 Okay, we're back. This is Dave Vellante. We're live at VMworld 2012. We're here in the hang space at Moscone North. Come and see us. There's a lot of good action going on here. Of course, the cube is here. This is our third year. This is day two for us at VMworld. You know, a lot of talk over the last several years about cloud, right? A lot of what we call cloud washing. Well, we're here with a company that doesn't cloud wash. They're basically serious about the cloud. They built it from the ground up. Nervonix, you know them well. Long time guest in the cube. Scott Gennaro, the CEO, and Drew Borden, who is the new chief strategy officer. Just joined the company about six weeks ago. Gentlemen, welcome. Thank you. Scott, always a pleasure to see you. We've done a number of these events. We saw you at NAB. We see you at all the big tech shows. VMware in VMworld is the new enterprise tech show. We were kind of talking about off camera. And you kind of, you got to be here, right? I mean, it's like Comdex used to be. Yep. Right, and, but so, give us an update on what you guys are doing, what you're doing here. I'm obviously meeting people, having a lot of business meetings, but what's going on with Nervonix these days? Yeah, so, you know, we're obviously continuing to grow pretty dramatically, you know, year on year, quarter on quarter, so we're pretty excited about that. This is one of the biggest events we do throughout the year. It's not only a great event to meet with industry analysts and people like yourself, but from a customer, I mean, this is a who's who's of customers. I was just over at our booth. It's jam-packed, you know, three or four deep of just people wanting to come by and have conversations. And it's a great opportunity also for someone like me, who travels a lot to be able to get a lot of meetings, you know, in a few days. So what are customers talking about at the booth? What are they asking you? What's the conversation like? Well, you know, once again, a lot of it is around, you know, how do we get our data into our cloud, into, you know, cloud storage? How do we monetize, you know, data that we basically have to keep, but we basically want to get to a point where we can potentially monetize it, right? And so, you know, it's a big conversation that we've had across the board. There's a lot of, as you mentioned, a lot of people talking about cloud. So we spent a lot of time talking about what we call real cloud, you know, reverse, you know, people just putting the word cloud on, you know, on a wrapper. So. Yeah, so, I wanted to talk to you about something you said was monetization. We've seen a couple of firms, three I can think of our fan, two are your customers, Cerner is one, USC is another one. Essentially, turning their IT and pointing it externally. And NYSE was another one that we had on here this week. And we've talked to Cerner and USC. That's a growing trend. And in those, the first two cases, they're using your cloud to do that. And they're using it in a private or even a hybrid setting, is that right? Right, yeah. So we see more and more large customers who are implementing private type clouds to not only utilize it for themselves, but they're also now making decisions that they want to monetize the private cloud that they've invested in. And they're going out and offering cloud services. So example, in Cerner, they're going out, they have a product called Skybox. They're out now offering to hospitals cloud services. USC Digital Archive is out now talking to USC Medical. They're talking to their students offering cloud services in addition to utilizing the cloud for their own personal use. So a lot of people doing that. A lot of service providers are starting to implement. We'll be announcing a few in the next quarter or so that have already bought private clouds that they're going to roll out their own cloud offerings. Yeah, and this is basically, these companies taking a page out of Amazon, if you will, pointing their infrastructure to specific industries and use cases and really trying to deliver a greater level of SLA for the clients. Let me ask you, you've got a strong background in media entertainment, obviously, a lot of need for archiving, digital media. We saw that at the NAB show, just an amazing innovation there. Why did you join Nirvana? Tell us a little bit about your background and what lured you to this company. Absolutely. So most of the last decade has been concerned around content collaboration for me inside the balance of big broadcast networks. And whether that was standing up the original IP streaming over the internet of our broadcasting programs or it was working deals with the Hulu's, Amazon's, Netflix of the world, what it became clear to me is that the entire process of creating that content was moving outside of the walls of the traditional studios, the traditional broadcast networks, and it was fundamentally going to where the content was being created, whether that was with the director in the field that was sending digital dailies over the wire back to a studio in Los Angeles or a post house. So it became apparent to me that in the long run, that is the convergence, which is to say it's diverging from that environment into the cloud and it becomes an entirely new mechanism for creating that content, collaborating around that content, distributing that content. And it feels like Nirvonix is a good example of being in the ground floor of that, particularly storage being the enabling factor around that. And obviously strong affinity to your world. You guys just did a deal with Fox. Obviously, that's a nice, is there any studio left that you're not working with? There's one left and it's going to close in this quarter or next because they've had a proposal, they've been evaluating our technology. But, yeah, we're excited about Fox being a new customer of ours. It's an interesting use case because, in addition to a lot of people talk about backup and archive, they actually replaced most of their NetApp devices in their locations around the US with our technology. These are big deals that you're closing. I mean, they're multi-pedabyte deals. I mean, you must start, to be getting the attention of some of the whales in the industry, are you? Or are they just not competing for this business? Yeah, I mean, to be fair, the large storage companies all compete, right? They don't have a real good solution to compete with. So, but are they participating? Yes, there's no question. I mean, as we've talked about before, I mean, we're going in trying to convince the customer to do something different. It's a whole different value. It's a whole different ROI conversation. And it's a different value proposition, not only financially, but technically from that point of view. But that being said, are we getting noticed? The answer is yes. We do know there's kill kits on us now for most of the major competitors, of how to compete with us and what to say. We've seen a few of those. Yeah, exactly. But once again, when we have something that's very different than what everyone else has, the knockoffs are usually hard to have because you don't have something to really compare apples to apples with. Well, what are they saying? What are the knockoffs? I mean, small company, okay. Small company, do they really, are they able to support you in the sense of the scare tactics of security putting data in the cloud? We used to get that through pretty quickly. The question of features, functions, but we do it differently. Do we need thin provisioning? No. You really need to understand the type of data we're putting in the cloud and what we're utilizing it for. And when you really zero in on that and you spend time understanding how we position our products and our company, it becomes very clear that a lot of the stuff that they're mentioning has to do with tier one enterprise type functionality and that's not the space we're focused in on. So from that perspective. Well, it's hard. I mean, those knockoffs don't put a lot of water. When you go to a market with IBM, you know, they're not a small company. A lot of rumblings in the market about from Dell customers, are you guys, are you working with Dell? That's not, you've not announced anything but can you talk about, are you specifically working with Dell? Yeah, so we've always had a relationship with Dell which has been a little more opportunistic if you want to call it that. But in the last quarter or so, Dell has made a decision that they're going to be rolling out and reselling our technology. Yeah, because Dell, I mean, I would think Dell is a perfect partner for you guys. I mean, they have just an amazing distribution channel. They've played around with, you know, Caringo and Object, but the, it seems to me it's never gained a lot of traction. I think there's a lot of potential there. How's the IBM relationship going? It's great. We've gotten a lot of net new customers from it, well over 100 plus net new customers from the IBM relationship. And so, IBM's a big company and constantly getting in there and driving them to go do that. But they're very committed to cloud and obviously on the services side. So when you bring up Dell, I mean, Caringo is a great example of a point product. And there's value of having point products that do, you know, file-based type environments. But once again, we don't really compete with that product when you look at what we do versus what that product does. So we actually feel in the Dell strategy there's room for both across the board. So what's your secret sauce? I mean, how is it that you all are able to win these multi-petabyte deals? Is it the business model? Is it the mindset? Is it the fact that you're a cloud specialist? All the above, can you talk about that a little bit? Yeah, I think it's really, it's all the above. But remember, this is a company that's been around developing ITP in the space for four or five years now. And that's a, it's a non-trivial exercise to build up and operate this at scale. Then there's the operational discipline around you, how you can host and provide the level of SLA that we do. And at the end of the day, it has to be far more efficient than what the enterprise can do inside. We can operate at scale that they'll never be able to in many cases. And then I think what really resonates with a lot of our customers, besides the technical features, is the geographic distribution and replication of our content. Because at the end of the day, no matter what happens to the on-premise gear, there's always one or more, and there's more in our case as a copy, sitting in multiple places around the world. That was really what was the driving factor for NBC Universal when they decided to move their gold masters off of Universal's lot, because they had a fire that almost destroyed the original sort of archival content into multiple geographic location. And no vendor could offer them a solution on-prem that was ever going to meet that particular need. Yeah, you guys, I've talked about, often, a global namespace. And you've got a true global namespace, meaning a lot of people talk about global namespace, but it's a global namespace within a data center. That's not a global namespace. You guys have a different point of view on that. Give us some depth on that, if you will. Yeah, go ahead, Drew. Yeah, absolutely. So, it's the ability ultimately to reference the file, geographically distributed, many replicas, but there's a single way to access it, and then we'll make the decision around where to pull that file from and how to fulfill the request for it. Now, what I think is really compelling about that is that we're able to meet the customer on their terms and their file system. So there really is no change when they move it into our cloud. They take their underlying structure, and it can be as simple as copying it through some device or any number of mechanisms directly into our infrastructure, and we replicate that exactly back out to them. Now, we were talking about SLAs before, Drew, you had mentioned it. Scott, you and I have talked a lot about how you don't really compete with Amazon. But conceptually, Amazon got this whole thing started. They sort of invented the concept of cloud. You don't run into them head to head, but everybody talks about Amazon. So you guys saw this announcement of Glacier. I blogged about it, and a number of others have as well. I took the CIO perspective, and basically my premise was you wouldn't put your archives, your critical corporate asset in the Amazon Glacier. You just wouldn't. Notwithstanding that it's going to be expensive to get it out, and we don't really know a lot about it, but just the history that Amazon has had in terms of the way they've responded to failures. I love Amazon. I think it's great for certain use cases. We're customers of Amazon, but what's your take on Glacier? What's your point of view on that? Yeah, it's a good question. And by the way, as you know, I spent about 60, 70% of my time in front of customers and prospects. And in the last week or so, everybody I have gone out and visited, I've asked them about it. I mean, we're not shy about it. It's out there, we've talked to them about it. And very similar to what you said, a five hour to just get to a point where you could potentially start downloading three to five hours, everybody we talked to of any size has said that's way too long. They're not going to put up with it the whole bit. Will they do minutes, maybe? Will they do 30 minutes, maybe? Will they do an hour? But you start getting past that 60 minute time frame to recover, it doesn't make sense for them to do that from that perspective. I think your other point is that once again, customers, when you think about either archive or even a deep archive type environment, customers still want to figure out how to monetize this data that's sitting in the cloud. So let's take rich media. Having something that you've stored for 25 years and all of a sudden now, I mean, Neil Armstrong just passed away, right? To pull pictures of the lunar landing and old footage on that in the whole bit, it's a time and point. And you've got only a maximum of a day and you can't afford to take half your day trying to pull the data off of it. It's just not worth it. But the amount of money you could potentially monetize that footage you have, if you want to call it that, could be huge if you're the first one out quickest to be able to go do that kind of stuff. So customers want a second tier in the cloud. We offer that. We have a deep cloud type archive solution that we do do. So yeah, it's great at one sense. It's interesting to do that. And by the way, if you use deduplication, you can get down to those types of levels without doing a five hour replace, move data around. And I'm an old storage guy and I got to tell you the only way to do this with disk is you either turn it off or you're having some sort of removable media. And when I was at Atachi, you never want to disk the turn off, especially not RAID type disk, because you'll be lucky if it comes back up and you never want to be able to move data. We used to say anytime a person had to get involved and that's when things got screwed up, right? I mean, machinery works fine, but when you actually get individuals in the middle of it. So there's a lot of questions about, in addition to that related around cost, what does this mean? Because at the end of the day, when you need that data, you need the data. Yeah, so you're saying you already offer a deep, deep archive service. It's substantially less expensive than your main line service. Okay, good. So you actually were first to market. We have some of our larger customers where we tier data with inside. So. Okay, good. Well, that's a trend we're watching. And, but I think you're right. I mean, people are going to want access to that critical data because, as Drew, you were saying, they want to monetize it, can't get access to it, can't monetize it. I wanted to ask you guys about this Cloud Starter Kit. Hear a lot about Starter Kits. What's that all about? I know you announced something with TwinStrada. Right. What's going on there? We have a lot of companies who have come to us and said, look, we want to dabble in the cloud. We want to play with it. We want to create a little environment where we can start dipping our toe in, if you want to call it that. So, we've created this Cloud Starter Kit. It's 50 terabytes. It's all inclusive. So you install the gateway product. You've access to the 50 terabytes. It's a pretty great ROI from a cost point of view. I think it's $49,000 for a 12 months usage of 50 terabytes. That's a great price point. And customers love it. It's great for the channel. One of the struggles you have sometimes of how do you sell the cloud, the on-compassing cloud. People get a little confused by that from a services point of view. But to be able to say, hey, here's a SKU that is 50 terabytes, everything you need to get started. It's getting a lot of traction, a lot of interest from it. Not only from a customer that wants to tip their toe in, but from an SMB type space and also the channel. So people are still concerned about the cloud. They're worried about security. One of the things that has always attracted me to your model is that you can go in the cloud or you can go on-premise. Your customer makes that choice. You made an announcement recently about getting off mainframe storage into your cloud. How's that going? Well, surprisingly, a lot of interest in it. And we knew that when we announced it, or when we looked at the market, but you never really know until after you announced it. Every major financial institution in Wall Street still has a mainframe. Surprisingly, nobody likes to talk about it. Yeah, I would say every movie studio runs all their licensing infrastructure off mainframe for the most part right now. So the one thing that, and by the way, I used to work in the mainframe world a long time ago. And the one thing that's still true that the cost for storage in the mainframe space is still a lot more expensive than the open system side of the house. So being able to come in and offer a tier for cloud storage or tape replacement and all the stuff we're talking about at the price points we're talking about, it's such a huge ROI and it's such an advantage. And these guys have been looking for this from that perspective. A lot of people aren't really innovating in that space, but that space has not gone away. I mean, the idea that the mainframe is dead is, you know, it's actually grown. When you look at some of the numbers that IBM has shown if you peel back their hardware numbers. So we think it's a huge space, you know, EMC, or not EMC, did a domain went after that space pretty aggressively when they were a standalone company. And we think we'll have similar success in that space. Okay, so you, is it generally available to the service? It is. And you've sold some? We haven't sold any yet, but we've got about 10 proposals out. You do, okay. And they're big deals. Genuine interest and you think you'll close some deals this year? Yeah, I mean, it's triple digit terabytes. Yeah. I mean, it's not five terabytes. It's a lot. And it's all sitting on tape today or? Tape or storage, you know, either or, but a lot of it's on tape, but a lot of it's sitting, it's just like any environment. There's a lot of data that sits out there that's probably 60, 70% of your data that you haven't touched in a year or two. And that's great, you know, a great cloud opportunity for us. Interesting. All right, Scott and Drew, thanks very much. Appreciate you guys taking time out to come in the cube. We're here live at SiliconANGLE TV's continuous coverage of VMworld 2012. Again, gentlemen, thank you very much. Thank you. Good to see you, always a pleasure. And keep it right there, we'll be right back. 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