SimpliVity Takes Aim At Amazon Web Services, Claims Hyper-Converged Is Cheaper Than Public Cloud

Hyper-convergence startup SimpliVity is challenging the widely held industry notion that running workloads on the Amazon Web Services public cloud is cheaper than running them in on-premise private clouds.

SimpliVity, Westborough, Mass., recently commissioned a study from Evaluator Group, a Boulder, Colo.-based research firm, which compared the total costs of running VMware-based private clouds powered by its OmniCube hyper-converged technology versus Amazon Web Services over a three-year period.

In the study, published Wednesday, Evaluator Group determined that running a SimpliVity-based private cloud is between 22 percent and 49 percent less expensive than using a similar AWS setup over a three-year period, depending on the number of virtual machines involved and type of configuration involved.

Evaluator Group factored in SimpliVity OmniCube hardware and maintenance costs, as well as the price of VMware server virtualization licensing, power and cooling expenses, and support and labor costs.

[Related: SimpliVity Launches Cloud Service Provider Program, Aims To Limit Financial Risk For Partners]

For the AWS calculation, the research firm used an AWS EC2 M3.Medium instance with 1 vCPU, 3.7 GB of memory, and 100 GB of storage, along with monthly costs of transferring VMs in and out.

Evaluator Group said it used AWS' "3-year All Upfront, Reserved" pricing model, in which up-front costs are amortized into 36 monthly increments, because it's most similar to the hardware costs of the SimpliVity model.

An AWS spokesman declined to comment on the study.

Comparing costs between public and private clouds is difficult to do, and Evaluator Group's study will no doubt attract critics that question its methodology. But SimpliVity's view -- backed up by the Evaluator Group's findings -- is that hyper-converged infrastructure is now a threat to the public cloud model, in large part because it cuts operational and management costs by combining compute, storage and networking on x86 server hardware.

"We have developed a technology on top of x86 that runs better than the Amazon technology that was developed 10 years ago -- with deduplication, with compression, with [data] protection, with all the intricacies around what enterprises want," SimpliVity CEO Doron Kempel told CRN in a recent interview.

SimpliVity is widely seen as the No. 2 player in the hyper-converged space after Nutanix, which filed for an IPO last month. But while Nutanix has focused its competitive message on data center incumbents like VMware and EMC's VCE converged infrastructure unit, SimpliVity is trying a different approach by taking the fight to AWS.

AWS executives have long insisted that private clouds are a vestigial remnant of enterprise IT, and that most computing will eventually move to public clouds. AWS backs up its claims with frequent price cuts, while also pushing the envelope by continually adding new services and features.

Yet despite AWS' status as top dog in the public cloud, solution providers say hyper-converged infrastructure is catching on as a way for enterprises to take advantage of cloud-like economics while maintaining control over their data.

"From a total cost of ownership standpoint, 75 percent of the time we go into deals with SimpliVity versus a vendor of a traditional IT stack, we win," said Stephen Oles, managing partner and director of technology sales at Cordicate, a Philadelphia-based SimpliVity partner.

With converged infrastructure, organizations must calculate future usage up front, but hyper-converged lets them simply add more servers as they scale. It's the closest thing the data center has seen to a cloud-style consumption model, which is a big reason why Nutanix and SimpliVity have together raised more than a half-billion dollars.

Interestingly, Nutanix partners told CRN they also agree with the message contained in the Evaluator Group report.

"Buying hyper-converged infrastructure is less expensive from a TCO standpoint, so a lot of customers are looking at the model," said Jamie Shepard, senior vice president for health care and strategy at Lumenate, a Dallas-based Nutanix partner. "Everyone says that once you get into AWS, it becomes more expensive when you get into production."

Tim Joyce, CEO of Roundstone Solutions, a San Francisco-based Nutanix partner, told CRN he thinks any market data that furthers the hyper-converged discussion is a positive for all startups in the space.

"If people are looking for a cloud environment in their own infrastructure, they can build their own hyper-converged infrastructure without defaulting to AWS or Microsoft Azure," Joyce said. "The economics of hyper-converged are sound, the control is greater and the flexibility and agility are just as good."

SimpliVity is looking to attract more service providers and large enterprises, and it launched a new program Tuesday in which a customer that purchases its technology is only liable for 50 percent of its total capacity over a three-year contract period.

With the new program, and the commissioned study, SimpliVity is aiming to chip away at the veneer of invincibility that seems to surround AWS, while also attracting some of its customers. If the strategy works, it might not be long before SimpliVity also decides to test the waters with an IPO.