 The Cube at EMC World 2014 is brought to you by EMC. Redefine VCE, innovating the world's first converged infrastructure solution for private cloud computing. Brocade, say goodbye to the status quo and hello to Brocade. Hi, everybody, Dave Vellante here. Jeff Frick and I are back. This is EMC World 2014, we're live from Las Vegas. Terry McClure is here. She's a senior analyst at ESG. Follows the whole file, unstructured data, all the file sharing, syncing, all that good stuff. One of the best in the business, Terry. Welcome to the Cube. Thank you very much. That was quite an intro. Thank you, Dave. Well, great EMC World, huh? What do you think? It has been phenomenal. It's just been a deluge of information coming at us for three solid days, I'm firehosed out, but it was all real good. People always ask me who is the most interesting guest you saw today, and I can't think of one guest, but I'm going to put you on the spot here. Anything that really jumped out that you can talk about, that you saw that excited you this week, maybe customer conversations or technology progressions or just epiphanies that you had? Well, you know, I have to love some of the customer examples that I've seen. I mean, I've been in the analyst track for the last couple of days, and some of the things that we saw was how EMC technology is helping speed the development of prosthetics and leg braces and such via the use of 3D imaging from weeks where kids, or months even, where kids outgrow them between the time that they do the molding and the development of the prosthetic to days, literally days, so they can help kids walk within days. So I love those stories that show how technology is really making a difference in our lives, and that was one of them. So this whole unstructured data space, and we've been talking about it for years, we all see the numbers, all the data is going on. A lot of people don't like that term, it's kind of dated. But it is what it is. But it is what it is, right. And it's your wheelhouse, whether it's file, I mean, this whole file sharing thing is exploded, and it's obviously great for you and your business, I presume, and just a lot of people trying to understand it, a lot of enterprises trying to replicate the consumer model. What are you seeing in the marketplace, the big trends in the areas that you follow? Yeah, so for somebody like me that covers file, object, the whole unstructured data market this week has just been a goldmine of announcements and such. And some of the interesting market trends that we see in our research have been, we dug into kind of how customers would prefer to deploy their online file sharing and collaboration solutions the way they access their data from their mobile devices. And our research was really interesting. No surprise, we saw that the bulk of the deployments out there for business use cases of online file sharing and collaboration is cloud based. They're using a public cloud service that they're subscribing to via SaaS. But, and that was 84% of the people we, it's a big deployment, it makes sense. That's been out the longest, it's the most mature, people have heard of it, it's had the most press, it's quick and easy, but what we also found is amongst that group that's already deployed a cloud based service, 97% of them would really like to put some roll of their data on-prem. 97% of them are already using a cloud based solution. There's a number of reasons. Certainly the nervous about having their data out in the cloud, I don't think the Snowden and NSA stuff did the many favors. In fact, we asked the key reasons that they wanted to keep data in-house and one of the top reasons was third party access to data that might be in my system. Not service provider access to data that might be in my system, which was, what we used to hear, the service provider has the keys and the data, their employees can get my data, but third party access, that was our NSA answer, right? So that certainly has people nervous, but another big driver is customers really want to leverage their existing IT investments. They've got big investments in things like Icelon, they've got big investments in NetApp, they've got big investments in existing file and storage infrastructures and document management systems like SharePoint and Documentum. And they're not going to throw those away because people need mobile access to their data. What they want is to be able to leverage those investments but somehow mobilize them. And so that's what's interesting about what EMC has done with Syncplicity and Icelon and what some of the Syncplicity announcements talked about this week. They talked about giving customers the ability to tie in to the SharePoint implementations, to tie in to the Documentum implementations, to carry forward the permissions, to carry forward all the ACLs, to carry forward to lock and unlock the content but done via Syncplicity. So now I've unlocked that data that's been locked behind those content stores. They don't have to log into a VPN to get them and I can access them and edit them on my mobile device. So I'm not throwing away that investment and if I want to migrate away from that investment I can do it over time. So essentially what you're finding in your research is that people want to replicate the fast sound nature of the public cloud, the simplicity of the public cloud but they want to have that secure, sleep at night environment. They can inject the edicts of the corporation in terms of policy and audit and security and compliance and all that stuff. What about the cost factor? Have you taken a look at that in your research? Do CFOs embrace that or do they say, oh just keep it in the cloud, what are you seeing here? Well I mean there's the risk-reward issue, right? So if I've already got an investment on Icelon I'm not going to throw it away. So certainly there's not new cost. That's an asset that's depreciating in the books. It's an asset that's depreciating in the books that I can leverage. Same thing with the VNX or something like that. So you can take advantage of your existing investments so from a cost standpoint it may actually be more effective to just bring in the on-prem. Yeah because it's a return on asset play. It's a return on asset play, right? Yeah that's good, okay. So in a lot of cases depending on where you are in your cycle it's actually going to be more cost effective and I guess you could argue that I always say this renting is always more expensive than owning depending but. Right and then you look at some of the costs at scale when it comes to going outside and scaling to tens of thousands or hundreds of thousands of users and the capacity and some of the trade-offs really start to mitigate for the cost. So I don't follow this that closely but my understanding is simplicity when EMC bottom was running on AWS and KK was telling us they essentially brought that in on-premise, Isilon example sort of huge case that you were describing. Is that AWS piece gone? Is that still, so you can still swipe a credit card. You can still, you know what simplicity gives you and what we're seeing emerge from a couple of major vendors in this space is the ability to pick where your data, what data lives where. So on-premise or? On-premise versus off-cloud. So in our research we ask companies do you have any data that, and if so what type that absolutely cannot be stored in the cloud and 90% of the companies we spoke with said yeah they've got data that they absolutely forbid to be in the cloud. So now with this type of a hybrid solution I can say okay this class of data that lives in-house on simplicity but I do want some of the economies of scale of starting to shift to the cloud starting to transform into the cloud for those things that I deem are safe for the cloud. So I'll put this stuff in the cloud and my important stuff say it stays on-prem so it depends on what your leverage points are. Did you have any visibility on that 90% who said there's absolutely no way we can put this stuff in the cloud who actually put stuff in the cloud without the IT guys knowing it? I don't. You got a gut feel there? Who would you think it would be a very high percentage? Yeah, yeah. I think it would be a very high percentage. It's a high percentage. The whole shadow IT thing. We actually did some research last year into regulated environments and we wanted to understand just how much risk there was out there of that data that absolutely can't be in the cloud being in the cloud. In our regulated environment research I think 50, I don't remember the numbers exactly but somewhere between 50 and 70% of those companies that had regulated data said they were sure that their employees were storing some regulated data that shouldn't be in the cloud in the cloud. This is the king has no clothes research that you did. Yeah, and so that shadow IT, it's a huge issue and it's really imperative for IT to get their arms around that and start looking at solutions that might meet their needs of the employees to share their data on their mobile devices and IT to secure it. And that's something I want to bring up because that's a big challenge is that usability factor. It's not enough just to roll out a solution that allows employees to sync their data to mobile devices. You need your employees to use it because it's way too easy to go to the consumer solution if you don't like it, right? So you really, it's an interesting paradigm where IT never had to be that concerned about how easy it was for the user. Is the business going to get its return on investment? Is it going to do what we want for the back office operations? But this is really like, our users really have to like this because if they don't use it, we're at just as much risk as we were before we deployed it. Because it's way too easy to go outside of the boundaries. Terry, what about not necessarily file sharing applications which is data application, productivity applications in the cloud like in Evernote? So I'm not sending files anywhere but I'm keeping track of what I need to do. I'm making myself notes. I've got attachments. I've got meetings. I've got all kinds of stuff. Evernote's a great tool for me. So I'm not on the drop box. And that's all the instructor data that they think is secure in our email system in case there was ever an audit or whatever. I think Evernote is a big hole in the enterprise right now because people are sitting in meetings and I mean product roadmap meetings, financial meetings and they're taking their notes in Evernote and it's going off into the ether somewhere. And I'm waiting for the Sync and Share vendors. Some have note taking applications but nobody's really come up with my Evernote alternative and Sync and Share in one. And I'd really like to see that happen so I can put my notes with my files and have everything in one place because I've got a bunch of stuff in Evernote, a bunch of stuff in my Word and PowerPoint documents. But I think because nobody's come up with a good solution for that Evernote's got an opportunity with Evernote for business but I still think there's a big unaddressed issue for security in the enterprise right now right there. So you have a bias obviously. You're an advocate for the IT practitioners trying to help them protect themselves. Absolutely. So you must have been stoked when EMC bought Syncplicity. I was stoked when EMC bought Syncplicity. I mean it's funny, I've been covering this market for maybe three years now. We've done a ton of research into it. And so it's been interesting to watch it evolve from when I started covering it in 2011, there were maybe seven, I think there were eight vendors in my first report that had solutions that had an admin console that were designed for business to give IT that centralized management and control. And Syncplicity was one of them. The last report I did, not everybody was in it and I think I had maybe 50 vendors in it and I didn't have everybody in it. There's maybe a hundred or more vendors who talk to me now in this space. It's been fascinating to watch it evolve but I think it's really strategic for EMC and companies like EMC to address this. I think it's a business opportunity for EMC and it's a business opportunity for their customers to be able to capture and control and manage all that data that's been leaking out of the enterprise for so long. So EMC has the connections with the right people within the enterprise to help companies deal with it. So you were talking off camera that you analyzed the box S1. Is this where you put me on the hotspot? Yeah, that's right, on the hotspot. So I was just curious. I mean, Aaron Levy just canceled the IPO. Well, did he cancel it? He delayed it. Postponed it. Sorry, he canceled it. They were scheduled and the cloud stocks are down. So yet again, the little guy gets screwed. But by low sell high, no, not for you, Main Street. We're going to do a whole section on that but that's another story. It's not just Aaron. And I don't think it's great. His ownership is actually quite low now but so I think he really wants to see this thing through. He's had offers, obviously. He's had some big offers. So he's got big plans and big visions but you read the S1, I didn't. What was your takeaway there? What did your research say? You know, it's tough. A lot of people have pointed out the fact. I mean, they've got 7% of their customers are paying customers and 93% of their customers are free. They've got the bulk of their burn rate is in what they call sales and marketing but that really what goes into that is their infrastructure to support the free customers. So their big challenge is they've got to convert free customers to paid customers. I mean. Spend $2 to get one. And that's what they're doing. They're spending $2 to get one. So they've been working on converting business customers for three or four years now and only 7% are paid customers. Is this one of those that you can make it up in volume type of stories? I don't, I don't know. We've seen those before. We've seen those. They need to. And sometimes it can happen. If the volume continues with these ratios it's never going to happen, right? I mean, as one said, there is no clear path to profitability. So they need to win over enterprise customers. They need to win over those site licenses. They've got some big wins. But to do that, in my view is, there's a big market opportunity out there for files they can share. But the political climate is such that they need to have a data center in Europe. They don't have a data center in Europe. And I don't think European customers have that trusting of putting their data in the US. You've got the Snowden effect, I think, that's a challenge on the business and elongate sales cycles. They've got to have a very long security discussion with their customers to get them comfortable with how they secure the data and where they keep the keys. So I think they've got a couple of big challenges out there that they're going to need to overcome to get that broad enterprise adoption to start building up the ratio of the paid business customers. So guys like Box and Dropbox, they are they the big competitors of simplicity? Is that sort of an obvious question or not necessarily? Is it something else like do nothing? Well do nothing is the, I mean right now, we're still really early on in this market. I mean a couple years ago when we did the research we had 28% of the companies that we spoke with had adopted it, but only for specific departmental use cases and individual users. Towing the water type of implementations. So this year when we researched the adoption we found that I think it was 48% of the companies we spoke with had adopted it, but towing the water. Specific departments that really needed mobile access or collaboration or individual users. So I think the big competitive issue right now is do nothing. I mean we walk in the door and there isn't a solution out there and then Dropbox gets brought in and Box gets brought in because they've got the brand and name recognition but then EMC's already in there, Citrix is already in there. So HDS is in there. So you've got these big guys with these existing relationships in there that probably have a leg up and a trusted relationship already with the vendors. So that kind of gives them an inside track. All right Terry, we'll leave it there. Thanks so much for coming to theCUBE. It was great to see you. You know, awesome job. Tons of research. Love the research angle. Real data coming out of Terry McClure and ESG. Keep it right there everybody. We'll be back to wrap myself and Jeff Rectus' EMC World Live 2014. This is theCUBE.