Are As-a-service Storage Models Immune to Tariff Downsides?

As organizations try to make sense of the rapidly changing tariffs landscape, everyone in IT—from OEMs and MSPs to customers—is scrambling to adjust. Because of the global nature of technology manufacturing and supply chains, and the outsized importance of the higher tariffs on trade with China, the risks and potential impacts are enormous. Price increases are expected, but the lack of clarity in how and when tariffs will be applied and what the timelines are has only added to the challenges. 

IT leaders have to make near-term plans on the fly while at the same time plan for a variety of future scenarios. In response to the possible U.S. tariffs, supply chains, manufacturing locations, and procurement decisions are all being completely rethought. Here’s our roundup of how various stakeholders are responding to the potential tariffs, with a focus on data storage.

Enterprise IT Is in Limbo

Enterprise IT leaders are in the same predicament as everyone else when it comes to tariffs—that is, trying to use a crystal ball to predict the future in the midst of near-daily changes in the tariffs plan. 

Should they preemptively stockpile hardware in anticipation of growth? What if growth is lower than expected and they end up with expensive, underutilized assets? Do they migrate more of their operations to the cloud to avoid tariff uncertainty? Do they diversify their providers and increase redundancy to mitigate risk? Do they need to rethink “just in time” provisioning? There are no clear answers yet, but IT leaders are scoping out plenty of “what if” scenarios. 

‘Just in Time’? Or ‘Just in Case’?

Prices are sure to increase eventually for all hardware categories should tariffs be applied for long enough. But supply chain impacts could be just as significant. Lead times could be affected; stockpiling of inputs by some manufacturers could cause shortages for others. And while higher costs from tariffs can be dealt with in a variety of ways, having to go without needed equipment could be even more costly to both suppliers and customers—creating backlogs, holding up expansion plans, and delaying go-to-market plans.

The “just-in-time” manufacturing concept has gained popularity for both manufacturers and customers across industries. IT OEMs can use “just in time” to reduce their inventory footprint for both parts and finished product while still responding to swings in customer demand. Similarly, customers can use it to spread out or even reduce costs by reducing ownership of idle equipment.

However, “just-in-time” manufacturing relies on stable trade rules and easy movement of goods and materials with minimal added costs. The tariff conversations may upend all of those prerequisites. With still-fresh memories of the chip shortages of the Covid era, many IT leaders are all too aware of the importance of resilience. As a result, the “just-in-case” approach—a prioritization of resilience over cost efficiency—has now come into the conversation. 

OEMs May Consider ‘Nearsourcing’

The tariff “semiconductor exclusion” declared by the U.S. exempts a range of computer and electronic parts and items, including memory components, from additional tariffs. OEMs have a variety of ways of responding, starting with relocating manufacturing or assembly plants. Taiwan, Korea, Japan, and Southeast Asia are likely to see more production as OEMs leave China due to tariff and geopolitical concerns. For example, Apple recently announced plans to shift production of U.S. market iPhones to India by 2027.

OEMs could also leverage low-tariff countries as sites for assembly. Mexico may be a logical place for such “nearshoring” to serve the U.S. market, if parts and components end up being imported from Asia to Mexico without tariffs, and finished products can be exported to the U.S. with Mexico’s potential lower tariff rate.

Comparing Hardware Procurement with Storage as a Service

The tariff avoidance ideas above involve long-term planning and would take several years to complete. In the near term, most storage OEMs may need to continue with existing operations and find creative ways to ensure continuity, defray costs, and insulate their customers. 

A likely solution is storage as a service (STaaS), which can help reduce tariff uncertainty when capital expenses are on the table. Transitioning storage from capital expenditure in the form of hardware purchases to operational expenditure in the form of storage as a service gives organizations financial and operational flexibility that can help manage potential tariff-related cost issues. 

Storage-as-a-service options, such as Pure Storage® Evergreen//One™, help customers navigate tariff risks in a variety of ways. The most obvious one is the nature of long-term agreements that lock in costs. These contracts not only provide a buffer against cost increases but also offer much-needed cost certainty, the one thing in short supply in today’s environment.

As a service provider, Pure Storage has the ability to maximize equipment lifespans by upcycling and recycling equipment whenever possible. Customers also benefit from the longstanding vendor relationships and purchasing power of the Pure Storage DirectFlash® Module supply chain, providing a hedge against price increases and bolstering resilience. If hardware cost increases lead to price increases, those effects can be spread across a large customer base and spread out over time, further protecting customers. 

In contrast, storage vendors lacking subscription-based services have fewer options for minimizing cost increase impacts on their customers. They can absorb the cost themselves, taking it right off their bottom line, or they can pass the cost increases through to customers and risk impaired competitiveness. 

Next Steps: How to Mitigate Potential Tariff Impacts to Storage Infrastructure

Organizations can take several steps to protect storage investments and de-risk storage environments for the (uncertain) future:

• Evaluate existing quotes and consider accelerating purchases before tariff-related price increases may take effect.
• Assess the total cost of ownership for traditional purchases versus as-a-service alternatives.
• Review contract structures to incorporate tariff adjustment clauses and flexible capacity commitments.
• Explore multi-cloud storage strategies to maintain negotiating leverage and avoid vendor lock-in.

Develop application-specific data retention rules to minimize unnecessary storage costs.

Implement sophisticated tiering policies using AI-driven automation to optimize placement across performance levels.