Flash Riddle

by Woody Hutsell, http://www.appICU.com

This isn’t Batman; this is your data center!

Riddle #1: What is a flash array that is fast like a Ferrari, has reliability and service like a Lexus, but is priced like a Chevrolet?

Answer: IBM FlashSystem

Riddle #2: What do you call the fastest, most feature rich but least expensive offering in a market?

Answer: The market leader in capacity shipments (see this link)

For as long as I have been associated with the solid state storage market, the products formerly known as Texas Memory Systems’ RamSan were labelled as the Ferrari of the market, but mostly in this context: “Who wouldn’t want to go that fast, but who can afford it?” For the most part, we embraced the label because we were the fastest. A quick look at Storage Performance Council results over the last decade can easily substantiate that position. But we did have a problem: The market didn’t perceive RamSan as the affordable choice, so we were left out of competitions before even being given a chance to compete. Who starts out their car buying process by verifying that the Ferrari is cost competitive? It was understood we were that fast and that expensive.

Since then, an interesting change has happened. IBM, with its buying power and economies of scale, has taken the Ferrari engine, surrounded it with Lexus-like reliability characteristics, and is now delivering it to the market with the lowest all-flash array price per capacity, according to some simple extrapolations from the latest IDC report on the state of the flash market.

Why is IBM throwing away its margins to take ownership of this market? It’s not. The economics are actually simple. IBM engineers the entirety of FlashSystem. As any accountant can tell you, this means that our R&D and engineering costs are going to be higher than the industry. But this is, in accounting terms, a fixed cost. If we pay this cost and don’t sell many products, we run at a loss. But if we pay this cost and sell a lot, our cost per unit only drops.

IBM buys NAND flash chips for FlashSystem; we don’t buy SSDs. Why does this matter? SSDs, in spite of their commodity nature and poor performance, are margin rich products for the companies that sell them. When our competitors buy SSDs to put in their all-flash arrays they are paying to someone else the margin needed to make investors happy while covering engineering investments. Thus, using SSDs actually makes the flash array product you buy more expensive. In accounting terms, SSDs represent a variable cost. As a vendor, you pay that same variable cost on every product you sell. Any business person will tell you it pays to decrease your variable costs because this enables you to bring your product to market for less cost than your competitors. This is especially important when you’re selling at the kinds of volumes where IBM sells in the all-flash array market – more than the next two competitors combined in the first half of this year, according to the same IDC report noted above. This explains why we are indeed a leader in this market space.

Maybe not what you’d expect from a company with an enterprise-grade reputation like IBM.

So, what does this mean to our clients and potential clients? FlashSystem can save you money. But the advantages don’t stop there.

Did you know FlashSystem offers inline compression and what’s more, testing of our inline compression at customer sites shows that it can be more effective and faster than that of our competitors? As a potential customer, there is a simple way for you to find out if this is true for your workload – include FlashSystem in your next storage procurement evaluation.

You could pay more and get less, but why should you? That’s a riddle worth answering.

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