Big Switch Networks is an SDN startup that aims to simplify networking through automation and orchestration. One of the company’s goals is to help customers stop managing their networks box by box.
And recently the company announced that it’s rethinking box-by-box pricing of its product.
Big Switch calls its new model Elastic SDN Pricing. It applies the cloud model, where you only pay for what you use, to premises hardware/software purchases. This model reduces capital expenditures, but also makes sure you have capacity available to meet demand spikes or normal growth.
We covered it briefly in a recent episode of Network Break, but we didn’t get the details quite right, so we wanted to clarify how it works.
Before we get to the elastic model, Big Switch also offers standard pricing on a per-switch basis. For instance, a 2-rack starter kit includes Big Switch software, white box switches, a controller, cabling and optics, and three years of support for $99,000.
However, customers also have the Elastic SDN Pricing option. Here’s how it works. You can purchase an 8-rack configuration, but only pay the upfront cost of 4 racks. Big Switch ships the full 8 racks, including all hardware and software components, to the customer.
The customer turns up the fabric and uses it as normal. If there’s a need to burst beyond the 4 racks, the Big Switch dashboard tracks the usage, and the customer pays $599 per switch per month. If the demand falls back within the capacity of the 4 racks, the charges stop.
Big Switch will bill customers for additional usage monthly or quarterly.
Customers can also start with elastic pricing, and then switch to the traditional model at any time. The company says the buyout price to outright acquire the additional racks would factor in any usage-based amount the customer had already paid.
Bold And Risky
I think elastic pricing is a bold, risky move on Big Switch’s part. As a new company in the nascent SDN market, Big Switch needs to get noticed, and needs to convince customers that already have switching infrastructure to take a chance.
While I’m sure the company would prefer attention based on technology merits, innovative pricing is also a valid way to lure potential buyers, and it never hurts to whittle away at cost objections.
It also potentially gives Big Switch a bigger footprint inside a customer’s data center than if the customer had to pay the full price up front. And having that spare capacity standing by makes it seductively easy for the customer to use it.
On the other hand, it’s risky because Big Switch bears the cost of shipping more hardware than might be used. No vendor, especially a budget-conscious startup, wants to see shipped inventory sit idle or underutilized at a customer site when it might be sold elsewhere. Big Switch is essentially helping to fund a customer’s purchase and delaying its ability to book revenue.
Big Switch offers three bundles under the Elastic SDN Pricing model: 8 racks that start at $199,000; 12 racks that start at $299,000; and 16 racks that start at $399,000.
This blog focused on a pricing strategy. For a good overview of Big Switch’s core product, the Big Cloud Fabric, check out this post from Rob Coote. Rob was a delegate at Network Field Day this August where Big Switch was a presenter.
You can also listen to the Packet Pushers podcast with Rob Sherwood, CTO of Big Switch.