 NetApp, we're here, Tom George is the CEO of NetApp. A little big company. You guys are a big company, you're public, you got to do earnings calls, you do all that stuff, and you got to produce revenue, and you got to change the market. So what is the big change that you guys are seeing, and how are you adapting to this marketplace right now? Well, I think a bunch of things come into play. I mean clearly we came out of last year with a tremendous amount of momentum. We actually broke $5 billion for the first time. We had 30% growth year. And that's how we ended our fiscal year at the end of April. I think what we've seen this year is it started off with a fair amount of momentum, but clearly, I mean we all read the headlines around what's going on in the federal business, and we've seen some impact on the financial services as well. On the other hand, other parts of the world have been just phenomenal. Our European business was very strong, our Asia business was very strong. And so I think that's probably the big difference that we've seen is it's a bit more uneven. Last year we grew 30% and every geography grew plus or minus 2% from that number. This year we saw some parts of the world grew 50%, and other parts of the world obviously grew a lot slower. So I think for us we need to basically move our resources to where we can make a difference. And the last time we went through a slowdown in 0809, those were our two biggest new customer acquisition years ever. So even though new customer acquisition doesn't necessarily yield to your growth rate right away, I think it was a key part of our growth last year. So our focus is we can't control the macro, but we can focus on gaining share and gaining new customers, and that's what's going to be our measure through this period. Yeah, and people look at NetApp because you are a pure play and you're also very transparent. Your earnings calls are great, you give a lot more detail than most companies, and again, part of that is your pure play. And people are saying, all right, is this an indication of a double dip? But if I understand it correctly, Tom, you're seeing pockets, you mentioned federal, but there's so much strength across the board. That double dip is really not something that you've put out there. And again, you can't control the macro, but are you still seeing pretty robust demand across the board? I think in general, we reported on our earnings call that even though it slowed down a bit in July, it was actually a third consecutive quarter of increasing year over year bookings growth. So the business remained robust, it was just a bit uneven. And I said all of last year, we grew on 30%, and my classic tagline was, business is good and the headlines are bad. And how do you manage that? How do you manage in that scenario? And the guidance to the team was a simple one, and that is we're not going to try and thread that needle. And that is as long as we're winning, as long as we're gaining share, we're going to invest. And last year was the biggest hiring year in the history of NetApp. And that's going to stay forward. And if the market does catch up to us, you know, I'd rather be in a position where we're going full bore, and if the market catches up to us, I'd rather put the brakes on hard and overshoot a little bit and then deal with that. And to look back two years from now and say, we just had our biggest year of new customer acquisition, our biggest market share gains in our history, and we were cautious so we didn't take advantage of it. So I don't want to look back in regret, I want to go full bore, and that's the kind of mode where we are, it was still operating on the plan we entered the year with. Okay, so you're seeing an opportunity, you're putting the pedal to the metal. This is really a case, I mean a lot of companies would kill to be in your position and have that kind of growth. It was, like you say, a little hiccup in the federal, but across the board, very strong. You're in a tough position though as a CEO. You've got very tough comparisons to last year. So we've seen you, I mean, you've got ONTAP, you know, you invented the whole concept and marketed it really well of unified storage. You've started to branch out into other areas. You know, you've got the e-series that's growing very well for you with the ingenio acquisition. You've got bycast, you've got deals going on with Compaq and Compaq, there you go, Commvault and Storenext with Quantum. So you now have a lot more operating systems that you're managing. Is that about expanding the TAM and really trying to continue to grow the company? Yeah, I think that it's important for us to continue to expand the set of customer solutions that we ultimately will provide an answer for. So, you know, I'm not interested in just being a portfolio company and having a lot of dissimilar businesses that are unrelated. You see in high tech, lots of companies that have expanded into business outside of their core where they can generate more, no leverage. And that has not generated shareholder return. So when I look at our business, I'm looking for businesses, obviously we believe in our core business. You know, we stay to flat out. In our core business, we believe we can double. But as I think about what we want to do, I want to look for the businesses that have affinity. Something that either my sales force could sell or something that by virtue of having enough portfolio, we can move more of our existing products. I'm not interested in being a holding company or portfolio player. My investors could make those decisions for themselves. They don't need me to diversify, they could do that. So as I look at it, I want things that can get leverage of my core business, but simultaneously without overlap. I think one of the key things about NetApp is that we built a big business without having a whole bunch of overlapping product lines that dilute our R&D. So we just acquired a new technology, but it serves a new market set, a new set of workloads. The last thing I want to be doing is having multiple products serving the same customer set. Because if I did that, eventually, we'd be replicating the same functionality over and over and over again. And I think that's been one of the reasons why NetApp has outgrown the market by such a big margin over 15 years, is that we've been a lot more focused. But part of that too, Tom, isn't it the luxury of yours? I hate to say it, but smallness. I mean, you're not a huge whale. I mean, at some point, you would think that those overlaps start to get that greater and you're going to have to start to make some tough choices about, okay, do we start acquiring software companies that might have been partners with us before? I mean, you're in that sort of mid-zone right now, aren't you? I think there's some of that, but all acquisition strategy starts with what you believe about your core business. And for us, we just had our biggest market share gain in our history. So I believe that if you just look at our business and you believe the IDC numbers, I don't believe any year we'll be right, but in the aggregate, if they believe that the market's going to grow 7% or 8% on a compound annual basis, then for us, just gaining a point and a half a share per year, that will generate 20% growth for us. And the number of companies our size that actually have generated 20% compound annual growth rate over the last five years is very, very small. In fact, there's only a handful of them in America. One of the things we saw that was different than last year when you were on the Cube is the massive growth in big data. And as storage is changing in obviously the internet companies and financial services and even federal, Hadoop and these commodity-based solutions. How are you guys responding to that as NetApp? Because you guys are playing on the edge of your product line in this emerging sector. You know, one of the things about big data is we need to be careful about what the definition is. So if you define big data as everything that's already big and consumes a lot of storage, that by definition, big data is big. We look at it really as three separate things. Number one is analytics. As you talked about it, how do I take data from a lot of dissimilar sources and make real-time decisions about risk or about investments or about treatments? So analytics is part of it. Another one is big bandwidth. We're seeing needs, sensors that are generating just tremendous amounts of data. A classic one is video. You know, we have an account that talks in terms of generating a petabyte of video data a day within a few years. And so collecting all of that data is, and you translate that into gigabytes per second. It's a big number. And it's not a number that's going to get met by a product that's designed to serve email or database transactions. So it requires a separate investment there. So analytics, big bandwidth. And the last one is content. Just massive amounts of data. It could be medical records. It could be emails. It could be pictures. It could be anything. But just how do I manage massive amounts of data? A lot of it being generated by handheld devices. A lot of it being generated by corporate events or media creation or YouTube or what have you. So the net effect of it is we see all of those is very, very different. And I think that NetApp has got a big play in each one. The acquisition that we just did was really focused around big bandwidth. Very, very high bandwidth, high data acquisition. And I think that just the last couple of weeks we closed the $14 million deal. And NetApp may be a big small company, but $14 million is still a big deal for us. Particularly in this environment. It's a big deal for Oracle. And then on the analytics side, out of that relationship came a new relationship with Teradata, who's the market leader in that space. So it allows us to participate in storage requirements on that end. And then the content side clearly data on tap and all of its richness is a big play there. So I think in those three segments as we think about it, it isn't one solution to all three, but I think NetApp is a big player. In fact, arguably the market leader technology wise in every single one of them. So continuing on that theme of big data, and you're right, a lot of it is how you define it. And I think you've defined it very nicely for your product set. But there's a trend going on. We had Amar Aadala on yesterday from Cloudera. And there's a trend going on of using commodity disks and saving a lot of money. And guys like you and EMC and HP and IBM are sitting there on very large array margins. But yet there's this huge opportunity. And everybody talks about lower cost. Amar said, remember this John, the biggest opportunity is in storage, believe it or not. That's where all the problems are. How does a relatively large company like yours be able to focus on that disruptive trend because the revenue's tiny? How do you do that internally? Talk about how NetApp solves that problem. Well it depends. If you look at the problem purely as a quote unquote disk and storage problem, then you get into this commodity argument. But if you're going to bring these things online and you're going to make business decisions and you're going to bring these systems that are going to make important decisions in the company, the data management, the data protection, the data security, the distribution, all of that stuff. So in NetApp we view ourselves more of a data management company than necessarily a pure storage company per se. So anything that creates large amounts of data create a very, very significant storage management problem. And that's an opportunity for our software. So maybe the raw data may get stored on commodity hardware. But the metadata, the analysis, the results, the backing it up and all of those things are still a very, very important market for us. So as we look at NetApp, as we look at Hadoop, what we're looking at is we're seeing some of our biggest customers doing experimentation there. A lot of those data feeds are coming from places where we currently store the data. We need to continue to protect it. But as these things become mission critical and are driving trading floor decisions or investment decisions or security decisions or credit card swipes, those things are going to be at a very, very high level of security just like other enterprise solutions. And I think our data management is going to continue to have a play independent of where the initial deployments are with Hadoop right now. So I think as it moves away from the science project phase into more the operational phase and the enterprise phase, then I think the need for mature proven products are going to be necessary in that domain. You know, the other trend that we're watching, of course, is this convergence. And, you know, VC put the VC coalition together and obviously HP is going hard at it. And initially I thought, wow, that's a really good strategy. You and I have talked a lot about the whole best of breed versus consolidated infrastructures. You guys responded actually very quickly to that trend. And I think you're showing me anyway, you're getting a lot of market traction. Talk a little bit about convergence, how you're playing there, where the partnerships are. I'd like to add, you know, add some color to that discussion if you could. Well, when I look at the storage market as a whole, what we see is that the independent players are gaining share and the server guys are losing share. But that said, the server guys still have a lot of, they still have a lot of market share. And if we're going to double their size, then clearly we need to be able to compete with that. So, if you look at the independent storage players, they're going to compete primarily on the vector of innovation. If you look at the server guys, they're going to compete primarily on the vector of integration. A one stop shop, server networking storage, all for one place, common service on the front and common support on the back end. And I think that's going to be the value proposition. And what it forces the customer into a choice is, do I value innovation over integration or vice versa? And I think for us, we need to recognize that there are customers that will value integration over the innovation capabilities of the product. So therefore, it's very important for a company like NetApp to partner with other like minded players like Cisco and VMware and Microsoft and the like to basically tightly integrate our stuff and be able to come to the customer with a value proposition that says, we are every bit as integrated as anything that those guys can offer. And we're also made out of best of breed technology that can create great business outcomes for you. So our view on FlexPod, independent of the other motions is how do we lower the barrier to acceptance of our technology for new end users? And that's what it's really about around this integration. So I think VCE took a very different approach, very service provider, very professional services intensive. I think we took a very, very different approach than they did. I certainly believe that we have as much of more momentum with FlexPod than they have with VCE, but the broader question is, how do we make this technology easier to deploy within our customer base? I have to say, Tom, my observation is that there are more similarities than differences. It's like Republicans and Democrats, but I understand the need to differentiate there. We're going to spend $2 billion on the next presidential election to try and highlight those differences. Which one's the Democrat and Republican? VCE or? I wouldn't touch that, but I want to talk about, shift gears a little bit and talk about Oracle and Oracle as an opportunity to net up. One of the things I love about your business is the OEM business. You've got, now of course you've got a bigger OEM business within Genio, but you sell to IBM, Fujitsu's a customer, and of course Oracle's a customer now. I understand that you've renewed that deal. They're going to continue to work with you, whereas some others they're maybe not as friendly with. What's your strategy with Oracle, both the OEM business and the direct business, or direct through your channel? Well, I think the relationship with Oracle is going to be a combination of, there'll be some element of competition, and there'll be some element of cooperation. I think that's just the way it is. You know, our original view with Oracle, particularly around Exadata, if I look at the things that it appears to me that they care about, and I certainly don't want to speak for Oracle, and Oracle's a fine company, but it seems to me that Exadata clearly is a high priority for them. Indeed. If you look at where Exadata is going in the market, a lot of the high-end data warehousing, which at least initially for NetApp, those are not where our install base currently lies. So I think that the Exadata's initial thrust into the storage business is a much bigger threat to some of our other competitors than it is to us. So the stance we've taken with Oracle is that we would like to partner with them, and we would like to complete the infrastructure. The transaction database and the data warehouse is one thing, but there's also the test and dev environment, there's the backup environment, there's the number of decision support environments, there's all those other things, which in many cases is more storage than the original copy of the data. And rather than taking Exadata head on, particularly in a segment of the market where they're probably going to be attacking my competitor before they attack me, then our status is maybe we can embrace that. Maybe we can make that environment stronger, more complete. I mean, nobody's going to deploy Exadata for test and dev, nobody's going to deploy Exadata for backup. We would like to be there to help them out, flesh out that infrastructure, and we have a lot of very interesting projects together. So I think in this particular case, Exadata is a bigger threat to my biggest competitors, and as a result, I think I can take an alternate approach to that business than they do. I think my big competitors, and we all know who they are, have to take the Exadata message on, head on as a threat. For us, it's not an immediate threat, and I'd rather embrace it and use it as a strength. You mentioned backup, and we all know the data domain story, but you've actually got a pretty good backup story. Do you look at backup as a business? You guys don't talk about it a lot, but what are your thoughts there, or is it just sort of part of the existing data protection as part of the existing infrastructure, and that's just, you have a different philosophy. Talk about the data protection opportunity. Well, to put data domain in context, I mean, when we look at backup, first and foremost, we want to sell the disk-to-disk backup offering that's behind our primary storage. So when NetApp is the primary storage, we want to sell the disk-to-disk backup behind it, and for us, that's a big market. That's a multi-billion dollar market in and of itself. So the things that we do, that we can leverage our technologies, our snap mirror, our snap vault, all of that technology, now we just have a relationship with Commvault, which helps us manage and catalog our snapshots to make that feature more rich. So that's one thing. The push for data domain was not to really answer the question of disk-to-disk storage, or disk-to-disk backup behind our primary storage, but it was a heterogeneous. When somebody else is the primary, how do we participate in the disk-to-disk backup market? And that was what data domain was interesting. So we've continued to do technologies of ourselves in that particular dimension. We've partnered with the backup companies. We have a partnership with SyncSort, which also does some heterogeneous work for us. So I think we're building out the portfolio there. I also believe that in the long run, a standalone data reduction device for the purpose of backup is not going to be how backup's done five or 10 years from now. So I think backup functionality will merge upstream either into the server, into the backup software. It'll be a service. So I think for us, clearly there's a clear market for the data domain product today. I certainly wouldn't deny that. I think it would be fair if I said otherwise. But I think over time, I don't think that's a predominant model. And I think we want to look at where this industry is going and how do we participate in backup as it evolves as opposed to a standalone data reduction appliance. Excellent. Tom, George, and Joe is a great guest. Really appreciate your friend of the Cube, an alum now, been on a couple of times. Great in-depth coverage there. Fantastic. Thanks so much for coming on. Appreciate it. Thank you. Good to be here. Good to see you. Good to see you again, George. Thank you.