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Observability Market Idea Proposal (DDOG, DT, ESTC, NEWR, SPLK)

Observability Market Idea Proposal (DDOG, DT, ESTC, NEWR, SPLK)

How will New Relic’s new pricing model in the observability space affect Dynatrace and the rest of the industry?

Report Available: September 10, 2020


Blueshift’s ongoing research found NEWR shaking up the observability market with a combined product and new pricing model. The pricing is designed to remove the financial disincentives for companies to broadly apply observability across the industry’s entire production ecosystem. As the digital transformation of virtually all business processes continues to rage, the demand for application performance monitoring (APM) and observability SaaS is exploding, but it can be expensive. The combined product and new pricing model being offered by NEWR is in its early stage and early reaction from industry experts is positive. How the pricing will impact competitors and the overall industry remains to be seen.



  1. Observability has gained a lot of popularity lately, however it was introduced over seven years ago in a Twitter engineering blog. Observability is the combining of metrics, events, logs, and traces in complex software environments and is essential to understanding and making sense of the performance of all of a business’s applications. Used in conjunction with APM, the goal of observability is to answer any arbitrary question at any point in time about what is happening inside a complex software system. The market for APM and observability is lucrative and highly competitive. An Aug 3rd blog post by Hayden James lists 100 companies providing the service including DDOG, DT, ESTC, NEWR, and SPLK. Gartner calls this market IT Operations Management (ITOM) and estimates it will reach $37B in spending by 2023.
  2. APM and observability tools are expensive and typically involve a per node or per server-based pricing model. A company performing APM and observability typically uses a combination of tools, leading to hidden costs and difficulty calculating and tracking different costs for monitoring capabilities throughout its stack—running hosts, computing units, page views, events, retention, spans, invocations, and logs. This opaque pricing model drives a company to limit instrumentation to only a small subset of systems which provides less than optimal performance.
  3. On July 30, NEWR Founder and CEO Lew Cirne announced the reconfiguration of its New Relic One and its entire product suite into three products, offering simple pricing and packaging. The new standard plan is $99 per user/month and includes one free full access user. Each month a company can ingest 100 GB free and then pay only $0.25 per GB ingested after that for all its telemetry data. The $0.25/GB is up to 95% lower than some of NEWR’s major competitors.
  4. The industry reaction to NEWR’s new product offering and pricing has been positive. Jason Bloomberg, president of industry analyst firm Intellyx said, “New Relic is changing the economics of observability by empowering companies to leverage all available telemetry at dramatically lower cost than before. For companies that leverage modern IT infrastructure, correlating all available performance data with the performance of their business has become mission critical. New Relic is removing the barriers to deploying essential observability across a company’s entire production environment.”
  5. Blueshift’s past work in the space said that ESTC’s top-notch solutions should continue to grow. Sources in Blueshift’s Feb. 6 report said ESTC offers a fast, powerful stack of enterprise search and monitoring technologies whose popularity should continue to rise. The underlying software’s ease of use, an active developer community, and frequent updates have combined to make Elasticsearch and its related tools the platform of choice for a wide range of uses and industries. Sources added that ESTC is well positioned in the observability space and could develop a unified solution for tasks such as application monitoring, logging, and SIEM (Security Information and Event Management). ESTC faces some challenges in getting users to pay for licenses rather than choose the free, open source version available from both ESTC and AMZN. This preference for the free version supports NEWR’s reimagined product and pricing model approach.


Will NEWR’s new pricing model truly be disruptive? How does NEWR’s new pricing compare to the industry standard pricing model? How will NEWR’s pricing model impact a company’s bill for observability? Will the new pricing model drive wider adoption? Will the industry change to a NEWR-like pricing model? How will the new pricing model impact observability ROI? How will competitors like DDOG, DT, ESTC, SPLK and others be impacted by NEWR’s new pricing approach?  To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Observability customers, Observability companies, Observability sales channel, and Industry specialists.  


Companies: Datadog Inc. (DDOG), Dynatrace Inc. (DT), Elastic N.V. (ESTC), New Relic Inc. (NEWR), Splunk Inc. (SPLK)


Research Begins: August 24, 2020


To see other ideas Blueshift Research is currently working on, please click here.


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