>> from Austin, Texas. It's Theo Cube covering your storage accelerate 2019. Brought to you by pure storage. >> Welcome back to the Q. We are wrapping up day two of two days of coverage. We're getting some applause. I'm pretty sure that's for us. At pure accelerate. 2019. Lisa Martin flanked by two gents Day Volante and Justin Warren. You probably know Justin, who's been on the Cube many times and less. Chief analyst. A pivot. Nine. Justin. You have been covering this event and well as an independent, so we want to get your take on this two days. We've had our 1st 2 day for the Cube covering pier storage. We've spoken with lots of people, cause Charlie kicks. I'm sure there's more nicknames that I'm forgetting customers. Partners. Dave. Let's do a quick recap of some of the trends and the themes that we've heard the last couple days. And then we'll get some independent analysis. Justin on Not just what you've heard the last three days, starting with a tech field day, but also just your history of covering and working with here. >> Well, so for my sample, its story of growth they even started pure starts all the press releases with the only company that's growing on the growth storage company. The growth in the first. So so this growth is a financial story there. Um pure is going for growth, the markets rewarding growth right now. So it's smart, double down on growth. That might change at some point on. We talked about Charlie Jean Carlo about this, and they'll decide what what they do at that point time. But But from a financial standpoint, growing fast, uh, like their balance sheet, be interesting to see if they can leverage it. Maur. But maybe they're using it for Optionality. They'll do 1.7 this fiscal year. 1.7 billion. That's good. They got 70% gross margins. It a little bit of free cash flow. Not much because they pour it back into the business. So story a growth that's number 12 was differentiation. Um, I think it it's pretty clear that their products are differentiated from the sort of big portfolio companies. I mean, it's it shows up in the numbers and the income statement, and it shows up when you talk to customers simplicity, the whole A P I thing. I guess the third is products. I mean, they're embracing the cloud, which is kind of interesting. I don't think they're gonna do a ton of business with block storage for AWS, but it's an interesting hedge, and I think it's really cool from an engineering standpoint on, I think you know, two other things. Culture but orange. They're different, They're cool. They're hip and customers, which at the end of the day, that's where the rubber meets the road. Customers happy you talk to companies are customers of companies like pure service now Splunk Nutanix >> Uh uh, >> and some others. And they're happy. They love it. It's transforming their business. Snowflake is another one. Really? How come you AI path is another one? These are the hottest companies in the business right now, and you can tell when you talk to their customers is good story >> and their customers articulate their differentiation for them pretty darn while what? You know, we've spoken to a number. I think four or five customers the last couple of days, and they're not talking about Flash Ray flash blade X M flashback. They're talking about their business and how the I T is benefiting from that and how the business is benefiting from that. You also see piers very vibrant culture being embraced organically by their customers. There's plenty of customers walking around and the brightest orange I think I've even seen here. So there they're differentiation. Their culture, their customer experience and their ability to really differentiate three that are were loud and clear for what I heard through the voice of the customer and the partners, Frankly, as well. >> So I guess, Justin, I mean, the other pieces Tam expansion 1st 10 years, Cloud New Way I workloads partnerships with backup companies growing. The Tim I've said the 1st 10 years is probably gonna be easier, and I know that's a terrible thing to say, but don't hate me for saying it pure. But then the next 10 because they're up against the flat footed E. M. C. That was getting pounded by Elliott management with pressures to go private, trying to hang on to its legacy business and then got acquired and distracted by Del. So that was a really tailwind for Pierre. Now it's like Cloud guys got their act together, you know? Aye, aye. Everybody's doing A s. Oh, so they get some challenges. But what's your take? I think I've >> still got an advantage. Talking to some customers, 11 in particular was quite clear. That they saw pure is having at least a 2 to 3 lead through 2 to 3 year lead on the technology from some of their competitors. So they shopped around and they had a look at some of his competitors, and they thought that actually they were trying to sell me technology that's 234 years old and they quite from them, was that this is something that I could do myself, so they clearly see that pure provides them with something that they can't do themselves. So pure has an advantage there. I also think that the way that the market is changing advantage is pure, a little bit as well. So you mentioned Cloud there, Dave and I think that we've all seen that people have realized that multi cloud is a thing and that not every workload is going to go to the cloud. A lot of it is going to stay on Prem, so now that that's kind of allowed, people are allowed to talk about that, That there are CEOs who would have been being pressured by boards and so on to say we have to go all in on the cloud. Now they can come back to them and say, Well, actually, weaken, stay on side. That means that we should be looking at some of these onside products, like pure so that we can go on put in storage. A race in a data center may not be our Dana Senate might be in Coehlo, but we have this on site method of doing things. Not everything has to go to the cloud. So I think that will help them with some of the growth. >> So I'm left thinking, What would Andy say? Okay to >> be >> It's the number one hottest company, you know, notwithstanding some smaller companies right now, cos moving the market is a W s obviously Microsoft with the trillion dollar valuation. But Amazon, to me, is the benchmark it. So I feel like Jassy would say, Well, so Hey, Andy, you've acknowledged hybrid, you know? Actually, yeah, I guess he uses that word. Um, and you're doing some stuff one prim, but I think he would say we still believe that the vast majority of workloads are gonna land in the public cloud. And what you just said is what everybody else believes. And to me, they're in conflict and I don't necessarily have the answer. But you got the big gorilla. Now the big claw gorilla is moving. The markets say with one philosophy and they've made some good calls and the entire i t industry. Yeah, the other the inspector. >> Except that AWS has outpost have a product that actually sits on site. And they did. And Jesse last year said that he did say that the boat inward, multi cloud, >> you know, So, uh, sorry. Used the word multi cloud used hybrid hybrid cloud. They don't say that. That's for Boden, but no. But my point is they've acknowledged hybrid, which they never used to talk about hybrid. So they capitulated there The end where capitulated on their claws on its cloud strategy. But he has not capitulated on the belief the firm belief that most workloads are gonna be in the club. I'm not sure he's wrong. >> That may be true, but on what Time horizon? So that's not going to happen next year. But I >> think for sure, >> I pointed out that the agile manifesto came out in 2001. That's 18 years ago. Not every shop is doing software in agile, so enterprises take a long time to change, so there's plenty of room for pure to grow. While that changes going on, even if it if it does go all their own cloud, it's gonna take a long time to get there. And people can make plenty of money in the meantime. >> But I believe you're sorry. I believe pure is growing in what is a crappy market. Yeah, I think the storage market is a crap market right now. It's one that's very difficult. The leader Deli emcees growing at 0%. And that's a goodness because they're gaining share. Ned ABS down last quarter, not minus 16% IBM, minus 21% hp thrilled with whatever 3% or whatever. They're at a minus three. I can't remember now. Here is the only one that showing any substantive growth on my premises there, doing that by having a superior product and business model, and they're stealing share. So and then I ask you this. I I believe in hybrid, by the way. But I'm just playing kind of devil's advocate here. Cloud is growing and it's consistently growing and everybody talks about repatriation. You don't see it in the numbers. Every talks about the large of the law of large numbers like in other words, they hit a wall. You don't see that in the numbers. What you see is the traditional IittIe spaces flattish. The new stuff that they're all developing is not growing fast enough to offset the old stuff. You see that? Certainly. See that IBM. You see that now? Adele, even though they had good bounce back last year. But now you're seeing that Adele Oracle ekes out 1% growth. So the big, uh, legacy companies are growing there, hanging on there, throwing off tons of cash. They got good, strong balance sheets, maybe taking on some cheap debt. But the cloud continues to grow at a pace that I think it's stealing share from traditional I t. >> That's that's a reasonable sort of announcing something. Yeah, whether or not we'll see an increase in growth of onsite, particularly things like EJ computing way, maybe you need Thio redefine what we think of as a data center, and maybe we're not thinking about a broad enough market. I actually think that a lot of those workloads that we would traditionally have said would go on site and cola. I don't think Cola Data Center is actually growing all that much, but I think we are going to see growth in things like EJ. >> So that's a really great point I want. I want to come back to that. But the big question is, then okay. Can cloud be before we get ahead, you can cloud be a tail wind for pure. They've embraced it. 20 years ago, the leaders of a company would say, Oh, no, it's cloud his crap about a peace Caesar of toys You remember that pure embracing cloud, I think, is impressive only from an engineering perspective but business model. So can they make in your opinion cloud a tail wind and an opportunity? Maybe that's where Multi Cloud comes in. >> Yeah, it's tricky. I think it will become more of an advantage once good things like kubernetes and containers matures a bit further and people are used to being able to deploy things in that way, both in Cloud and on site. I think that that's the portability play, and it's more about making onsite more cloudy rather than making the cloud more enterprising, which I think was one of the messages that we had here. Because enterprises a lot of what yours messaging so far. And it's product development, particularly around cloud block stories, to make the cloud look more like an enterprise. Where's what we actually needed it to go the other way. Pure is doing things in that in that regard with pure storage optimizer, which which takes a lot of the decision making a way that from the way you would normally do things on side the way we've gotten used to it, manually configuring things, it's actually turning it into software on just letting computers handle it. That integration with things like the M, where is making things operate a lot more like cloud? So once enterprises become used to operating on a lot more like clouds, I think that's going to be an advantage for pure. To be ableto have that operations be in cloud and then they'll bring in products into in time for that to happen. >> You have the opportunity just in a couple days ago to tend the technical field day, the TFT that pure dead. So you got that double click the day before all the press releases broke about. Some of you know, we talked about the expansion into cloud with aws Maur, their portfolio delivered as a service. The aye aye data hub. But if we look at one of the things that stuck out today was differentiation. We've talked about that a number of levels in the last minutes. But talk to us about the technical differentiation that you've not only heard this week from pure, but that you've been engaging with them for years. You have an interesting story of Of John Cosgrove caused their CEO and founder really describing something very unique. That seems to be quite a technical level of differentiation that you even said We don't see this from a lot of their competitors. Give us a little snapshot of that. >> Yeah, you don't sort of get that level of detail in some of the briefings as well. So it was another tech Field day event some years ago on was talking about flash array and we sat in a room, and they had a flash array in front of us, and I think they were talking about the newest kind of flash they were putting into this. But they described some of the technical decisions they made about the architecture inside the blade. So at that time, and I hope I'm getting all these details correct, they had designed and asic, so to go in front, off the flash so that they could essentially create a layer above above the flash that they could speak to within their software. That meant that it didn't matter which flash foundry they bought it from, because it's slut. There are certain differences around the way that flash works, and they do address the flash directly, unlike buying SS D's and putting them inside the box. So that gives them a performance advantage because you don't have a whole bunch of software translation going on to get into the flash. But that decision meant that they could then change flash foundry without changing the experience off the awful. The software developers up the stack inside their array, so that meant that there cadence of being able to bring out new products and gradually dropped down the cost of the supply of flash, which makes up a large amount of the calls on these particular devices. It provided them with better options so they could maintain, maintain optionality essentially and be very, very flexible and react to the things that they can't predict. So Charlie mentioned in the briefing yesterday that you know, in this industry, you might get a 20% drop in the cost of flash in one month, which will then affect them their revenues in coming months after that, because clearly they want to pass on some of those cost drops to customers. But it needs to be done a certain, more manage way. When you have that kind of dynamic behavior happening in the market, being able to react to that well in something where the hardware design time can be 18 months to two years, building that into your product so that it then provides you with business options as a technology, that's a really impressive way of thinking about how all the different pieces of your company have to interact with each other. So it's not just about the technology, it's about the business and the technology working hand in hand, >> and those lower flash prices should open up new markets for them. Flash a racy I think they call it, is still not at the price of hybrid, I wouldn't think, although they saying it will be. Hybrid arrays are priced around 70 60 70 cents a gigabyte today is according Thio Gardner analysis. Big >> Challenge with hybrid of rays Which flat, which flash around flash or a C wouldn't actually wouldn't have? This problem is the reliability of the Leighton see and predictability. So with an old flash array, you don't get Layton. See sparks if you suddenly exhaust the amount of flash that you have in a hybrid of rain that has to go back to the disk. So if you need that predictable performance, that's why people have gone with flesh arrayed very beginning, absolutely getting that as a capacity tear. I think that provides a lot of reliability, for particularly when you've got large amounts of data need to write flesh >> and the price is coming down and it's maybe it's double now on a per gigabyte basis, that'll come down further. But I welcome back to EJ because I think you bring up a good point And we didn't Thankfully, here a ton about EJ. I think we heard anything about EJ at this show. We didn't get inundated with edge, which we always do with these big shows. And I'm happy about that because I think that that a lot of the companies that we re attend I think they got it wrong. They're taking a box and they're throwing over the fence to trying to do a top down model to the edge. Hey, here's a server or here's a storage device and we're gonna put it at the edge. It's like, OK, well, I think the edge is going to evolve as a software development. You know, play not isn't over. The top is gonna be bottoms up innovation. Now, I don't know question about you know, whether Amazon at the edge vm wear at the edge. Um, but I don't see any traditional i t companies crushing it at the edge there talking about it. They're trying to build out ecosystems, and but nobody's has meaningful revenue today at the edge. But it's a new way to think about this. Distributed massive compute engine >> on. I think we'll start to see that mature as people start to bring out products that actually do operated the way heard from Nvidia about some of their ideas that they have about doing a I processing at the edge for things like image recognition systems, where you train your model on leg large data sets in a cloud or in a data center. And then you shoot those models out two devices that operate on a smaller data set. But for a lot of these things, you need to do data collection at the edge. So Formula One is a classic example based given for the F one racing team is an I. O. T. Company that is connected to a nail and analytics company. Really? >> Yeah, that's right. We did hear about EJ and that an actual use case is in college edge, so there's going to be >> a lot more of that. We have things like sensors are just all over the place, so you know, in anything in retail, if you have fridges in retail and you need to monitor the sensors in those to find out whether or not is the temperature going out out of control or outside of your control limits because that will affect the food that's in that. There's a whole bunch of kind of boring examples that are actually all I OT. So I think some of those will start to push more data into into devices at the edge. And as people's understanding of how to use machine learning and I matures away from the hype, I think we're pretty peak hype at the moment. Once we do actually drop that back a notch and we see that people they're doing really use riel riel world use cases with real world business value that will start to drive a lot more of the growth of practical. And that will drive growth in data, which will need to get close throughout the weather's device. >> I think you're right. I think that date is gonna be at the edge of a lot of that data. I would say most of that date is going to stay at the edge. It's probably it's not gonna says it. Probably it's definitely not going to sit in a million dollar storage array, and it's gonna comprise a lot of alternative processing arm, Uh, GP use versus conventional microprocessors. So >> and that's where I think he was thinking about, like the white pure One works, for example, pure. One works the same no matter what products you have from pure, and they have been very clear in stating that they want to make sure that when they bring out a new array or a new product, it works with pure one. So it's that consistency of experience for their customers, which I think is fairly unique in the industry, is a lot of other products that will come out. And they only partly supported, not full support for their entire race tagging. AMC struggle with that for a long time simply because it has so many products and needed to kill a whole bunch of them first. So when when you have that kind of engineering discipline built built into your company, when you go out and you have customers who have edge devices or you have stuff in the cloud and they have devices on their phones which they used to showing off a conference and say, Hey, come and have a look at my array, it runs on software on my phone that's pure one that software ability that pure has of being able to address this data wherever it is. I think >> there's >> a real opportunity for pure that put that kind of intelligence on to age things. Even if they don't actually sell any flash a raise to those people, they could start to sell them software. >> All right, guys. So 15 seconds each since arose at a time. Computers competitive. Positioning your thoughts in a quick summary about what you've heard the last few days and what Justin has >> to me if I would expect continued growth, forgetting about the macro for a moment, even in gonna grow faster than the market place. Um and yeah, they said they don't throw off as much cash as the big guys. So it's gonna be a game of the big guys do in stock buybacks, free cash flow and pure storage. Investing in growth. >> Excellent. Justin. >> Yes, I agree. I think they're going to double down on the R and D spend to make sure that they maintain a technological advantage over their competitors. The biggest risk of pure is if the other players, you know, the deal emcee other plays in that big online storage market. If they actually get their act together and start bringing out competitive products, that's the biggest threat to fuel. But pure has a big lead on them. I would say, >> Yeah, I think the last thing cloud, you know, kind of a question Mark. And I think the m where to me, Del. Of course I care about storage is huge business for them. They're all above the M where and to the extent that they can leverage VM where, you know, as a competitive weapon, they'll use it against anybody you know. Damn the ecosystem. >> Excellent. Well, thanks, guys, for a great wrap up to our two days here for Justin Warren and Day Volante. I'm Lisa Martin. Thank you for watching the cubes. Coverage of pure accelerate 2019.

>> from Austin, Texas. It's Theo Cube, covering your storage. Accelerate 2019. Brought to you by pure storage. >> Welcome to Austin, Texas. This is the Cube. Live at the fourth annual pure accelerate. I'm Lisa Martin with David, Dante, Dave or in Texas, >> Texas again. >> Austin, Texas. Very interesting venue for this fourth annual hear stories. >> A lot of construction, >> music, a >> lot of music. >> So we just came from the keynote and news announcements, customers on stage. But the first thing to point out is, this is here is about to celebrate their 10th anniversary. Charlie Giancarlo, CEO and chairman who's coming on the program with us, and just a few minutes talking about what they have innovated and delivered these 10 X improvements and 10 years kind of this overnight success in 10 years and what's coming? What was with the things that really stuck out at you, Nicky Note. >> Well, first of all, ironically, this is the 10th year of the Cube, not our 10th anniversary, but it's the 10th year of doing the Cube. And so our fourth year, I think it's pure accelerate about what 3000 people here, >> you know, the keynotes >> pure was laying out what their vision is of the modern data experience and that I felt like the keynotes least there were sort of, ah, speed date of what's coming. There was a couple of major announcements that we'll talk about, >> Uh, but >> they really are trying to differentiate as the modern storage company turn a deep position. The competition, as the old guard is to use this term that Andy Jassy uses pure, didn't use that term. But they really talked about it's time to go Modern. And so they were an overnight success. It took him 10 years, was one of the comments that was on stage. So I think this is worth pointing out. A couple of things. I mean, let me lay out. Sort of my thoughts on Pure is a company. They were the only storage company Ah, in the past. Let's call a decade to reach what I'll call escape velocity. They achieved a billion dollars a couple years ago. They're doing their due about a billion and 1/2 on a trailing 12 month basis. They'll do 1.7 billion this year and evaluations about 4.5 billion. So they got a a three ex valuation in that fluctuates. That's pretty good for a storage company. Billy on Lee major storage company. That's really growing rapidly. They got 28% growth. I did a breaking analysis on Lincoln, and I'll just share with you some of the numbers. Dallas flat at 0%. So Del is actually gaining share with no growth has got a scary NetApp minus 16% in the quarter H P E minus 3% IBM minus 21%. And so it is pure A 28%. So they're really crushing it in terms of growth. They've also got a 69% gross gross margin, even if it's in its heyday. E emcees gross margins weren't that high, you know. They were in the sort of mid sixties, and so, and they've also got a good balance sheet. About a billion dollars in cash A little. A little more than that, they got some debt. They're shifting their model to a deferred revenue model. Now the only thing is, you know they're growing much, much faster than the competition. But they're throwing off a lot less cash because they're much smaller. Just as an example, they probably throw off 5 to 6% of their revenues in cash. Netapp probably throws about 23% of its revenues, often catch the big Delta there, so the point is long winded. But but pure storage is in growth mode. And until the market rewards more consistent with a cash flow, they're gonna, I think, stay in huge growth mode. >> There was a great analysis. Dave and I saw an analysis that you did with some spends data, just a couple of your reverence. A little bit of that. There's there seems to be a tailwind behind here you mention the 28% wrote that they announced in Q two, and some of the things that also they talked about were there. Adding about in Q two of F Y 2020 about seven net new customers every business day, adding about 450 new customers just in that quarter. Like you said, 3000 folks expected here today. The momentum is behind them, but they're also a company of firsts. You talked about this a number of times. The first, with all flashed the first with envy me on the back and a couple of additional firsts announced today. Talk about the as a service model and how that youth, in your opinion, you think might continue that trajectory that they're on. >> Yes, so basically pure laid out today, said that vast majority are Pouliot Portfolio is gonna be available as a service. That's the cloud consumption mall is important because pure has about $600 million in deferred revenue, largely coming from their evergreen service. But there they are, slowly shifting their model to a subscription model. It's gonna be very interesting to see how that plays out. Um, we've seen a number of companies do a tableau in Adobe kind of pulled the band Aid off and did it Splunk has taken years to do. It will be interesting to see how how pure goes. For that. I'll >> bring it >> back to the cloud up yours largely an on Prem storage company. That's where most of the revenues come from. But we heard the gentleman from Amazon today. I think it was E ethan whiner, not Ethan, anyway, Mr Whiner, he said. That gardener did A survey last year showed 88% of customers said they have a cloud for a strategy, but 86% of those customers continue to spend on prim. So here you have the cloud. Amazon gorilla wants everybody to go to the cloud pure would much rather they make much more money on Prem? But they realize customers air pulling them in. So they have to move to that as a service model. One of the interesting things that pure is done, which, you know, that's not really a first. But it certainly is for the large storage companies they've announced. Ah, block storage on AWS. So basically what they're doing is they're taking the pure experience. It all looks like pure software, and they're front ending cheap s3 storage from Amazon with E. C. To compute instances, and they've architected using Amazon service. Is this basically a block storage array in the cloud so Amazon gets paid, pure, gets paid? It's a little bit of a premium, but you get higher availability. You get great right performance and you get the pure cloud experience pretty interesting strategy, >> and they're talking about it really as this. This positioning it rather as a bridge, a bridge to hybrid cloud. This numbers that the Amazon gentlemen, share that you mentioned Gardner were really interesting both sides recognizing there's a forcing function there and that forcing function is the customers from the enterprise to the small business who need to have data available immediately wherever it is people to extract this insights from it quickly so that those companies, whether it's a capital one or a Delta Airlines or a smaller organization, can act on it quickly to Dr Competitive Advantage. Same kind of challenge that your storage has. But really that forcing function of the customer, clearly bringing the giant AWS together with yet another story >> so pure as they say reached escape velocity. They and Nutanix were the only on a new entrance that reached a billion dollars Nutanix. I really don't consider a storage company. They're kind of hyper converged. And the way they did that as they drove a truck through E emcees install base with flash. So they were the first within all flash array. Maybe maybe they weren't the first, but they were the first to really drive it. They hired a bunch of DMC sales reps. They knew where all the skeletons were buried and they really took out a lot of old Symmetric Se's and Claire eons and V. Max is and all the old sort of GMC install base, and that helped them catapult their way there 1st 10 years. Now they got to do that again. They got to get to get They're on their way to two billion. But how did they get to five billion? Um, and and so the way they do that is they have to expand their tam. I mean, we'll talk to Charlie Jean Carlo about this. My feeling is a big job of the CEO is to expand the Tamil. How do they do that? They go after new workloads like a i. They go for cloud. They go from multi cloud. These are all very large markets in which they don't participate. Data protection. They'll partner with Lex, Kohi City and Rubric and Beam to to have data protection software running on their flash. A raise with very, very fast restores. That's something that's taking off. It's gonna be really interested in seeing as they say, they've got this subscription model that's coming in. They've got all this deferred revenue that in a way, it's going to slow him down a little bit just from an accounting standpoint, cause when you recognize deferred revenue, you recognize that, you know over 12 months over 36 months, so that's a little bit of a transition. The other thing that pure is facing in a tactical basis is Nande pricing. It's like this countervailing effects nan pricing is coming down, which means lower prices, lower costs but also lower revenue. But at the same time, it becomes more competitive with spinning disk. This is something else. We'll talk to Charlie Jean. Cholera right about it opens up new markets. So this tam expansion is critical for pure in terms of driving this modern data experience into these new workloads and fighting the competition, the competition is not sitting still. All those companies that I mentioned the H P ease, the the Delhi emcees, et cetera, are basically taking a page out of your swords narrative, talking about the cloud experience, talking about, you know, flexible pricing models, building cloud products on prime and hybrid cloud and multi cloud. So it's hard sometimes for customers to squint through that. And really, no, I guess the bottom line, the last thing I'll say is pure. Doesn't have as many feet on the street is these other guys. So it's gotta leverage the channel increasingly, and that's how it gets beyond two billion on its way to five billion. >> And that was one of the factors that they attributed the second quarter. 28% year on year growth is to not just innovation, but also to the channel. So they've done a good job of really pivoting. There's large enterprise deals to be covered, direct and then bringing in the channel for those smaller mid size business customers. Adding a lot of momentum in cute to you mentioned the nan pricing that in some of the political climate with the start of China, most of their businesses in the Americas so they're not facing as many of those challenges. So they did lower guidance for the rest of it is >> the second time they've >> lowered 20. However, they kind of attributed that thio the nan supply oversupply and they say happy Matt to flatten out quickly, say they're >> not worried about the macro. I mean, look, if if the economy is good and is booming and people are spending money on cap ex. That's good for even a high growth company. They're basically positioning to the street that if if the economy does turn down and there's a softness at the macro, they'll actually gain share more rapidly. Which, by the way, is probably true. But look at the rising tide lifts all boats. Nobody wants to see Ah recession. Having said that, well, it's interesting. When you saw Pure Lower, its guidance stock took a hit, and then net app, I'd be him. All these other company you have to see a deli emcee they announced in the market said, Wow, pure must be doing really well compared to these other guys. So it's come back in a big way. My opinion pure is going to in the e. T. Our data shows this from a spending intentions Pure is going to continue to gain share at a much, much more rapid pace of the other. The other guys, from a product standpoint, delicacies consolidating its product portfolio, trying to lower its cost. H. P E is really focused on limbo. IBM needs a mainframe product cycle to get back going, Ned APS facing its challenges and its kind of tweaking its go to market model. So all these other companies air dealing with sort of some structural changes. Where is pure is like put the put the foot on the gas and accelerate no pun intended. And so I think they're gonna continue to gain share for quite quite a number of quarters. >> I want to talk about sustainability before we break. And one of the things that Charlie talked about on his keynote is in terms of the modern data experience, he said. It was three things. It was simple, seamless and sustainable, an inch sustainable. You really started talking about the evergreen model that they launched a while ago that seems to be really sticky with organizations. He also talked about sustainability is a lot of other organization I need to adjust in terms of, you know, waste and carbon emissions and things like that. But I'm just curious, since Pierre is much smaller than the competitors that you mentioned and a lot more focus, obviously all in on flash. Where does the evergreen model, in your opinion, give them that tail winter? That advantage? >> Well, the Evergreen model was first of all brilliant marketing strategy and a business strategy Because if you think about the traditional storage vendors, they make so much money on maintenance, they would never have done this unless pure force them to do it. Because they're making so much cash on the maintenance. You know, it's it's you. You put the storage array in and we're just gonna charge you maintenance. And if you're not on the maintenance contract, sorry. You don't get all the software upgrades, everything else. So it's just this, you know, this lock in strategy, which is work brilliantly for two decades pure, comes along and says, Hey, where? Software driven. We're gonna allow you to get all the modern software. As long as you're got a subscription with us, we'll swap out your controller for free. You know, the competitors hate that. There's all kinds of nuances and stuff, but it worked, and customers love it. And so it's very strong, and it's a fundamental as they said, they got $600 million in deferred revenue, largely from that evergreen model. So they, you know, Charlie mentioned first for non disruptive upgrades. First for cloud management, first for a I ops first for always on que Os first with always on encryption, and if they're really the first, we're probably the first big company. They got a lot of attention there. Last thing, it's it's a four big announcements today. There's a I ready infrastructure, airy. They're doing some stuff they were first to announce with video. You know, a year or so ago, they got cloud offerings. Ah, block storage for AWS. And they've got clout Snap for Azure, which is actually pretty hot. It's backup on Azure, and they got product extensions. They got cheaper flash with a flash or a C for capacity. And then they have extended their all flashy raise their flash played etcetera with storage class, memory and and storage memory. And in this, this as a service model. Those are really the four big announcements that were gonna dig into all this week. >> We are, and we're gonna be talking with This is a great event. Two days. The cube is going to be here. We have seven pure customers to talk to you that I think kind of a record, at least in my cube experience of the last >> AWS always puts a lot of customers up too. You know. All >> right, well, there's no better validation than the success of a brand, whether we're talking about Evergreen or their first or the reaction of the market to bringing flash down to satya prices. So excited to dig into customer stories with you, Dave. Course we'll talk to some partners who got c'mon slung Cisco somebody else and probably forgetting. And, of course, some of the pure, exactly gonna be exciting two days with you and looking for two days >> looking forward to at least a great >> all right stick around. Dave and I will be right back with our first guest, Charlie Giancarlo, chairman and CEO of Pier Storage. Stick around, come back Mawston in just a minute.

>> Announcer: Live from Las Vegas, it's theCUBE! Covering VMworld 2017! Brought to you by VMware and its ecosystem partners. (futuristic music) >> Welcome back everyone, we are live, here, in Las Vegas for VMworld 2017, I'm John Furrier, my cohost Dave Vellante, eighth year with theCUBE, proud to have two great guests, Josh Epstein, CMO of Kaminario and Eyal David, CTO of Kaminario, great to see you guys again! >> Likewise, great to be here! >> You guys had a great event in Boston recently, what's going on with you guys? Give me an update on the company. >> Sure, I'll go first. Kaminario's been around for awhile, but we've been, first of all, moved the headquarters over to east coast US, outside of Boston, Massachusetts, opened up a great new office space there. Got a lot going on from a product perspective, a lot going on from a go-to-market perspective, you see a lot happening in the all-flash space and the storage space in general, and just, really excited to take it to the next step. We see a lot of things happening here. >> It's a pretty big week this week. We saw Scott Dietzen from Pure Storage become the Chairman and Jean Carlo, ex-CISCO MNA guy from Silver Lake come in to be CEO, so Dave and I were speculating, All flash, a lot of, what's going on! A lot of people saying, woah, is it growing? Still a need for flash. What's the big hubbub about? >> So, we definitely see a change in the market, and the emergence of two different models. The way people used to buy storage, and the way next-generation application, cloud-scale application, software-to-servers, e-commerce, online businesses, need to buy storage. And their need for simplicity, performance and cost-efficiency at scale is still driving the need for flash storage, and we'll talk about this yet to come some more. >> And you guys see those as really distinct opportunities, is that right? Can you add some color to that, Josh? >> Yeah, I think that we see the flash space made up of two different markets, one is just the massive stocking function of traditional enterprise data centers, making the move en masse to flash. And there you have, obviously, the incumbent vendors with their flash solutions, you know. That's a dogfight, there's a lot of competition in there. There's this other market which we see growing more healthily, more organically, which is the growth of these cloud-scale applications. As Eyal said, flash provider, or, software-to-server providers, e-commerce providers, fintech, healthtech, these large, highly-scalable, database-driven cloud-scale applications. That means a different type of of scale, so that's where we see less competition from the incumbents and more opportunity -- >> What's different about that market, what's the requirement, what are they looking for that makes this a good engine for them? >> So one of the key requirements is agility and flexibility. One of the current characteristics is they don't really know what is going to be the next workload, how their workload is going to change in scale over time. So they need an infrastructure that can change and adapt to their needs, still deliver the same level of performance, still deliver the same level of simplicity. But have that flexibility to address their changing needs in capacity and performance, to address growth in customers, changing in workload application, without too much pre-planning. >> So I'd ask the question to you guys, I get this all the time. So since you guys are the gurus in the area. I get this question a lot, what is a modern data center? With all the action on private cloud happenings, true private cloud, they truly point out, people are re-tooling their data centers to operate like cloud, it's still on-premise. That's kind of the gateway to hypercloud, very clear. Public cloud, workloads, all bursting, that stuff's great. What's a modern architecture, what's a modern data center? When I hear that term, what do you guys mean? >> That's a great question. So the modern data center, or even the next generation data center is exactly that, one that allows enterprises to achieve the same levels of scalability, efficiency, as the hypercloud, but on-premise, or in a hybrid fashion. But it allows them to have that level of control against operation simplicity that's hard to come by, but on their own terms, adapting to their own needs. >> So without the need to build out a massive engineering team to build this from the ground up. >> So are the buyers different, are those two worlds coming together? I wonder if you could address that. >> Yeah, I think the buyers are, in fact, different. I think, now, you see a convergence over time as the classic enterprise data centers start to look more like a private cloud. But we see this growth in large-managed private cloud providers really exciting, and they come in different forms. You have the Telcos getting into the business, you have the outsourcers getting into the business, you have the traditional channel getting into the business. We have a great partnership with Vion, a big federal reseller, and using Kaminario as a flash service offering. And they start looking like a cloud provider, and they're thinking like a cloud provider. >> And what's the benefits then? Cause I was just looking at the gov cloud impact, I was just at the Amazon Public Sector Summit. Huge traction right now because it's so fast, you can get into the government cloud quickly. Why is that unique, why, as a service, and why are you guys really driving that? >> One, it fits with our architecture perfectly. But I think from a customer standpoint, the ability to procure, like, procuring from the cloud, but also to get the kind of services, you know, as people start re-engineering applications thinking about dev-ops, cloud-data-type applications, leveraging the same kind of utilities that they might get from an Amazon or an Ajer, from a managed private cloud provider, it becomes really important. >> And Al-fed ramp is there, you get all the federal information stuff going on around it. >> So I wonder how you deal with this problem, it's a relatively small company, you're up against the big guys, you say, it's like a rock fight. But you have an affinity to, let's say, SAS players. They like your product and it fits better with their vision. But then you have this big whale, saying, okay, I'm going to buy my HR software from, you know, some SAS provider, I'm going to do some, whatever, 70,000-person deployment, but, as a quid pro quo, you've got to buy my all-flash array. So you must see that all the time. When you peel back the covers, underneath that SAS provider, what do you really see? Like, they fence off, sort of, legacy-vendors' stuff, and they really drive in their core business with your modern platform? Or is it sort of just a mishmash? >> No, I think we're seeing a shift. I think what we're seeing is, some of the legacy architectures are running up against boundaries. Boundaries in terms of complexity, boundaries in terms of agility. Kaminario was built to scale from the get-go. It was built for performance and it was built for scale. And I think what we're seeing is, the main value of these SAS providers, as they're reaching scale, is the ability to deliver consistent performance, consistent cost-efficiency, and really, our predictability. The ability to sort of forecast in the future what cost structure's going to look like in order to continue to deliver high-performance to their own users. >> So the hypothetical example I gave, I'm sure you see it, but are you, you know, winning head-to-head in those environments, and your piece is growing, and that's sort of just a static one-time deal? >> That's exactly what we're seeing, so our main growth, our main focus is on these software-to-service companies or software-to-service departments within existing companies building these types of offerings to deliver this as a service consumption model. And you were asking about the back-end, in the back-end, these are often large-scale databases operating mixed types of workloads, for example, transaction processing, analytics, all at the same time. And the need to support these types of workloads requires an infrastructure that can deliver at-scale, consistent performance. And when we face off the legacy vendors in those environments, we win out. >> You have to be substantially better as a small company. You are, otherwise, you're out of business. >> Absolutely. >> And so, interesting thing about the flash market it, a lot of the big guys realized right away, wow, I'm way behind, so they went out and they bought a lot of startups. What happened, did they sort of pollute them, through the integration, or ... (laughing) >> I think the marketshare statistics are a little bit confusing, but what we see is, you know, the bulk of the legacy vendors, you know, push in what we call retro-fit flash, basically taking their old legacy architectures, their scale-up or scale-out architectures, and cramming flash into it, and basically, then, they don't bring the same kind of simplicity, same kind of agility, same kind of scalability as a built-for-flash-offering like Kaminario. >> Right, what about, you guys have some announcements this week? >> Yup, take that? >> Yeah, two weeks ago we announced our next-generation platform, K2.n, which is based on a fully-converged, NVIO mean over fabric back end. This is basically taking our core operating system, Vision OS, which is a mature and robust storage software stack with all the data services and enterprise features that enterprises need. And deliver it on an NVIO fabric backend which leverages the existing capability to aggregate capacity and compute, and take it to the next level, delivering a very scalable and agile storage cluster that allows you to mix and match different types of resources, to add and remove resources very dynamically, and make your data center responsive in minutes and not hours or days or even months. >> You guys are familiar with our service and research, and we're very excited about NVIO over fabric, because we've been talking about it since probably, maybe 2008, 2009, some type of ability to scale and to communicate, and that's here today, finally. How close are we to actually having a product in the field that I can actually deploy? >> We will actually be shipping this in Q1, the K2.N They added another layer on top of that, We also announced a new software platform called Kaminario Flex, which is a orchestration platform which rides on top of K2.N, and allows you to dynamically compose virtual arrays out of these NVME-connected resources. So I really take that, looking ahead, that the classic notion of a monolithic shared-storage array, is going to die over time. >> Well, here's the numbers. I mean, it's automatic, go ahead. >> Well no, this is the whole debate that we've been clearing up with the true, private cloud report. I mean, guys, no-brainer, check, as a service, as the future, so you're good there. (laughs) The true pilot board, too bad it shows the on-prem stuff is declining in general, that's settlement for buying boxes, and the old way of doing things. Labor's being automated away and shifted, that's pretty obvious. Enter your business model, right? I mean, this is perfect for any cloud deal. >> Right. >> The question is, track record, bulletproof, reliability, security, the table stays all shift, data protection, all these details, that's what they care. You guys check that box ... (laughing) >> So the disability takes vision away, so I'm going to take it to the next generation. Technology is what actually allows us to do that. Whether it's in a hypercloud or we're going into a managed cloud provider, that is becoming a very desired consumption model for a lot of the ads of service members, allows them to build such a flexible architecture, based on a mature software step. >> So you guys, really, from what I see is your strategy is, get this out there quickly from a tech standpoint, software, flex, and integration with cloud is critical. Because you can offload a lot of that heavy lifting on those unique requirements to the cloud guys, where the pre-existing tech exists. Did I get that right? >> Yeah and I think what we see is these managed cloud providers are going to want to have a say in it, they want to actually be part of the evolution of the platform, right? >> Yeah, go ahead, fine, it's your stop! You can always buy the servers more flash! (laughing) >> So talk about your channel, and you go to market, help us understand that a little bit better. >> Yeah, I think it's all about focus for Kaminario. I mean, let's face it, the flash space is competitive, right, if we're going to go head-to-head with everyone, kind of, pull one of these growth-at-all-cost models. And you see what the market values those types of companies. So we've been really focused in two ways. One, SAS providers, next-generation business. I mean, if we opportunistically find a VDI deal, okay, that's great, we have a great solution for VDI, but it's not something that we're going to go out and hunting day to day. The second is really to focus on channel partners. We've got a channel first model, really, effectively 100% of our new business in 2017 will come through a channel partner. Most of those channel partners are looking at developing some type of managed services offering as well, so you know, it's not just about the margin on the deal, it's about the longterm -- >> Cause they're trying to respond to the market transit and value. >> Exactly, so it's about focus on a relatively small number of channel partners that get it, that like our model, and again, it's just -- >> Hey, you'll make money from it, cause that's all, at the end of the day, you've got to get that leverage, because that's your David and Goliath story. >> Exactly, yeah. >> And, global footprint? Is it primarily US and Europe or -- >> Yeah, so it's been, we started in Israel, US has been a good focus, last year we opened up the UK and France, end of the great we opened up Korea, we're now in Singapore, we're moving into China through partners, and so yeah, this is a global story. Clearly, US is the, in terms of adoption of these server infrastructures, US is really the furthest ahead, but it's a global phenomenon. >> What do you make of the VMwear momentum? Because two years ago, VMwear was, the stock was sort of in the tank and there was no growth, and now it's on fire, the data center's on fire, you can't get data center space! (laughing) >> From my perspective, the fast adoption that VMwear had for new technologies, for adopting containers, for adopting cloud paradigms, for adopting this new delivery model, and enabling a fuller stack aligns very well with the kind of demands of the next-generation data system we talked about, where the management plane, the orchestration plane, is becoming more and more important in optimizing the way in this infrastructure gets delivered. So that's, I believe, what is driving that forward. >> Josh and Elay, thanks so much for coming out, coming our way, you guys, company watch, love the business model. The tech comes home, you get it with that integration, man there's not a leverage there, congratulations on your success! (laughing) Great business. TheCUBE bringing you the CUBE as a service, all flash content here! Back with more VMworld coverage after this short break. (futuristic music)