Vast Data Sheds Hardware Business to Tackle Largest Users

For storage startups focused on the highest end of infrastructure, removing the costs associated with a hardware business might be the only way to reach potential. But only if you’re not leaving customers to fend for themselves integration-wise.

Look as profitable as possible and focus on only the largest deals. This has been Vast Data’s stated mission since its inception and in a new move announced today, the startup is one step closer to both.

Vast is stepping out of the hardware business and taking that hefty line item off their books, shifting it entirely to hardware partner, Avnet. Instead of buying the hardware up front or forcing customers into the familiar pattern of over-provisioning, Vast’s books show a software profits only while on the customer side, they can basically dedicate support people just to those muti-petabyte deals they’re focusing on.

It is this focus on just the highest end of storage where Vast can differentiate from other startups who took a similar approach to ditching their hardware businesses. First, they’re doing it relatively early in their game, avoiding the Oracle or Nutanix shock that hit when those companies took similar steps. And unlike a Nutanix, which focused on tackling the entire market, from small, mid-size, and large enterprise, Vast won’t have to scramble wildly to deeply support everyone. It’s just the largest installs, which means Vast can wisely provision the people to make the support work instead of trying to handhold the world’s businesses ala Nutanix.

This is a smart move. Vast can have all the cost off their own books, pushing it onto Avnet’s, and bask in the glory of high software margins, making it more attractive to investors and potential buyers. And while it shows some internal business savvy, there’s nothing really lost for users, in fact, everything stays the same, except users can buy hardware at cost and add to it over time instead of having a single fat CAPEX to contend with when what they wanted might have been a performance not a capacity increase out of the gate.

The kernel of the idea for this shift in practice was driven by a hyperscale customer that wanted to use Vast’s software but already had established relationships with the hardware vendors. What held the deal back, according to Vast’s Jeff Denworth, was that they didn’t want to leave their own hardware partnerships on the floor to make the shift to one of their appliances. “They wanted to buy like a hyperscaler but they don’t have legions of people doing storage integration. In this middle state where they want the visibility, want to align their flash purchases with their server purchasing cadence for maximum buying power but don’t want to deal with the integration part.”

This “Gemini” business model, as Vast as named it, will let Vast keep selling managed software on hardware that customers can buy at cost as an integrated appliance that comes straight from Avnet. And for end users, the possibility to escape some of the problems inherent to appliance purchases, letting “customers buy like hyperscale cloud operators without the heavy lifting commonly associated with building always-on, massively scalable clouds of low-cost flash infrastructure.”

“This is really the first disaggregated business model in storage,” Denworth says. “At the end of the day, customers just cut us a check for the software and only see hardware at or below street price. We have our own purchasing people work with companies like Intel and Mellanox to ensure a good price and you’re not solving the problem on your own, which you would be with software-defined plays. The product is fully integrated by the manufacturer, just as before, so in terms of how the systems is delivered and supported, it’s all the same but for us, we have more financial instruments to use to go after the big deals and to satisfy customer requirements in a more granular manner.”

The true differentiator here for those hyperscalers who want to leverage all the hardware partnership benefits but don’t want to deal with integration is packaged in with the Gemini model. Vast has a “co-pilot” for each of its customers who have their own hardware but a Vast Gemini license. This gets them their own Level 3 engineer dedicated to their site to monitor systems, handle feature requiests, and manage all the deployment and operation of Vast’s Universal Storage platform.

VAST says it has already delivered dozens of petabytes to customers since the launch of this new business model at the turn of the year. Gemini customers such as Squarepoint Capital and the Broad Institute of MIT and Harvard benefit from the flexibility Gemini provides them as they scale their Universal Storage investments with a solution that is now optimized for each organization’s unique requirements.

“Hardware refreshes are a chronic headache for any IT department as any downtime can have a negative impact on business operations,” said Bill Mayo, CIO of Broad Institute. “What we look for are solutions that have the flexibility to scale performance and capacity so we can quickly adjust to the needs of our organization.”

“In the quantitative trading industry, having the flexibility to dial up performance and grow on demand without a forced refresh or hardware tax is a key win for our business,” said Jesse Sieger, Systems Specialist at global investment management firm Squarepoint Capital. “Gemini has given us the freedom and flexibility to meet our data center needs at any given time, while also increasing our return on investment.”

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