>> Announcer: Live from San Francisco, it's theCUBE!
Covering Pure Accelerate 2017.
Brought to you by Pure Storage.
>> Welcome to Pier 70 in San Francisco, everybody.
I'm Dave Vellante with my cohost Stu Miniman,
and this is Pure Accelerate 2017.
Pure Storage in 2009 started a big wave of flash migrations,
and the company's strategy was to specifically go after
the large EMC Install base of older Symmetrix, mainframe
class storage, and even to a certain extent VNX and
Clariion, if anyone remembers those terms, the Install base.
Pure's ascendancy was really a function of shifting
from spinning disk to flash.
Fast forward seven, eight, nine years later, and Pure is
talking about big data and AI and machine learning and IoT,
and is really trying to completely transform not only
the storage industry but itself as a leading player.
The last time an independent storage company hit a billion
dollars is about 20 years ago, a company called NetApp.
Pure is trying to be the next
to be a billion dollar company.
Stu Miniman, lot of action goin' on here, used to be
back in the day, I bought EMC for block, NetApp for file.
Pure is trying to change that.
>> Yeah, and Dave, you know storage,
we've talked about it when Dell bought EMC.
What did that mean to the whole storage industry?
I wrote an article when it happened and said it's the end
of the storage industry as we know it.
When I came in here, it was like, oh,
we're going to be talking about storage.
You mentioned NetApp; I was at a NetApp event last week,
and they said, "Storing is boring."
It's really about the data, it's about the new applications.
I really liked in the keynote they were talking
about new use cases, new applications,
how do they fit into that multi-cloud world,
really interesting to hear Scott Dietzen,
who we've known since this company was in stealth,
laying out where the company is.
They've got over 33 hundred customers,
lot of SaaS applications, they're talking a lot about
the machine learning and the AI pieces that are in here,
but at the end of the day, I mean Dave, this is their
primary business is a storage array replaces,
as you said, the traditional EMC boxes that used to be sold.
So how much of this is still kind of an update on what
the legacy is doing, how much are they ready for the future?
I'm excited to dig in with some real customers here.
Pure has a good movement, good customer base,
I've always had some good smart people with good tech,
the Puritans as they call them, all wearing orange here.
So, a cool venue and excited to dig in.
>> Well, it's one of the fastest-growing companies
in the storage business and in the IT business,
and the way that Pure has gotten there isn't,
you know, in its early days it never really talked
much about so-called software-defined, it just did it.
One of the problems that Pure attacks
is the problem of migration.
David Floyer and Wikibon have written extensively
about the cost of migration, the pain of migration.
It was almost just assumed, well you know,
if I'm buying storage I'm going to have to migrate,
and I'm going to spend 50, a hundred,
sometimes many hundreds of thousands of dollars
migrating my workloads from older arrays to newer arrays.
Pure Storage has this Evergreen concept,
where through the use of software and software-defined
technologies, it's able to upgrade new customers
quote-unquote seamlessly, there's that overused word again,
but it's able to deliver essentially storage as a service
even though you're putting an appliance on their site.
So it's a radically different model.
They've announced some things today, for instance like
three site data replication, which is very very complicated.
Trying to simplify that, so a lot of really novel ideas.
Again I come back to their ascendancy.
It was really based, Stu, upon attacking the slow,
expensive spinning disk using its data reduction technology
to create parity between the cost of spinning disk
and the cost of flash, something David Floyer predicted
back in 2009 would happen by 2014 for the high-spin speed.
Now with FlashBlade, which is essentially the file-based
system that Pure has, they're going after that same mantra
with higher-capacity spinning disks,
really going after the NetApp base.
>> Yeah, and Dave, you mentioned that Pure could be
the most recent billion dollar storage company.
The company that might actually
beat them to that is Nutanix.
Now of course, Nutanix sells more than just storage.
They're hyper-converged infrastructure,
which means the compute that they're also selling,
that's being used there, so it's not quite apples to apples,
but the last quoter Nutanix had, about 10 million dollars
more in revenue than Pure did; they also had IPOed.
In that hyperconverge trend, one of the things that I saw
early on on that, Dave, was attacking that migration cost.
Hyperconverge, like what Pure does,
a software layer, you create a pool of architectures,
I can add in nodes, I can change configurations,
I can update without the traditional way
that we used to do it in storage, which was buy that box,
take months to get it in there, load it up,
transfer it over, retest it, you know all of those things
that really kept your time-to-value on storage down,
and that's something that Pure and all the hyper-converged
players have been attacking, that kind of legacy mindset
that we had in storage for so long.
>> Yeah, and of course Pure's approach to converged
is in partnership with Cisco and presumably others,
I'm not actually sure about that, but Cisco's the main
partner there with FlashStack, that's their converge play.
They kind of do a knock on hyper-converged,
kind of de-positioning it as sort of low-end,
sort of contained,
within small remote offices,
whereas they're positioning FlashStack
as the scalable internet infrastructure.
Pure does very well with SaaS companies,
they do, they're increasingly doing better with Fortune 500,
they've still got a long way to go there.
About 80% of their business is U.S.,
so there's a lot of upside internationally.
We're talking about a company that'll be a billion dollars
in their fiscal 2018, which is fundamentally the year
we're in now, they've got about a 2.4 billion dollar
market cap, they're growing at about 30% a year.
And very interestingly, they had mid-60% gross margins
at one point last year, they had like 69.6% gross margin,
which is unheard of, you know, we haven't really seen this
since back in the heydays of NetApp and EMC.
The question is, is that sustainable?
And of course the big question that we have today,
and we're going to talk to Scott Dietzen, nickname Dietz,
lot of nicknames here at Pure Storage, about is
the concept of a large independent storage company.
That concept is going away, it's like extinct
except for one company really, NetApp is the only
billion-dollar storage company left.
It's been 20-plus years,
maybe even 25 years since that's occurred.
What are your thoughts on that, Stu?
You know, I wrote a piece maybe eight years ago,
Can EMC Remain Independent, recognizing that
most of EMC's value was coming from Vmware
and of course EMC could not remain independent.
Do you think a company like Pure can unseat the leaders
of Dell, EMC, HPE, IBM, and remain
an independent storage company?
>> Well, one of the things I always look at is what is,
where are they going to hit their plateau?
They're reaching towards billion dollars
and they do continue to grow.
I think that Pure still has plenty of headroom,
but how long does it take them, Dave,
to get to three or five billion dollars?
The reason I throw out that number is that's probably
how much storage Amazon's doing today.
You know, look at Amazon, it's a 15 billion dollar company,
somewhere between 15 and 30% of Amazon's business,
and nobody in the storage business talks about that
because it just ties to my applications.
So I want to follow the applications, follow the data.
It's good to hear that Pure is
getting in with a lot of SaaS providers.
From Wikibon data, 2/3 of the public cloud data,
I'm sorry, of the public cloud revenue, is SaaS providers,
so absolutely here come these like Pure, SolidFire sold,
before when they were an independent company,
sold to lots of service providers as well as SaaS providers.
Kaminario, a Massachusetts-based flash company, sells to
I believe it's about half of their business,
is selling to the SaaS providers because these are companies
that look at, okay I need to own how I scale my environment,
own those economics, and need to grow that.
And just one more piece on that economics, Dave.
Look at that kind of multi- or hybrid cloud world.
I bristle a little bit when I hear Scott Dietzen
kind of almost say, public cloud, it's in the corner.
about 20% of the use cases fit in that environment,
yeah we'll do snaps to Amazon, we'll do some other things.
But you don't put the public cloud in the corner
and just say, oh, 20% of the market's there.
'Cause that's today, and it is still growing 50, 75, 100%
depending on which public cloud you're talking about.
We think that there's still plenty of upside,
and when does that become a headwind
that will slow the growth of what Pure's doing?
You see a lot of the other software storage companies
out there say how do they become software?
When we were at the Veeam show, Dave, how did,
they really were, we're going to live in Azure.
We're going to partner with AWS, and they don't really care.
Pure very much, their growth, their revenue,
and their margins today are all built that they're going to be
selling gear with that, yes they have the Purity 1 software
and they have some cloud plays, but very much seems to be
saying that public cloud's not the direction.
I'm sure Scott will probably give us
a little more nuance there, but you know,
that legacy change to new distributed architectures
has been a tailwind for Pure, and when will cloud
be something that will push against their growth?
>> Well, we're going to ask Scott Dietzen about that,
and you're right on, I mean public cloud
clearly is growing, I mean it's growing like crazy,
particularly the SaaS component of that.
Now of course, that can be a tailwind for Pure
because they do sell to SaaS companies.
They even, Scott even had a slide up there today
showing Google, Uber, Facebook, AWS.
Did you infer like I did that they were implying
that they were selling to those companies, or?
>> No, no no, I saw because in the last quarterly report
they talked about basically the number four
through a thousand. >> Dave: Four to a thousand.
>> Dave: Right. >> So they're not selling to
the top three, that they're clear on.
>> So, okay, so the top three would be Amazon,
Google, and Microsoft-- >> Right.
>> But then there's Facebook, and Uber, possibly they could
sell to those companies, Spotify is a SaaS company,
so that SaaS part of the market is growing like crazy.
Now the other point is, Wikibon released a study.
We've been talking about it for the last couple of weeks
in theCUBE around the true private cloud market forecast.
True private cloud is an on-prem infrastructure that
substantially mimics the public cloud at a much lower cost.
We came up with this notion of true private cloud
because there was so much cloudwashing going on,
which really was virtualization.
Now, the true private cloud is growing actually faster than
any other cloud segment, now from a smaller base, granted.
But we see about a 230 billion dollar TAM
over the next 10 years evolving.
Now, the most important part of this, and Scott Dietzen
touched upon this in the morning, as did Hat,
using some nicknames again,
that companies are really focused on lowering their IT labor
costs, and we see 150 billion dollars, approximately,
of IT labor moving out of nondifferentiated heavy lifting,
into what we sometimes call vendor R&D.
In the form of cloud, or on-prem products, appliances,
and other software frameworks that can automate
and eliminate this low-value provisioning
and patching and LUN management.
So, Stu, you were very much involved in that
true private cloud report, that market's exploding.
I mean, to me, it's all about TAM expansion for Pure.
They're a billion dollar company, roughly,
they're participating in a 30 or 40 billion dollar market,
so they have a long way to go.
>> Yeah, absolutely.
Because really, Dave, it's about the application.
It is not a winner-takes-all environment.
When you look at multicloud, it's what applications,
and even we start teasing apart pieces
of my applications and where they live.
So, I look at, there was a nice logo slide that Pure put up,
and you say okay, Hulu is a customer.
Well, is Pure helping with their CDN?
I really doubt it.
You know, you look at Workday.
Workday, up on stage at Amazon Reinvent talking about
how they partnered with Amazon.
So what applications is Pure winning,
which ones are their customers using the public cloud for,
and how does all of that sort out?
Absolutely, true private cloud is really that reinvention
of the data center, that flipping, if you will, of
I mean Dave, you probably know better than me,
that saying that IT spends 80 or 90 percent
of their budget on keeping the lights on.
How do we flip that so we can spend money on innovating,
driving the business forward, stop spending on
one of our favorite terms, undifferentiated heavy lifting
and move to innovate and drive the business,
and have IT serving those applications
and serving the things that help me differentiate
from the competition and move faster.
Because, absolutely I'm sure something we'll hear this show,
is it's that agility and that speed is what companies need,
and Pure with their six nines of availability
and that if you buy it today you're future-proof,
if you will, is going to help customers say that they can
have a platform that they buy today
and know it's going to serve them well in the future.
>> Well, Mark Benioff I think was the first that I heard
said it, or it might've been Peter Burns, I can't remember,
but basically there're going to be many more SaaS companies
coming out of non-tech companies than tech companies.
That to me, Stu, is a big, big tailwind for a company
like Pure who's software first, software-defined,
knows how to sell to SaaS companies.
The other thing is, Pure's the latest company.
They didn't say this but they certainly, one could infer it,
the latest company to basically say tape is dead.
So it used to be offsite backup the tape,
now they're talking the flash to flash to cloud
as the long-term retention.
So a lot of really interesting things going on here.
The venue is actually quite amazing, it's at Pier 70,
this place is going to get torn down right after this show,
it's a place that used to be an old steel mill
that used to make battleships here,
about two battleships a year during World War II.
>> Yeah, the new Warriors facility
is going to be here in Dogpatch soon,
and I know everybody's super excited about that.
>> Yeah, well, yeah, a lot of purple hats here,
a lot of excited Warriors fans.
>> All right, we'll be back, we've got day-to-day
all day, wall-to-wall coverage
of Pure Accelerate, #PureAccelerate.
This is theCUBE, I'm Dave Vellante with Stu Miniman,
we'll be right back with Scott Dietzen
right after this short break.
(upbeat electronic chords)