Storage @ Work

One of the things that has stoked EqualLogic's rapid rise was it's business model of embedding all software with the hardware as part of the product. I like to think of it as "priceless", because there is no separate price for software - even if it sounds a little silly to say "priceless" out loud. The "catch", if there is one, is that customers must be on maintenance in order to get priceless software updates when they become available.

People don't like paying for upgrades to storage software and some see the line-item software pricing that some of our competitors have as an exercise in nickeling and diming. Nonetheless, line-item software pricing has its fans, who perceive it as a way to get tighter control of the IT budget and to avoid paying for functionality they don't need.

But the notion of bundled software shouldn't imply that everything in the bundle has a determined, embedded price. Sure, there are costs associated with every software project, but that doesn't mean there is line-item accounting for each development project in the system price. Our products get cheaper over time, even though the software feature set is expanded significantly. At the end of the day, we make our money selling integrated iSCSI SAN storage arrays, not their various hardware and software components.

It's easier developing core functionality without the byzantine distractions that come with software for serialization, stratification, licensing, packaging, distribution and promotion. If you throw out the licensing-related crap, software development is a lot more efficient, and that is a very good thing. I'm not 100% sure, but I think EqualLogic came to its priceless software model because its engineering founders didn't want to screw around with any code that didn't deliver core functionality.

An unexpected outcome of a priceless software model is the difficulty in drawing attention to new functionality when it is delivered. As a no-charge upgrade, our priceless software tends to be devalued. One of those strange but true things - people want the best - and "the best" usually means paying more, not less.

At this point the die is set at EqualLogic. We're not going to start adding licensing "features" to call attention to our software's capabilities. But for people to take advantage of it, they first need to realize that it can solve their problems and that it is extremely competitive and fully-featured. Maybe we should rename our maintenance programs to something like "the annual fee paid to get priceless software and great support".