Financial models and purchasing patterns, blog by Camberley Bates

By Camberley Bates, Tuesday, July 15th 2014

Analyst Blogs

This week another special purchasing model was announced,  as Violin Memory rolled out its Pay-as-you-go model.  There seems to be multiple financing options (or re-introduction), representative of the tightening of CAPEX budgets around IT.

Violin Memory, needing to re-establish a leader position is aggressively going after the market to gain their footprint.  Economically, you can buy a 17TB raw capacity device at an adjusted 17TB price, but they install the 35TB model.  As you scale up, they will true up on the honor system. Of course it is always cheaper to buy the bigger box to begin with, but depending on what you have to spend, at least it gets you into a flash system.

Brocade did a similar offering especially for hosting providers, who are traditional cash strapped due to the CAPEX investment.  However in this case, the long term financial minimum commitment going in was substantial.

IBM has a similar model for PureSystem, again focused on MSPs, eliminating payment until the MSP sells the services.  Again aligning the cashflow.  Another option they recently announced is “buy one, get the next one (kind-of) free.” That is you pay for the full cost of the XIV array once you reach a certain threshold (70%).  And when you fill it up, they send the next one ‘almost-free.’

So what is going on here? One, if you are competing in a tough market, then special financial terms get you noticed.  Especially if the numbers are more than 25% of the competitor.  Secondly, as stated earlier,  IT budgets continue to get crunched. And with storage being 60% of the IT CAPEX budget, it is an easy target to get attention.

All in all, expect more announced and unannounced deals to be offered.  For IT (and the VARs who are selling), ask for what you want, you may be surprised to get it.

 

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