Introduction

Storage as a service (STaaS) options grew considerably in 2023, as major vendors significantly expanded their consumption programs. Programs such as Dell APEX and Hewlett Packard Enterprise (HPE) GreenLake that began as STaaS programs have expanded to implement those vendors’ hybrid and multi-cloud visions.

All the major storage vendors also now offer perpetual upgrade programs, providing free controller refreshes as part of customers’ service contracts. The refreshes ensure customers have access to the latest technologies and products. These as-a-service and upgrade models deliver cloud-like buying experiences for infrastructure, and vendors are integrating their storage products with public cloud services.

2023 Recap

While most major storage vendors’ revenue declined in 2023, customers buying subscriptions rose. Large vendors credited their as-a-service sales for growth in their financial services and annual recurring revenue numbers. HPE and Dell were most active in this area. HPE GreenLake and Dell APEX were the major themes in those vendors’ annual user conferences, and each company rolled out services throughout the year.

HPE

HPE added GreenLake for File Storage through a partnership with VAST Data and GreenLake for Block Storage—both using HPE Alletra MP hardware. GreenLake for Storage Fabric Management, a STaaS offering for configuring and managing Fibre Channel SANs, also launched in 2023. On the data protection front, HPE launched GreenLake for Backup and Recovery and GreenLake for Disaster Recovery. GreenLake goes beyond storage, as HPE also added GreenLake for HPC, large language models (LLMs), and GreenLake for Private Cloud Business Edition services. During its most recent quarter, HPE said its annualized run rate for GreenLake hit $1.3 billion, up 48% year-over-year (YoY) as GreenLake orders rose 122% YoY.

Dell

Dell built out its APEX storage services in 2023, mainly through public cloud integration with APEX Block Storage and APEX File Storage for Amazon Web Services (AWS) and Microsoft Azure. Dell also added APEX Cloud Platforms for Azure, Red Hat OpenShift, and VMware, and as-a-service capabilities for compute and PC.

Pure Storage

Pure Storage expanded Evergreen//One STaaS and Evergreen//Flex subscription programs in 2023 by committing to pay customers’ power and rack space costs, making the buying process even more like consuming in public clouds. With the help of Evergreen, Pure bucked the trend of storage revenue declines in 2023. Pure Evergreen//One and Evergreen//Flex are expected to more than double annual revenue to nearly $400 million this year when the final numbers are in, and Pure has grown its annual recurring revenue (ARR) to over $1 billion per quarter.

NetApp

NetApp launched NetApp Advance, which provides free controller refreshes and capacity upgrades and storage efficiency guarantees. NetApp Advance also allows customers to swap an on-premises controller refresh for cloud services or NetApp Keystone Storage as a Service credits. NetApp also added NetApp Storage on Equinix Metal through Keystone. The service combines NetApp flash storage with Equinix Metal for bare metal as a service.

Future Directions

These consumption models represent a significant change in how storage (and infrastructure in general) is purchased and managed, and the trend will continue into 2024 and beyond. They allow customers to buy and use on-premises resources as if they were in the public cloud.

The goal is to align costs with consumption. This approach not only shifts pay models from CAPEX to OPEX but also offloads lifecycle management from IT teams to free them for more strategic tasks. Buying infrastructure as a service also gets capacity and other resources to customers much faster than when they have to wait for vendors to ship products to them.

Other storage vendors such as Hitachi, IBM, and Lenovo also have STaaS or perpetual upgrade programs. These consumption options provide customers with flexibility when buying infrastructure, but also require them to make choices. Customers must ask:

Do I want to pay upfront and depreciate or buy as a subscription?
Do I want to buy “outcomes” where the vendor picks the technology for my organization based on my specific requirements or do I want to pick my own products and technologies?
Where do I want my data and applications—on-premises, in the public cloud, or in a co-location site?

These considerations can be made on a workload-by-workload basis, which can save money and prove more efficiency but requires more upfront planning.

Perhaps the biggest question around these consumption models is whether they can stave off the steady move of data from on-premises infrastructure to the public cloud? I’ll be watching closely to see the answer to that one in 2024.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.