All of a sudden, software has become all the rage in hyperconvergence. Just the hint of switching from an appliance model to a software model is enough to get financial analysts in a tizzy and the price of a stock soaring. And why wouldn’t it? Software is a much better business model than selling appliances.
But even though software is a better business model, most companies start off by shipping appliances. It’s just much simpler to sell, whether being sold direct by the vendor or indirect through a reseller or distributor. It’s also much easier to develop the software for a limited number of hardware platforms and much easier to support few hardware platforms.
Once that appliance-based product has taken off, the company will want to change to a software business model from a profitability perspective. This can be a difficult pivot to make financially since revenue decreases before profitability improves, and it changes how the sales teams are paid. If the pivot is made successfully, then the company is much more profitable and financially stable.
Even if a pivot to software works out for the vendor, it does not always work out well for the customer—especially if the software model is an appliance “in software clothing.” If you’re considering hyperconvergence software, make sure it’s not an appliance in disguise. Many vendors will claim to offer hyperconvergence software, but still significantly restrict how their solution can be deployed and used.