Monday, April 17, 2006

History shows that where ethics and economics come in conflict, victory is always with economics. B.R. Ambedkar

Why does NetApp tax their users more to manage 24TB of data on an R200 than 12TB of data?
In short NetApp charges more because they think they can, but in the long run they will lose customers to lower cost alternatives. It is the way of the world.

One of our customers asked us this the other day, and I had to tell him that I could not figure out a reason NetApp would charge more to manage more data. It is the same software, and it has the same amount of programming. So why does it cost more?

Perhaps NetApp views software the way the IRS views income? The more you have the higher the tax on it. It seems ironic that NetApp would put a progressive software tax on storage, since the one thing all enterprises want to do is lower their marginal tax costs.

How can a NetApp user lower their marginal storage tax burden? There are a few of ways:
1) Purchase transferable licensed systems and then max out the storage on the systems.
2) Use storage systems that don't tax storage as much as NetApp does.
3) Get a quote from companies like Zerowait and show it to NetApp, that usually has a downward effect on NetApp's priocing.

Over time NetApp's high marginal tax rate on storage will cause customers to look to other sources of storage which are cheaper to maintain. Think of it as the gloablaization of storage. Just as NetApp is using India for engineering, customers will sooner or later embrace lower cost alternatives to NetApp.

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