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Reduce hardware costs by 37% with software-defined storage



IT departments are struggling with exponential data growth and big data environments, which is driving unexpected capacity demands and exceeding budgets. Traditional storage appliances are too cumbersome, rigid, and expensive to handle this massive data growth. As a result, companies are moving from traditional, appliance-based storage to software-defined storage. Demand for appliance-based storage is expected to halve by 2021, while software-defined storage is growing 36.7% year over year. This shift is largely driven by the significant cost benefits of software-defined storage.


To see the major difference in total cost of ownership (TCO), IT leaders need only to compare the storage life cycle. For traditional storage, an organization purchases an appliance, which includes both the hardware and the software. Then, support costs appreciate rapidly until a new appliance is purchased. This model has two major inefficiencies:

  • Bundling software and hardware enables traditional vendors to force their customers to repurchase the software every life cycle. Given that software (orange in the accompanying figure) typically costs between 60% and 70% of the initial purchase, for a $100,000 initial purchase this can quickly add a $60,000 to $70,000 tax to every storage life cycle.1
  • The traditional vendor rapidly appreciates support costs to shorten the repurchase life cycle. Because vendors make most of their profits and margins through software repurchases, halving the repurchase life cycle doubles the business.
image container Figure 1. Traditional cost of ownership vs. software-defined storage cost of ownership

By decoupling software from hardware, software-defined storage removes these inefficiencies from the life cycle. There are no software repurchases because licenses span generations of hardware. Red Hat® subscriptions are all-inclusive. Also, support costs do not increase because the vendor’s software repurchase incentive is removed.


In addition to changing the storage life cycle, the transition from appliance-based storage to software-defined storage eliminates hardware vendor lock-in. With software-defined storage, IT organizations can choose any set of enterprise-grade hardware, and they are free to switch hardware vendors or media as prices and requirements change. For example, consider a 50 terabyte (TB) environment that grows 50TB per year over four years, for a total of 250TB. Assume a $1 per gigabyte (GB) initial hardware cost.

In a traditional storage environment, all 250TB of capacity would be purchased initially at $1 per GB, as that is when negotiating leverage is greatest. The total cost would be $250,000 or $50,000 “depreciated” per year over five years total (four years plus the first, starting year). Capacity would be filled over the latter four years.

image container Figure 2. Traditional storage hardware expenditures vs. software-defined storage hardware expenditures

In the software-defined storage model, hardware is only purchased as needed for capacity. Given that hardware and media costs are rapidly declining — server hardware is decreasing 18.9% year over year and solid-state drive (SSD) prices are decreasing 33% year over year — the software-defined storage model saves approximately $95,000, or 37.8%, on hardware costs.

Through software-defined storage, customers typically experience greater than the 37.8% hardware savings for two main reasons:

  • When purchasing in increments, environmental costs are approximately half because there is less hardware to support.
  • Most datacenters experience exponential rather than linear growth, thereby magnifying the largest cost savings that occur in years three and four.

Software-defined storage solves the problem of massive data growth for IT departments running on ever-tightening budgets by making software repurchases obsolete, mitigating rapidly appreciating support, and removing the hardware vendor lock-in associated with traditional appliances. Contact your Red Hat sales representative to learn more about the value software-defined storage can bring to your datacenter.

Range for gross hardware margin for EMC and NetApp CY 2011-2016