 Live from New Orleans, it's theCUBE. Covering VeeamON 2017, brought to you by Veeam. Welcome back to New Orleans, everybody. This is theCUBE, the leader in live tech coverage. We give out to the events. I'm going to extract the signal from the noise. I'm Dave Vellante with Stu Miniman. Dave Russell is here. He's a vice president and distinguished analyst at Gartner. David, good to see you. Thanks for coming on. Hey, good to see you guys. Nice to see you again. So we were talking off camera. I mean, you are probably the number one known backup data protection analyst in the business and have been for quite some time. You've seen it all. Give us the state of backup, recovery, data protection, availability, whatever you want to call it. But where are we today? You know, I don't know. In some regards, I don't know if we're any different than we were 28 years ago when I got into the business. So the interesting thing is my wife actually got into this before I did. We were both mainframe developers of backup at IBM. And I didn't really want to get a real job. Maybe I could argue I still don't have a real job. But what I wanted to do is just stay in grad school forever. And I started doing backup there, in grad school for undergraduate computing lab. And about six years ago, I showed my wife some of the polls that we do at Gartner events. We can do real-time feedback. You know, what's your greatest challenge? What are your issues with backup? And then she said, that was kind of interesting. And then two years ago, she came to an event we did in Las Vegas. And afterwards, you know, she came up and I was hoping she was going to say, hey, you did a good job. She said, what in the heck have you been doing? These are the same problems when I left the industry 20 years ago to be a mom. Everybody still has too much data, too little backup window, the cost is too high, the complexity is too great. So a lot of infrastructure changes, but not a lot of the same pain points have shifted dramatically. What has shifted though is cost is even more important than it ever was. And obviously we could talk about volume of data, but now we maybe want to have multiple copies of even our backup data. We want faster access to that backup data because we want now backup to be a high availability replication solution, not just the tape in the vault somewhere. So there's now speed requirements on our backup. So I could keep going forever, but you know, I'll just net it out to say that as an industry, we still have many of the same challenges that we've always had arguably for decades and decades. Now the challenge is the cat's out of the bag, meaning the rest of the business sometimes is aware of just how costly this is, just how difficult this is from an OPEX perspective. We can't go higher, five, 10 smart people to do this. And the backup window is a correct to say it's essentially disappeared? Yeah, I mean, there's some organizations that really feel like we don't have a backup window. Because if we just take a step back, what is really backup? Never mind you how you could use it for other use cases like DevOps, but backup, if you've stated in the most unappealing terms, it's how much data are you willing to lose? How much time are you willing to take to go get that aged copy of data? And of course the rhetorical answer would be, well, I don't want any of those bad things to happen, right? But at the end of the day, that's really our frustration. And I want it back instantly. So that's obviously putting great pressure on the businesses. So when you look at Veeam's ascendancy, I've been saying all day, and I would like to test this with you, it sort of coincided obviously with VMware. And when people had to sort of rethink their VMware backups, you just did a webinar entitled backup fix it or ditch it. I feel like a lot of people went through that, answering that question in the early VMware days. So give us, what was the conclusion of that webinar? Yeah, well, the number one thing is frustration. And we've done a lot of drill down on what are you frustrated on? Number one is cost. Number two is complexity. And we can even break this out by large enterprise, mid-size and smaller enterprise. But there's a lot of similarities. So now where do you come out on fix it or ditch it? The answer for many organizations is a little bit of both. And what I mean by that, this is kind of mind boggling, I think, is that the backup space used to be sweep the floor. If you were an incumbent vendor, you wanted to kick out any other solution. If you were an organization, you wanted to collapse from three, five backup products to one backup product. And if you were an emerging vendor, what'd you want to do? Go kick out the incumbent vendor. But now an organization says, you know, maybe we'd like to completely change, but we can't. So we're going to try to fix what we've got. And that's usually what I recommend. At least try to get the value out of what you've already bought and deployed. But we're going to implement something else too. So this probably 15 years or more of trying to collapse the number of solutions, now an organization says, not because I want five solutions, but because I threw pain, basically, not getting my needs met, I'm going to continue running two solutions or expand to two solutions. And you could argue that, I mean, Veeam invented that. They came in on the virtual end exactly to your point and then it was a land and expand. We see this happening though in the industry overall. Dave, I have to think that just the current state of cloud is compounding what you're talking about. Customers have their own data centers. They have virtualized environments. Think Veeam said this morning, the average customer they have is only 75% virtualized. So they've got 25 physical. Everybody's got SaaS. Everybody's using some public cloud, at least first and test dev. Veeam says that they can now go everywhere, but most customers are probably doing piecemeal deployments, everything in IT is additive. What do you see? How does cloud impact that space in general? Well, my biggest fear on the cloud aspect, whether it's software as a service or public cloud, someone's going to rent you infrastructure, is that we're going to learn some lessons the hard way again, meaning that most organizations typically think, well, if we went to software as a service, they'll take care of it. We have no responsibility anymore, or didn't we get rid of that problem, meaning backup or DR? And the answer is no. You're still the owner of the data, right? And where it gets shades of gray is that, well, SaaS provider's going to give you some level of protection, some level of backup. Chances are they're not going to give you everything you had when you had, say, that email system on premise. So my fear is that organizations are going to suffer an outage and realize there is still a need for additional protection. Right now, many organizations, they're running a bit exposed, or don't even realize that they're running a bit exposed. Yeah, what is the state of those SaaS providers and public cloud providers? Is Veeam still best of breed to go in those environments? Are you always starting to see them all offer their own native pieces? Well, I think we're in a transition period because there's a number of third party solutions that can be good at handling this, and you'd have to believe that, so take Microsoft for example, they're in the unique position of having had on premise applications and now having a public cloud. And so eventually someone's going to say, well, here's all the things we did for exchange on premise. Why can't we get all of that availability beyond 60, 90 day retention if we go to SharePoint online or exchange in Azure? And so there's a tension that's taking place right now. Right now, at this point in time though, I think if an organization really wants to protect their data like they have and they're used to have been doing on-prem, they're going to need a third party solution, whether it's Veeam or someone else. David, I want to ask you about your magic corner on a data center backup and recovery software. I would struck me that in the, I don't want to overdo it. I know you guys are very sensitive about each quadrant and how customers should interpret that, but we all do the same thing. We go right to the leader, people fight to be in the upper right. And it struck me that Veeam was the only smaller company that knows their way in there. And they're known for SMB, but in the magic quadrant you were saying this is really the upper end of M and larger organizations. So what is it that sets leadership apart and how is it that Veeam was able to get in there with those established, much larger players? Yeah, and that's a great question because exactly what you said. The competitive response would have been isn't Veeam just deployed in small environments. And collectively we take about two and a half thousand end user inquiry calls a year in backup. So we started seeing a number of trends a couple of years earlier that hey, Fortune 500 companies are deploying Veeam and it's not in the plant in Mexico City or in a small little area. It's in Detroit Motor City in the data center and we're seeing a bid for six figures or higher some cases. So that's when we started realizing, hey, wait a minute, at the point of being cast an enterprise supplier is to actually be in the enterprise, they're already in the enterprise. So that's what we started to notice. And finally we said, another issue we have with putting some of the leaders' quadrants, are they really leading the market or pushing the market? And we really felt that Veeam had kind of crossed over the point last year when we issued the quadrant in June that they were causing the market to shift. Whether it was having better virtualization capability, changing to socket level pricing, addressing ease of use. They were doing things and we give sort of extra credit for a provider that can not only sense what the market's looking for but kind of push the market. Can you explain the socket-based pricing a little bit and how that affected the market? Because I know a number of vendors have made some pricing changes. Yeah, I'd be in particular sort of said, all right, everybody can buy anything and use credits there. That was, I felt like a move to keep the install base where it is. Veeam I'm interpreting was different with the socket-based pricing. What was that? Did it have an effect on the market in any other way? Yeah, and the short answer is absolutely affected the market because you look at the number of heterogeneous backup vendors that have come out and now offer socket-based pricing. So they're doing this in response to Veeam. And what we see now is the organization depending on who the buyer is, they have no idea what terabytes are. I know what server deployment we have, I mean how much socket we've got. So it was just speaking to that constituency in a buying motion that they understood. Something they could quantify. Exactly. Veeam made a number of announcements this morning and some prior to the show. Anything jump out at you? CDP is one of the ones we've been talking the most. Maybe give us your quick competitive analysis of how that looks. Well, CDP was near and dear to my heart. In 2005, September 2005, almost the same day Microsoft came out with their data protection manager for CDP, backup exec came out with CDP. I was trying to remember when Kasha came out because I was at the company that acquired Kasha. Yeah, sure. So Kasha, Topio, we can go on. And CDP around 2005 and 2006 was really a lot of buzz going to change everything. The problem was it was difficult to do because the infrastructure didn't facilitate it. So back then you had to split the volume manager and have multiple rights. Now today's announcement on CDP where you don't have to have a lot of extra infrastructure, but it's the hypervisor that's splintering the soft for you, IO filtering that's making this easier, making this actually achievable. I think that's going to be really compelling. Most people here I've been talking to say this is going to be great for the critical applications. There were some shops I spoke with in the mid-2000s, five, six, seven year that said, will you CDP even on general file systems? And why? Well, it's because if I keep making a delete and I call up the help desk and it's like, oh, okay, Dave hit confirm to delete again. He called up to say, can you get me my file back? It's the fifth time I've called this week. Well, continuous data protection would allow us to let him go self-service perhaps, but definitely lose less data. So for Veeam to get that CDP granularity, I could talk about that for a second, it's got to obviously rely on VMware APIs. I mean, I'm sure you're tracking this, but are you concerned about Dell EMC gaming the system? I mean, historically, what have you seen there? Difficulty getting hands on SDKs, you know, trying to put the incumbent in an advantage. What are your thoughts on that? Well, you're right. I mean, historically, especially it's a storage array perspective, you know, proprietary APIs or sort of supporting SMIS but having quote extensions that you're basically proprietary off to the side where we're an issue. Here's a case where I think it's in the hypervisors best interest and soon it'll be in Microsoft's best interest with Hyper-V and you could go on and on about the other platforms to offer the capability as well. So there is a danger, but I don't see how the sort of storage oligarchs are going to be able to fence that off in this case. Yeah, I call them the cartel. Nice. Good to know. So is Veeam now because of its ascendancy part of that oligarchy? Well, I think you have to say, you know, approaching a half a billion dollars in revenue, you know, it's sort of like the enterprise question. At what point, how many enterprises do you have to get into before your enterprise? Well, how many hundreds of millions of dollars you have to make before you're one of the big ones? What do you make of this messaging of Veeam companies like Veeam don't want to talk about backup anymore. Backups kind of pass, you see some startups like Datos the other day said, no, no, we're not a backup company. Okay, and then they're shifting to this notion of availability. Does that resonate with customers? Is that the way customers are thinking about this or is that just sort of good marketing? It resonates with some customers. Now personally, I like it because to me, availability is an umbrella and we can put backup and we can put disaster recovery and high availability under there and maybe you can sort of find a way that DevOps and copy data kind of plays under availability. Right. It doesn't actually work in all geographies. So I was in Tokyo at a Gartner Data Center conference a couple, three weeks ago, I guess almost and they don't really, availability doesn't sound good and disaster recovery sounds worse because that meant you had a disaster. So how much disaster recovery do you want to buy? Well, none, because I don't want any disasters. So availability is a little regionalized. There are definitely some shops that just say, look, I have a backup budget and that's what I need to go and do better. I have a backup pain point, et cetera. I think though, whether it's replication and instant VM mounting and the notion of DevOps, we're seeing more and more organizations get their head around. If it's what they want to call it availability or something else, that it's beyond backup. Well, what's come through loud and clear, however, is your point about cost. I mean, it seems like customers are still they can sanely focus on causing this because backup generally is insurance. So cost and complexity have to be minimized and a lot of the backup platforms that are out there are expensive and they're anything but simple. Yeah, and you look at the economics. I mean, we've seen negative pricing pressure on dollars per terabyte of backup software now for three years running. Now list price, and obviously, no one really pays the list, but list price starting with just a small number of terabytes, it was some vendors were $10,000, some vendors were $14,500 a terabyte, and you and I go down to whatever shop and we go buy a terabyte drive if you can find a one terabyte drive for a couple hundred dollars, obviously four terabytes. Yeah, obviously the data written on it's where the real value is, but you see the mismatch of I'm spending list price $14,000 terabytes to protect $140 worth of equipment. There's a problem here. So whether you're the VP of infrastructure, the purchasing department, or just the backup admin that says I have a problem because I can't go buy now the agent for the database that I'm trying to buy because we've already spent all this money on just the base backup platform. Yeah, and it's really, there has been this sort of 10 year pressure on all infrastructure pricing, cloud, open source is really putting pressure on that. So, David, thanks very much for coming on theCUBE. We really appreciate your insights and keep up the great work. Hey, it was great to see you guys. Thanks for having me. You're welcome. All right, keep it right there, everybody, we'll be back with our next guest at theCUBE, we're live from New Orleans, Veeamon 2017.