If Disk-Drives Weren't Proprietary, Storage Would Still Be Expensive

Every once in a while I'm chagrined when another storage blogger, who should know better, starts complaining about the huge difference between the cost of a 2TB hard drive they buy at Fry's and the cost of a similar amount of storage in an enterprise array. Ladies and gentlemen, while disk drives may account for most of the weight of a disk array, we're past the point where they make up most of the value.

In fact, the comparison isn't apples to oranges, it's more like apples to apple pie. When we compare EMC's disk drive markup to the markups food companies take on real commodities like the corn, pork bellies or frozen orange juice, we could trade at Duke and Duke; we see that just how good we have it. For example a bushel (56lbs) of corn trades for about $3.65 in the commodities market or $.065/lb.  A box of Kellogg's Corn Flakes is almost $4 a pound at my local A&P a 55x markup. At $150 for 15,000lbs in the commodities market the frozen orange juice that made Dan Ackroyd and Eddie Murphy so much money in Trading Places costs one cent per pound, but Minute Maid sells it for over $3. If EMC marked up Seagate drives that much, we'd be paying over $5000/TB for drives alone.

Even if disk arrays are like apple pies, we all know there's a big difference between the cornstarch-laden pie at the Circus-Circus buffet in Vegas and grandma's homemade apple pie. While the differences between pies are mostly labor, and one could argue love or at least attention to detail, the difference between a pile of drives from Fry's and a Clariion or AMS is mostly software and mechanical engineering.

In fact engineering is the real difference between a BackBlaze storage pod and a server running NexentaStor or OpenFiler connected to some JBODs. Standing drives on their connectors and using rubber bands to hold them in place works for a while, but as Sun's video shows, yelling at a disk array causes read errors and reduced performance showed good mechanical engineering pays off.

In fact at Newegg a 16-drive SAS JBOD with SAS Extender costs around $2500. Seagate ES.2 1TB drives $160/ea or another $2500 for 16, so enclosures alone cost as much as the disk drives without the RAID controllers, replication, snapshots and other good stuff. In fact, once I price a 24-drive SuperMicro server with NexentaStor, the drives are only about 1/3 of the system cost.My other problem is my fellow bloggers are comparing highly-discounted street prices with EMC's list. No one in their right mind pays EMC list. Even if you just want a Clariion AX, leaving aside for the moment why you'd want an AX, you can get 25-40 percent off by calling the EMC salesperson the last week of the quarter.

Now that's not to say EMC doesn't make a markup. They sell that same drive, with some firmware tweaks that, depending on who you listen to, either match them better to the Clariion controller improving customer value or just keep EMC customers from buying drives at NewEgg, for somewhere around $400 ($390 on the state of Texas price list, $495 on the NY state version, $660 MSRP). Much of the difference goes to reseller markup and the cost of keeping the EMC sales guy wearing nice suits, buying drinks and paying greens fees. It also pays for the R&D in the back room that has to be amortized across the units sold.  Since the equivalent of a gold record for a disk array is just 5000 units or so, the millions add a few grand to the sticker price.

One way to look at the whole problem is to calculate the cost of a drive bay in a disk array.  On my Supermicro server is around $400, a dLink iSCSI array w/10Gbps Ethernet almost $500. Slot costs on enterprise arrays are in the thousands of dollars. Of course for that you get fove-nines availability and a raft of data protection features. So before you go decrying how big bad storage vendors make obscene markups on "commodity disk drives" reflect on how the companies that market real commodities like frozen OJ work on much larger markups. I wonder how to calculate Kellogg's box cost.