Welcome!

Cloud Expo Authors: Elizabeth White, Dana Gardner, Jeremy Geelan, Helen Ching, Adrian Bridgwater

Related Topics: Web 2.0, Virtualization, Cloud Expo

Web 2.0: Article

Scalable Pricing in a Scalable World

Nati Shalom: Need scalability in the new dynamically-scalable world? Don’t forget pricing

Nati Shalom's GigaSpaces Blog

In most discussions about scalability, we often approach the topic as a pure technical/architecture challenge, and ignore cost issues. The problem is that when we truly scale our application, and want to benefit from economies of scale, we're going to end up with scale limitations, not because of technical issues, but because of the pricing and licensing models.

In most discussions about scalability, we often approach the topic as a pure technical/architecture challenge, and ignore cost issues. The problem is that when we truly scale our application, and want to benefit from economies of scale, we're going to end up with scale limitations, not because of technical issues, but because of the pricing and licensing models.

Scalable pricing

Scalable pricing means a pricing scheme that provides the benefits of economies of scale. Below are pricing models commonly used for software products and how they fit in the new dynamically-scalable world.

  • Free - while this certainly sounds like the best option (and may very well be) the customer needs to be aware of the following:
- The free license of a software product typically does not include support: not an option for most mission critical applications.
- When you do pay extra for support, you will typically be charged just like any other run-time license on a per CPU basis.
- Make sure that the company behind the product has a sustainable business model, otherwise there is a good chance that it will either die when its funding dries up or change its license model to monetize its user base. That's fine, but all it means is that it's not really a free offering in the long run, and you don't know what the pricing model will be exactly.
- In terms of total cost of ownership (TCO), free products are not necessarily the cheapest option. TCO is dependent on many factors, for example, dependency on other products (and their license costs), the need for integration and maintenance, etc. See my post, Economies of non scale, for more on the topic.
  • Subscription model - With a subscription model you pay a fixed periodical fee, typically on an annual basis for infrastructure software, and on a monthly basis for SaaS. Subscription pricing is suitable for on-demand scalability as it provides the flexibility to grow or reduce cost based on the annual use of the product.
  • Pay per use - this model is even more flexible then subscription model as it gives you higher granularity. Pay per use is provides in various forms where the usage can be a measure of CPU utilization or bandwidth utilization. Amazon for example charge per machine utilization for its EC2 services and data-utilization for its data services.
  • Perpetual license - This model is used to buy licenses in advance and pay for support separately (normally 15-20% on top of the per CPU license). This is the most commonly used model with commercial software products, however, due to the large initial investment required by this model, it doesn't fit well with on-demand environment.
  • Enterprise unlimited license - This model enables you to pay premium price in advance (based on potential future usage) and gives you the freedom to use the software without any limit. This model fits to environment where you anticipate that over a fairly short period of time the usage of the product will become wide and therefore the pay-per use or any of the other models mentioned above will become more expensive.

Which model to choose?

Each of the models has pros and cons and therefore the answer depends on your situation. Also, over time, as the situation changes, you will probably realize you need a different license model, and so it becomes equally important that the product you choose will give you the freedom to move from one model to another in the future.

GigaSpaces scalable pricing

With GigaSpaces we continuously look into ways to make our software license cost fit the on-demand world. For example, we launched a free Start-Up program that provides a totally FREE version of GigaSpaces for startups (hundreds of start-ups have already signed up for this program since we launched it last year). We also provide a Pay-Per-Use model for those running on Amazon EC2.

We felt that even though this is a fairly flexible pricing, we could do better. As of our 6.6 release, we added the option to buy our software at a yearly subscription price, and we also launched a new package called XAP Standard Edition, which is sold at a very low price of $9,500k per package (not CPU) where the package includes two servers, 4 GigaSpaces nodes and up to 50 clients or remote servers.

These changes were designed to address the needs of developers looking to start running their applications at a relatively low scale, who need the full functionality of the product, but cannot afford the full XAP price. Another principle that we kept when we designed this package is that moving from Standard to Premium edition wouldn't require any change in your architecture or code - which means that you could always scale to the premium edition just by changing the license key.
More details about the new pricing model is available here.

 


Nati Shalom was part of the star-studded lineup of speakers that spoke at SYS-CON's Cloud Computing Expo. Between them, they covered every aspect of the hottest IT topic for years, with not just Amazon but also IBM, Microsoft, Google, Yahoo, Intel, HP and a host of others all offering, using or developing high-end computing services typically described as “cloud computing” - through which massively scalable IT-related capabilities are provided as a service using Internet technologies.

Forrester Research analyst James Staten calls cloud computing "classic disruptive innovation - where the mainstream dismisses the product and small companies have time to create a real differentiated value." But there are so many offerings just now that what infrastructure architects are looking for above all is a set of organizing principles they can use to guide them in choosing between them all.

Such principles. and a host of associated topics, were addressed in San Jose by a Top Speaker Faculty that included:

  • Dr Werner Vogels - VP & CTO, Amazon.com (Keynote)
  • Mike Feinberg - Senior Vice President, Cloud Infrastructure Group, EMC
  • Steve Herrod - CTO, VMware
  • David Bernstein - VP & GM of Network Applications Infrastructure, Cisco
  • Rob Weltman - Director of Grid Services, Yahoo!
  • Peter Nickolov - President CTO, 3tera
  • Kevin Haar - President & CEO, Appistry
  • Songnian Zhou - Co-Founder & CEO, Platform Computing
  • Patrick Harr - CEO, Nirvanix
  • Gerrit Huizenga - Cloud Solutions Architect, IBM
  • John Keagy - CEO & Co-Founder, GoGrid/ServePath
  • Sajai Krishnan - CEO, ParaScale
  • Reuven Cohen - Founder & Chief Technologist, Enomaly
  • Mike Eaton - CEO, Cloudworks
  • Jonathan Bryce - Founder at Mosso (Rackspace)
  • Nati Shalom - CTO, GigaSpaces
  • Don MacAskill - CEO & Chief Geek, SmugMug
  • Billy Marshall - Founder & CEO, rPath
  • Dr Thorsten von Eicken - CTO & Founder, RightScale
  • Jonathan Pyke - Chief Strategy Office, Cordys
  • Jason Stowe - Founder & CEO, Cycle Computing
  • David Young - Co-Founder & CEO, Joyent
  • Dave Durkee - Founder, CEO & Technical Director, ENKI
  • John Janakiraman - CTO, Skytap
  • Stuart Charlton - Chief Software Architect, Elastra
  • Lars Leckie, Principal, Hummer Winblad Venture Partners
  • Dr Rich Wolski - Professor, U.C. Santa Barbara
  • Javier Soltero - Co-Founder & CEO of Hyperic
  • Omer Trajman - Director of Field Engineering, Vertica Systems
  • Rachel Chalmers - Senior Analyst, Enterprise Software, The 451 Group
  • Alan Williamson, Founder at Blog-City.com, Creator of BlueDragon

More Stories By Nati Shalom

Nati Shalom is CTO and Founder of GigaSpaces. He is also the Head of the Israeli Grid consortium. He has more then 10 years of experience with distributed technology and architecture namely CORBA, Jini, J2EE, Grid and SOA. As a technology visionary he's a frequent presenter at industry conferences and actively involved in evangelizing Space Based Architecture and Data Grid patterns.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Cloud Expo Breaking News
With Cloud Expo 2012 New York (10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what e...
2011 was a year of rapid adoption for public and private cloud services. Instant and on-demand server provisioning was the driving force behind the massive growth. On top, cloud server templates and script automation simplified application installation for simple and pre-defined application stacks, but have not targeted more complex enterprise application environments. In his session at the 10th International Cloud Expo, John Yung, CEO of Appcara, will discuss how 2012 will be the year for app...
"Having been in the IT field for many years, I believe the cloud computing chapter in the industry is an exciting one and I am proud to be a part of it," said National Reconaissance Office (NRO) Chief Information Officer Jill T. Singer Tuesday, as it was announced that she was one of 10 winners of the 2012 CloudNOW "Top Ten Women in Cloud" Awards.
As more enterprises are adopting clouds, the nature of cloud computing is changing. Previously, clouds were used to test applications or for non-mission critical applications. Today, enterprises are using clouds for cost-saving advantages and launching more mission critical applications that have defined performance needs. In his session at the 10th International Cloud Expo, Eric Shepcaro, CEO and Chairman of the Board of Telx, will discuss how distributed computing has many advantages. It wou...
With Cloud Expo 2012 New York (10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what else h...
Building a cloud computing environment with on-demand access to compute, network, and storage resources requires an elastic infrastructure at multiple levels. Virtualization combined with x86 servers has transformed the way we scale out compute resources. Unfortunately, legacy Fibre Channel and iSCSI storage architectures are rooted in rigid mainframe-era designs, and are fundamentally mismatched with the dynamic, shared modern data center. In his session at the 10th International Cloud Expo, ...
With Cloud Expo 2012 New York (10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where do they work, what e...
With Big Data Expo 2012 New York (co-located with 10th Cloud Expo) now under four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference... We have technical and strategy sessions for you every day from June 11 through June 14 dealing with every nook and cranny of Cloud Computing and Big Data, but what of those who are presenting? Who are they, where ...
With Big Data Expo 2012 New York (co-located with 10th Cloud Expo) just four months away, what better time to start introducing you in greater detail to the distinguished individuals in our incredible Speaker Faculty for the technical and strategy sessions at the conference...
Can you bring services from the cloud to your customers faster and have them adopt it with ease of use or bring the power of bundled services to the fingertips of your clients without creating new rigid ‘apps stove pipes'? Do you want to prevent your business running away to public and unmanageably immature cloud services? In his session at the 10th International Cloud Expo, Hans van de Koppel, Sr. Enterprise Architect at Capgemini, will take Cloud Expo delegates to the developing world of clou...