At least a few times a month at Microsoft I’d get customers, resellers, and even internal folks less involved in Azure confuse these two terms.
TLDR
To fully understand, this is the best write up: https://techcommunity.microsoft.com/blog/publicsectorblog/history-of-microsoft-cloud-offerings-leading-to-the-us-sovereign-cloud—july-20/2157821
*updated August 2026
I’ve been hearing more organizations ask whether cloud storage is simply too expensive compared with buying hardware. It’s a reasonable question—especially when cloud pricing is presented as a visible monthly number and hardware is evaluated as a one-time purchase. But that comparison often leaves out the operational costs, lifecycle risk, and capacity-flexibility tradeoffs that determine the real total cost of ownership. This post is written for infrastructure and IT leaders who need to evaluate cloud storage costs against traditional hardware purchases on equivalent terms.
Cloud storage often looks expensive because it exposes costs that on‑premises environments quietly hide. When you compare total cost of ownership—not just raw capacity—the story changes.
The useful comparison is not cloud capacity versus hardware capacity. It is cloud service cost versus the full cost of delivering storage as a reliable service: capacity, performance, availability, lifecycle management, facilities, labor, and risk.
Let’s start with a simple analogy, taken from a familiar example: pizza. Making pizza at home, picking it up partially prepared, ordering delivery, or dining out all result in the same end product—but the cost structure and responsibility change dramatically. Some options give you maximum control, others trade that control for convenience, consistency, and predictability. Infrastructure works the same way.
Figure 1- https://pragmaticworks.com/blog/this-week-in-data-pizza-and-the-cloud
The cloud does not look expensive because it is inefficient. It looks expensive because it exposes costs that on-premises environments often hide, underestimate, or defer. Hyperscalers also purchase hardware, power, and data center services at volumes individual organizations rarely match, so the comparison needs to account for both bundled operations and buying power. To understand the real economics, we have to look past hardware acquisition and examine what it takes to deliver storage as a service.
ksThe yellow boxes represent the layers the customer controls and pays for directly. That control can be valuable: teams can choose the brand, size, lifecycle, configuration, and cost profile that best fit their environment. But every layer of control also brings ownership responsibility, including planning, patching, monitoring, troubleshooting, support renewals, and refresh cycles.
Now let’s apply this to Azure NetApp Files (ANF). Azure NetApp Files is a PaaS storage service. With ANF, teams no longer manage storage firmware, controller upgrades, hardware refresh cycles, performance tuning under failure scenarios, or capacity planning against physical constraints.
And this model still leaves out several cost categories that are easy to treat as background expense but very real in a storage TCO analysis:
In infrastructure terms: availability engineering, performance headroom, patching, lifecycle management, and incident response need to be considered —they’re either handled explicitly or quietly absorbed by your team.
For simplicity, this example models a 100TB storage requirement and focuses on first-year cost categories a buyer would commonly evaluate. Actual results will vary based on performance tier, utilization, regional pricing, resiliency requirements, discounting, and how much operational cost is already allocated to the storage environment.
Once you account for those operational realities, the cost comparison becomes less theoretical. Let’s look at what this actually means for a typical 100TB deployment. On-premises, your costs would look something like this:
| Category | Cost Range |
| Hardware (Drives, controllers, shelves) | $42,000–$78,000 |
| Networking gear | $6,000–$18,000 |
| Software licensing | $12,000–$36,000 |
| Annual support (hardware + software) | $18,000–$42,000 |
| Facilities / Power / IT labor | $24,000–$52,000 |
| 8.5K-18.8K/m or 102K-226K/yr |
*Expect 20–35% higher hardware costs and 15–25% higher power/ops costs compared to 2024–2025 baselines.
That is a wide range, but the range is not a weakness of the estimate. It reflects how variable on-premises storage economics become once utilization, growth, support renewals, and failure scenarios are included.
Now compare that with Azure NetApp Files (ANF), which offers more predictable consumption-based pricing. While past pricing behavior does not guarantee future pricing, the buyer can evaluate ANF as an operating-cost model rather than a hardware-refresh commitment.
Total Estimated First‑Year Cost for 100TB ANF, East US
| Component | Estimated Cost |
| ANF Flexible Cool (75% cool) | 7.5K/m or 90K/yr |
| ANF Standard Cool (75% cool) | 8.5K/m or 102K/yr |
| ANF Flexible (no cool) | 11.3K/m or 135.6K/yr |
| ANF Standard (no cool) | 12.4K/m or 148.8K/yr |
With hardware, you must buy a large enough device to last the lifespan of the hardware. Let’s consider a customer who starts with 100TB, grows 20% a year, and is comparing hardware and ANF to host their storage.
Realistically, many customers find that a large percentage of capacity can be tiered to cool storage because ANF tiers at the block level and restores in seconds. For this analysis, let’s model the numbers with 75% tiered to cool.
The tables above show that ANF can be more expensive in some scenarios, but it will often be the more cost-effective choice when utilization, tiering, operational burden, and growth uncertainty are included. Instead of committing capital up front, teams can pay monthly and adjust capacity as growth rates change.
A practical way to test the comparison is to ask three questions: What performance and availability level must the workload sustain? How much capacity is truly active versus cold or infrequently accessed? And which costs are already visible in the budget versus absorbed by facilities, operations, or another team? Those answers often matter more than the raw price per terabyte.
When people claim that cloud storage is more expensive than hardware, they’re often not wrong in a narrow, line‑item comparison. But that comparison rarely reflects equivalent costs. On‑premises storage absorbs power, cooling, facilities, labor, maintenance, and operational risk in ways that are difficult to quantify—and very easy to overlook. Cloud pricing, by contrast, makes those costs explicit.
When you factor in the full operational footprint, services like Azure NetApp Files stop looking disproportionately expensive and start looking predictable. That predictability—along with reduced operational burden and faster time to value—is what organizations are actually buying. The question, then, isn’t whether cloud storage costs more than hardware. It’s whether organizations are comparing the same thing at all.
For technical teams, this isn’t just a pricing discussion—it’s a decision about where operational complexity should live. Azure NetApp Files makes that complexity explicit, priced, and predictable instead of implicit, fragmented, and risky. Before declaring cloud storage “too expensive,” ask whether your comparison includes the costs you’ve already normalized.
TL;DR: Cloud storage often looks more expensive than hardware when the comparison stops at capacity price. But once power, cooling, facilities, labor, maintenance, lifecycle risk, utilization, and growth uncertainty are included, services like Azure NetApp Files can deliver a more predictable—and often more comparable—total cost of ownership. Add hyperscaler buying power and consumption-based flexibility, and the hardware-versus-cloud comparison becomes less about price per terabyte and more about where you want operational complexity to live.
State, Local Government, and Education (SLED) organizations are under pressure to modernize services, strengthen resilience, and operate within tight budgets. Cloud adoption is accelerating—but not all storage is created equal. NetApp’s Azure‑native storage solutions (Azure NetApp Files and Cloud Volumes ONTAP) give agencies the performance, security, and operational simplicity they need to modernize without disruption.
Education workloads experience extreme seasonal spikes—registration, grading, testing, and LMS usage.
NetApp Advantage: Elastic performance, predictable low latency, and instant snapshots ensure uptime during peak periods without overprovisioning hardware.
Courts, law enforcement, and public safety agencies require strict data protection and rapid recovery.
NetApp Advantage: Immutable snapshots, encryption, and replication support CJIS compliance while enabling fast, testable cloud‑based disaster recovery.
Many SLED organizations cannot justify a secondary datacenter.
NetApp Advantage: SnapMirror replication to the cloud provides low‑cost, highly reliable DR with fast failover—no additional physical infrastructure required.
VDI demand fluctuates during emergencies, elections, weather events, and academic cycles.
NetApp Advantage: High‑performance storage ensures consistent user experience, while autoscaling eliminates the need to size on‑prem hardware for peak load.
Agencies must retain public records, student data, and body‑cam footage for years or decades.
NetApp Advantage: Automated tiering reduces cost, while classification tools improve visibility, compliance, and audit readiness.
SAN refresh cycles were already painful—now they’re becoming unpredictable and prohibitively expensive. With memory and storage prices spiking faster than most IT budgets can adapt, many organizations are being forced to rethink how and where their data lives. If you manage on‑premises SAN infrastructure—or are facing an upcoming refresh—this shift in storage economics directly affects your roadmap.
Hardware prices have risen sharply over the past year because memory and storage costs have spiked at unprecedented levels, driven by AI‑driven demand and severe DRAM/NAND shortages. Major OEMs—including Dell, Lenovo, HP, and HPE—are implementing 15%+ server price increases as memory makers shift production toward high‑bandwidth AI components, leaving commodity DRAM and SSDs in short supply.
This same pressure is hitting storage infrastructure: SAN hardware costs are rising as HDDs, SSDs, controllers, and networking components all inherit the same supply‑chain inflation, with vendors warning that cost increases are “more dramatic than any player can mitigate.”
Note: I specialize in NetApp Azure solutions so examples will be Azure solutions.
Shifting storage to Azure means you’re no longer stuck buying big SAN refreshes or guessing how much capacity you’ll need years from now. Instead, you scale up or down on demand, pay only for what you use, and get built‑in security, backup, and high availability without adding more tools or hardware. With on-premises storage getting pricier and harder to maintain, Azure gives you a cleaner, more flexible foundation that grows with your organization.
There are several ways to leverage the cloud – from low effort to high effort. Below are some key options to get you thinking.
Cloud tiering is compelling when SAN hardware prices are rising and budgets are tight—it lets you extend the life of your existing investment while shifting growth to a more flexible, cost‑efficient platform.
When cloud tiering makes the biggest impact:
For many teams, this approach delays a SAN refresh by years while giving them immediate breathing room for growth.
Moving DR data into the cloud helps you sidestep SAN refreshes because you’re no longer trying to squeeze years of backup copies, replicas, and retention policies onto hardware that was never designed to grow at cloud scale. Instead of buying a second SAN—or expanding the one you already have—your DR footprint shifts to a platform where capacity, durability, and geographic redundancy are already built in. And you can by moving DR into the cloud, existing DR hardware can be used for production data.
Why cloud‑based DR takes pressure off your SAN
Most enterprise backup solutions have an option to store backups in the cloud. If you’re not already leveraging this feature, it’s a great way to reduce your on-premises footprint.
Moving backups into a cloud tier takes a lot of pressure off your on-premises storage because you’re no longer forcing your SAN to hold years’ worth of data that rarely gets touched. Most restores come from the newest backups, so keeping only that “hot” layer on local hardware and letting the cloud absorb everything older gives you room to breathe, stretches the life of your existing arrays, and avoids the cycle of buying more shelves or controllers just to keep up with retention policies.
Why cloud‑tiered backups feel lighter to manage
Data that isn’t frequently accessed—archives, backups, compliance records, and historical logs—is often the simplest to migrate because it doesn’t require tight latency or real‑time synchronization. These datasets benefit immediately from cloud durability and low‑cost storage tiers, and they avoid the complexity of moving active, constantly changing workloads.
The biggest differentiator isn’t the data itself but how tightly it’s tied to on‑premises applications. Start with data not tightly coupled with on-premises applications. Then consider moving applications with large datasets to get the biggest storage space savings for your effort.
Once organizations decide to shift some storage responsibility to the cloud, the next question becomes how to do it without disrupting existing workflows or retraining teams.
Cloud Volumes ONTAP on Azure is essentially a way to bring the ONTAP experience you already know into the cloud, so your data behaves the same whether it’s on-premises or in Azure. Instead of refactoring apps or juggling different storage tools, you get a familiar set of features—NFS, SMB, iSCSI, snapshots, replication, and efficiency—running as a software‑defined storage layer on Azure. It gives you the flexibility of cloud infrastructure with the comfort and control of ONTAP’s data services.
What it actually gives you in Azure
Azure NetApp Files is an Azure‑native, high‑performance file service that gives you the feel of on-premises enterprise storage without the hardware, making it easy to run demanding workloads in the cloud using the same NFS and SMB protocols you already rely on. It delivers all‑flash performance, sub‑millisecond latency, and multiple performance tiers you can switch between on the fly, so you can match cost and performance as your needs change. It’s designed for everything from home directories and shared file services to databases and HPC, and it supports both Linux and Windows workloads without refactoring.
What makes it easy to work with
As SAN hardware costs continue to rise, the question isn’t whether storage strategies need to change—it’s how quickly organizations can adapt without increasing risk or complexity.
If you’re worried about increasing SAN hardware prices, it’s time to start planning NOW. Reach out to your NetApp Azure seller and/or your Microsoft Azure contact to review options and see what the best options for your organization are.
Just want to fill in a gap in our public documentation. The Account Owner ID (displayed as email address) must be unique across the Azure environment (i.e. unique across the entire public cloud or the entire Azure Government cloud).
This is because subscriptions created by the Account Owner inherit settings like enrollment ID, AD tenant, etc. from the Account Owner. If the Account Owner sits in two enrollments, the subscription won’t know which to inherit from.
When my customers get started with Azure, one of the first things that trips them up is the terminology. This is a quick primer of the terms you’ll encounter as you begin your journey.
The Azure enrollment is an Azure usage agreement often tied to an Microsoft Enterprise Agreement. One enrollment = one bill. Under the enrollment you create Azure accounts, subscriptions, and ultimately resources (VMs, storage, DBs).
A tenant is a instance of Azure Activity Directory (AAD). A tenant is similar to a Windows AD domain. Within the AAD you can have users, groups, etc. Each instance of Azure, O365, Dynamics, etc. requires a tenant. These tenants can be shared or you can use a unique instance for each one.
*each subscription can use a separate tenant*
https://docs.microsoft.com/en-us/azure/active-directory/develop/quickstart-create-new-tenant
An Azure subscription is the unit where all resources (VMs, DBs, etc.) reside. The this is the highest level in an enrollment that can incur charges. A subscription is equivalent to an AWS account.
When talking about VM data encryption a lot of customers start looking at Azure Disk Encryption (ADE) and Storage Service Encryption (SSE). These two offerings are similar, but unique. Whether you stick with SSE (always enabled) or add ADE on top is up to you – really it depends on your security needs and design.
Below is my quick breakdown of the pros and cons to help you decide what is the best design for your organization.
SSE (default)
ADE
and thanks for Eric Marks for raising this question!
When you’re getting started with Azure there is so much to learn and so little time! Below is a quick summary of the resources I recommend to my customers as they start ramping.
Update 08/30/2019 – see also https://docs.microsoft.com/en-us/windows-server/get-started/azure-hybrid-benefit#how-to-maintain-compliance
Hopefully by now you are familiar with the Azure Hybrid [Use] Benefit (https://azure.microsoft.com/en-us/pricing/hybrid-benefit/) which allows you to save ~45% off the list price for Windows VMs, SQL VMs, and Azure SQL in Azure. For those organizations with an Enterprise Agreement that includes Software Assurance this is an easy way save in Azure.
Microsoft doesn’t talk as much about staying compliant – i.e. not using more licenses than your agreement provides.
As the customer, it is your responsibility to stay in legal compliance with your license agreement. While we don’t have a single tool to facilitate this “true up” (after all, the licenses span Azure and your other environments), we do have a high-level process and clear ways to track AHUB usage.
1. Check in Azure to see how many AHUB cores are deployed per https://docs.microsoft.com/en-us/windows-server/get-started/azure-hybrid-benefit#how-to-maintain-compliance
2. Using your own tools, scan your other environments (on-premises and other clouds) to determine how many licenses are consumed outside Azure
3. Review your agreement and see how many licenses you have paid for
Then simply do the math.
Licenses Paid – licenses used = Licenses remaining
If you used more licenses that you have paid for, you must purchase more licenses or turn off the Hybrid Use Benefit on servers that are in excess of your agreement (see https://www.youtube.com/watch?v=YPv5SpTbzWs&t=23s for instructions).
This is something that will be discussed at enterprise enrollment renewal – but ultimately it is YOUR RESPONSIBILITY to stay in compliance at all times.
When I first meet with new Azure EA customers, one of their first topics is “how do I set this up?” Azure is very flexible, but this means you have design decisions to make:
While there are wrong answers, there is no one right answer. Each organization will need to evaluate their needs, organizational structure, and use case(s) to see what works best for them now. And if things change in the future, this design should change too.
Let’s break down the different control points.
First off, consider if multiple enrollments are needed or if multiple subscriptions within a single enrollment will suffice.
| Subscriptions | Enrollments | |
| Separate Invoice | X | |
| Able to view charges at this level | X | X |
| Can use unique AAD Tenant | X | X |
| Can view charges in EA Portal | X | X |
| Can share an ExpressRoute | X | X |
| Simple to Administer | X | |
Then consider how to further separate resources leveraging subscriptions and resource groups:
| Resource Groups | Subscriptions | |
| RBAC supported | X | X |
| Easy to view Billing | X (in Azure portal only) | X (in EA and Azure portal) |
| Resource can be shared across | X (natively) | Requires additional configuration and only some resources are supported |
| Azure Policy supported | X | X |
| Best for Sandbox | X | |
| Best for restricting access in a common environment (i.e. PROD) | X | |
| Simpler to Administer | X | Multiple subscriptions create administrative overhead |
| Can share a single ExpressRoute | X | X |
Keep in mind subscriptions can be grouped and administered in a hierarchy using Azure Management Groups (https://docs.microsoft.com/en-us/azure/governance/management-groups/). Management groups allow you to set Azure Policy and RBAC centrally for governance with low overhead support.
Finally, in the EA portal itself make sure you are thoughtful in how roles are assigned and controlled.:
That’s my two cents on how to get started, but keep in mind this is a journey. I recommend lots of whiteboard sessions to play with the different options and then test them out again real-world use cases. The best designs appropriately limit access but are easy to implement and maintain.