>> Narrator: Live from New Orleans, it's theCUBE covering VeeamOn 2017 brought to you by Veeam. >> Welcome back to VeeamOn in New Orleans, everybody. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante and I'm here with my co-host for the week, Stu Miniman. We're going to talk cloud service providers. Cloud is obviously a very hot topic this week at VeeamOn. Matt Chesterton is here. He's the CEO of OffsideDataSync and he's joined by William Bell who's the vice president of production development for cloud and enterprise services at PhoenixNAP. Gents, welcome to theCUBE. >> Thank you. >> Thanks. >> So, let's start. What's happening at VeeamOn? You heard what I said about, you know, cloud seems to be a major theme here. What are you guys seeing this week? >> We're seeing the same thing. So today is officially cloud day at VeeamOn and some great announcements that are going on so new product announcements with B10, so we're excited about that. >> William, anything you'd add? >> Yeah, I mean, the general session this morning covered so much around cloud and what's that's going to mean to the end user at Veeam. Right, and how the ecosystem is being built and working both with the hyper-scalers and guys like us. >> So, so much talk in the industry about the big, really the big three. Maybe you throw a China cloud in there, a Japan cloud in there, how is it that folks like you all can differentiate from the likes of AWS and Azure and Google. Maybe you can start, Bill, and share with us. >> Yeah, sure, and service. I think that's really the key is that customers need a help. >> Dave: You mean I could talk to you? >> You could talk to me. We can actually help you achieve an outcome that you're looking for with your business. That's not something that you're going to get from a hyper-scaler, period. >> You don't have a little device I can put in my house that I talk to instead? >> No, no new devices, no books, no operating systems to install, just help. >> So your value property is really high-touch. >> High-touch, high-touch for us, it's high-touch global, right? So we can help you do the same things that you're trying to accomplish anywhere in the world talking to the same people, alright? And that's our kind of commitment. >> And yet you've also got infrastructure behind that. >> William: We do. >> So why wouldn't you, for example, could a viable strategy be, say, I'll put that high-touch in front of AWS or Azure? Why not? >> Well, for us, it really comes down to margins, right? At the end of the day, it's that we derive margin from infrastructure just the same way we do from the service angle of that. So if it's only service and there's no margin on the infrastructure it's a tougher business to scale, right? We also can capture markets that are uncapturable. This isn't a cloud business for us, right? We're data center owner-operators. We're doing things that customers need that are not cloud-centric. >> How about you guys, Matt? Little different story here. You guys are more specialized. >> Yeah, little bit, little bit different. So service is always important. We've taken the approach with the public clouds of kind of going with the tide. So layering products and services that go with that. Example, today or yesterday, I think it was announced with the scale-up backup repositories being integrated with storage like Glacier. I'm sure there's a product plan there for a service provider like us so that we can offer that as a service, too. So kind of taking that momentum and working with it. So integrating with what's already going on. It's going to be a tough tide to fight if we don't kind of direct it in the way we want, so we're kind of taking that and going in the direction of how can we use it and how can we benefit from it. >> Matt, can you build on that Veeam as a partner. I think it was Peter McKay told us 30% of their business is to the, you know, thousands and thousands of service providers they have. You know, where do you find opportunity, products, growth when it comes to Veeam? >> Good question, Stu. What Veeam's doing, they make it very easy for us as partners, in the cloud of course, so that when something's delivered, they make a cloud available, as well. So as you can see, users of Veeam can direct their backups and archives to the cloud, private, public, but they've also made that available and are going to make that available for us so they're a great partner. They always think about cloud and cloud first so they don't just develop a product that can be used in and around service providers but that we can take and capitalize from it as well. >> William, what I want to add on there, you're also a VMware partner. Maybe tell us what it's like being a VMware and Veeam and do you go beyond the VMware piece too with Veeam or? >> Yeah, so I mean, in Veeam's ecosystem, VMware and Microsoft are very important to both of them, right? And because of where Veeam started, hyper-V's a large part of their business and growing still very rapidly part of their business, right? And so we're forced to address both sides of that. When we go to build our own infrastructure, when we're going to offer our own services, we've made a commitment to VMware today, right? And we're building services around that ecosystem including the stuff that's happening with Veeam. But let me talk about Veeam as a partner, right? Veeam has been singularly the best manufacturer partner that we've worked with up until this point. Maybe it doesn't mean that somebody else maybe not tomorrow, but at least up until this point, they've help both of our businesses really grow. >> Matt: I couldn't agree more. >> And grow in branding and grow in product diversity and grow all over the place. >> Explain that more. >> Is it simplicity? Is it pricing? Is it, you know, community? >> It's their dedication to us as a partner. So you hear of partner relationships in the community. Veeam has taken it to a new level. They're truly a partner with us. They care about how our business is doing and how they can develop us and how they can find out what we don't have experience with and then help us. So design a program or introduce us to the right folks or make the right alliance relationships. So they genuinely look at it >> So are they a channel for you or are you a channel for them? >> William: Both. >> Yeah, sometimes you don't know. The lines are not exactly clear. And that's good. >> Yeah, I think that those unclear lines means an increase in all kinds of things for both of our companies mutually, right? We're here. We started together in this Veeam ecosystem, you know, three and a half years ago I guess now, and you know, as the first five service providers that were teamed up with Veeam, and we're also both standing here with gigantic platinum sponsorships at their show because it's become that important to us and our business. >> And you guys, I mean, you sell to, your customers are doing everything. They got one of everything in their floor. They're, I'm sure, diverse. You've seen a bunch of folks on stage this week. We saw Microsoft today, Hewlett Packard Enterprise. We saw Cisco yesterday. What kind of relationships do you have with the big whales? >> So we align very well with Cisco. In fact, that's what we power our networks with, and we use their Cisco UCS series for everything we power in our data centers, too. So it's great to see them here and interact with the team. They're a great partner for us. >> And HP Nimble Storage is our other clear-cut top partner, right, in this ecosystem. And there's a great marriage there, both on the integration side, but from a powering these Veeam powered cloud services like offsite backup and Zas recovery requires a lot of storage, right, to take that data in and hold it and replicate it and do things with it. And so our partnership with HP Nimble's large. 6- In some of the expansion that we're seeing Veeam talk about, the kind of new ten years where they're going, some of that is as a service. How do they talk about that dynamic of potentially being a competitor now to the 18,000 great partners that they've had? >> You know, I think a lot of it's got up in a bit of semantics problems, right, semantic issues. Veeam is doing a lot of things that are going to enable services and as a service, I don't see them building solutions that would compete, right? They have a great example of what it looks like to do that with vCloud Air being such a VMware-centric partnership, that was a headwind that they were unable to overcome even the size of VMware, right, going out and building and being a service provider and building an infrastructure service, trying to take their software company and become a service provider, it doesn't work. The same for us, I'm not going to go start building backup software. (laughs) >> So, if you think about the mega phases of cloud. We've been doing this for a long time, and I think back to the early VMworlds that we did, we had so much discussion around cloud, and back in the early days, it was kind of, you know, after Amazon announced AWS and cloud sort of got coined, it was an experiment, it was for startups, and that was pretty clear. And then in sort of 2008 when the economy tanked, a lot of CFOs said, "All right, shift capex to opex." And that was sort of the next phase. And then coming out of the downturn, a lot of lines of business said, "Hey, we got cash. We need speed. Let's go," and started to invest. And then after that IT sort of embraced it. And now seems to be whatever term you want to use, cloud broker or just, they've sort of captured a religion in a nut to hang it onto lun provisioning anymore as a practice. Now I'm wondering if that is a reflection of your world or because you in your case are specialists and you guys are more service oriented, did you ride those waves, was it different ways. Maybe William we can start with you. >> So, our first product line was a 250,000 square foot facility in Phoenix, Arizona, right? Building a kolo, a network access point, that's the heritage of the PhoenixNAP, right, the name, and so we were relying on capex. People to go in and buy equipment and stick it in our facility. Everyone had already decided they didn't want to build data centers. Right, in 2010, everyone's like, "You know what, ten million dollars to get my data room up? No thanks." Right? But they were committed to buying hardware. And we took advantage of that and grew that business and we started to address the opex side in 2012 kind of moving forward. At least we believe we're prime positioned because at the end of the day, it's going to be both. All opex is not the answer, right? I truly believe that. And that's part of that hybrid story, as well. >> And Matt, what about you guys? Again, being specialists in all kinds of things, DR, recovery, etc, did you take a different journey? >> Yeah, Dave, we did. And I heard the term even this week, born in the cloud. If it makes sense, we're a cloud company that had that vision from the beginning. So we didn't build a facility, but that's certainly what we do, leverage space power bandwidth that we partner with Switch and Supernet facilities for our data centers. And we believe that customers are and will continue to move into the opex model into the cloud, so both production work loads and DRAs backup as well. It's interesting to see that mix, too, especially as things from Veeam are announced that really becomes one. So the workloads of DRAs are soon within, you know, 15 minutes or 15 seconds can become a production work load. So if customers aren't necessarily moving their infrastructure to the cloud, it's going to happen one way or the other, whether it's the model of they don't want to purchase hardware any longer or they've had some sort of failure, disaster, and they're going to move that way. >> I want to let you speak a little bit more about your customers. There was a great line, I thought, from Mark Russinovich which said that the C-suite doesn't come asking for infrastructure as a service, they want to figure out how to take their business to the next level. Where are you customers in that kind of cloud strategy and how are you helping them along that journey? >> We have a discussion with them. We try to understand what their business objectives are and what they're trying to achieve by either pushing to the cloud or understanding what the cloud is. And there's a spectrum there from as I mentioned before, backup, disaster recovery as a service, infrastructure as a service, and not all things line up to one single service or way you can put it in the cloud. So we try to understand what their business objectives are and say, "It's going to make the most sense to put some of the work load in the cloud, but some applications stay onsite and you have DRAs replication to get them offsite." So really engaging and understanding what their business needs are and getting under the hood of what they're trying to achieve. >> Yeah, I think that at the end of the day, we are focused on a hybrid future. We truly believe that customers will search for the cloud experience, the business optimization for a period of time where they're saying, "You know what? I don't care. I want this outcome. Go get me this outcome." At some point, it will come back. They will be like, "We have the outcome. How can we optimize this outcome? Are we spending the right amount of money to achieve this outcome?" And the moment they do that, they will find that opex purely and blatantly, if you just say, "I'm all in. I'm always on. I'm only opex." You will spend more money on that over time. If you pick and choose the things that you are incapable of doing or would cost you more to do through capex and staffing, then you can basically position both of those things to maximize value. >> Horses for course, gentlemen, we have to leave it there. Thanks very much for coming on theCUBE, 'preciate it. >> Absolutely. >> Alright, keep it right there everybody. Stu and I will be back with our next guest. We're live from VeeamOn 2017. This is theCUBE.