SNW - SMB - IBM execs on price gouging, EMC tie-ups

06.04.2006

Monshaw: In general, the partnership is going extremely well. We got products to market in record time last year. I do not see the conflict the analysts you referred to see. To me, it's the uninformed talking to the uninformed. The proof will be in the results.

Users at SNW have voiced anger about storage management software licensing being based on capacity. Every time they add another 2TB, you bill them. Will you address that?

Sanders: When storage management software first came out, everyone said we priced per processor. Everybody hated that and said we want it priced per terabyte. So we priced it per terabyte. I think the issue really is the steepness of the slope. If, every time you buy 2TB, we send you a bill saying, "Thank you for playing. Here's X times 2," I totally agree. It's got to be graduated pricing or site licensing. But the thing that bugs me about this is one of the reasons this was all done is people never had a budget for storage management software. They bought disk or they bought tape. So I'm actually thrilled that they're talking about storage management software pricing, because they're thinking about it as a thing that they need to buy against a value. If there's a different way we need to price and package it because of that, I'm good. That'll be great to have that conversation with our customers.

Users see the price of disk plummeting, yet they feel like they're being gouged. What's IBM doing to provide more honesty in pricing?

Monshaw: That's contrary to what we hear. Incumbency leads to gouging. I think some vendors out there have some hidden costs. Hidden costs for device drivers, for maintenance, for anytime they have to come in and touch the infrastructure, and hidden costs for replication on every disk array. Disk prices have been [dropping] between 35 percent and 40 percent year to year. That's not that different from what it was before. But, let's be honest, some folks charge you for damn near everything.We do get brought into a lot of accounts where the incumbent is pricing very high and [the user is] stuck. But the entrant into the account will have a higher cost just to get in. What we've seen in many, many accounts is a virtualization layer takes away this whole cost of switching [vendors].