Understanding True Costs - Hardware and Software for 10PB

We had a conversation with the CIO of a major bank the other day. They are one of the global systemically important banks - the biggest of the big. The CIO had decided to bring in MinIO as the object store for a data analytics initiative. This deployment collects data from mortgage, transactional and news platforms to run Spark and other analytical tools to drive insights for the Bank. The implementation that MinIO was replacing was a proprietary platform. The switch to MinIO was motivated by technical glitches and inflated costs of the proprietary solution.

Things were going swimmingly until we got a call from our CIO friend. His incumbent vendor (they have both HW and SW) had persuaded the procurement team that MinIO was 4x as expensive as the incumbent’s object storage software solution. 

This was a curious development because the incumbent vendor doesn’t have object storage software - they have an appliance. It took a few moments for us to realize what was going on, and less than an hour to get it sorted out. This post talks about what the vendor did, how that obscured the value assignment, and how it came back to bite them in the end. 

In doing so, we are going to tell you what you can expect to pay for 10PB of storage - both from a software and hardware perspective. 

Feel free to use these numbers on us and on your hardware vendor of choice. If they won’t hit the numbers, ping us and we will tell you who it is and they will honor that price (assuming the same config yada yada). 

Before we bury the lead. Your software costs for 10PB of storage from MinIO with the Standard plan will be $667K per year. Your total hardware costs for 10PB of NVMe storage from a leader in the commodity hardware space is going to be about $1.28M. This is a full featured, all-flash system that can do anything from AI/ML to Archival. 

So, back to the story. 

The CIO explained what the incumbent vendor had presented to him and it went like this…the vendor’s “new” object storage software-defined solution isn’t ready for primetime (it has been in “beta” for a few years now) but the vendor wasn’t about to let another hardware vendor into the account. It is a $250M+ per year account for them. 

What they did was to present MinIO on their HW platform as one offering. The HW was full freight. The combined price was MinIO at $667K and HW at $2.1M+. Separately, they offered their legacy (read “old”) object storage solution with their HW as a bundle. In this case they dropped the HW price considerably. The effect was to price as an appliance where they didn’t attribute any value to their software (which tells you what they think about their soon to be EOL software).

The goal of their proposal was to make MinIO’s software look very expensive to the bank thereby leading them to the appliance solution. After we explained what had happened, the CIO went back to procurement and asked for the pricing of the hardware without any software, just like they might do with any commodity hardware provider. In a “shocking” development, the procurement team learned that the incumbent’s HW vendor’s costs were 4x what a commodity vendor was willing to provide them - in writing! 

This is the power of unbundling the cost of hardware and software. Always demand the unbundled costs from your vendors. 

When they offer to “separate” them out - don’t take the bait. Understand what each component offers. When they claim, “but our software is optimized for our hardware” don’t buy that either - the HW salesperson will gladly throw their software brethren under the bus as soon as you tell them you are selecting another hardware vendor. The response will be immediate, “of course, our hardware works great with x software, in fact these three Fortune 500 companies run it….” 

Trust us here. If they can unbundle, and the other option is losing the deal, you will get the truth. 

The reason appliance vendors like to “separate out” the costs is that it is easy to manipulate where the value lies. The incumbent in this case actually has nice HW. They just have bad incentives when it comes to doing the right thing for the customer. They “subsidize” the HW with mediocre to poor software. Generally, the customer’s procurement team doesn’t see the difference. They see a bill of materials for object storage software and accompanying HW, and calculate what they think to be the “all in per TB” price.  

In this case, when all was said and done, the incumbent found itself in an awkward conversation about their HW pricing. If the software added no value (as they demonstrated by making it almost zero $) then the HW was, in turn, fairly expensive. Specifically, 4x the commodity price of that same type of hardware. More importantly, that was the price the bank had been paying for years….So much for investing in the relationship. 

The True Cost: 10PB of Software and Hardware

We will keep it simple. 

If you are buying 10PB of usable capacity from MinIO on a multi-year deal you should expect to pay $66.7K per PB per year from us. You might be able to do better depending on the length of the term. 

If you are buying 10PB of usable capacity from one of the leading commodity HW players you would expect to pay around $1.28M ($128K per PB).  

That means your all-in costs for HW and SW would be around $1.95M in year 1, and $2.7M for the subsequent 4 years, for a total of $4.6M for 5 years.

This gets you best of breed. 

The alternative? The appliance with software that will be EOL in year two of the five and a cost of $5.4M - $5.8M for 5 years. 

The Takeaway

The appliance model is designed to obscure value. The argument that it has a lower TCO simply doesn’t hold water if it isn’t cloud-native and doesn’t work with the rest of the cloud-native ecosystem. It almost always shields one of the components, the hardware or software. Given the legacy of many of these companies - it is the software that they need to obscure because in their DNA they are HW vendors, not software developers. 

So, ALWAYS get your unbundled, not separated-out, pricing. If you do that you will end up with better pricing, better software and better hardware, and a better overall solution for your needs. You don’t have to pick us - we mean that sincerely, but we hope you follow our advice. Feel free to reach out to us at hello@min.io to have that conversation.