 From Las Vegas, it's theCUBE. Covering IBM Think 2018, brought to you by IBM. Welcome back to theCUBE. We are live, finishing up our first day of three days of coverage on theCUBE. From the inaugural IBM Think event, I'm Lisa Martin with Dave Vellante, talking about snow conditions. We're in Vegas though. It's a beautiful day. So we'll leave the snow to California and the East Coast. That's the again getting slammed. Dave and I are joined by Mark Bregman. SVP and CTO of NetApp. Great to have you on the show. Thank you. So what's new? I was talking about before we started that I was formerly at NetApp and Marketing quite a few years ago. What's new at NetApp? What's going on with NetApp and IBM? Well, first of all, if you'd been at NetApp a few years ago, you probably thought of us as a storage company, but increasingly we think about ourselves as a data company because it's really all about the data. And so we're doing a lot of work with IBM in a couple of different areas. One of those is extending our data fabric, which is really the software capability to manage and move data across different types of storage, move it in and out of the cloud. And it's absolutely crucial when you look at some of the things IBM is trying to do with the IBM cloud and with a lot of the machine learning applications. So Mark, what's the difference between a storage company and a data company? Well, I think about it as sort of, think about banking. 150 years ago, if you wanted to get a bank, you would probably go in and inspect whether they had a good solid vault to store your money. I guess when you opened your bank account, you didn't do that. You just take that for granted. But you went and know if they had the services to access my money, move my money, inspect my money and do those kind of things. And the same thing is happening in our industry. Storage is still important, just as the vault is still important, but it's not the first thing you think about. So the more important thing, the thing you do think about is, what can I do with my data? How can I move my data? How can I get access to it? How do I protect it? And the actual storage is critical as an enabler, but it's not what most people are focused on. So those activities that you just mentioned, those sort of adjacent value producers, those are services that NetApp provides that it didn't use to provide or it provides them in a different way. How are things changing? Well, from the very beginning, NetApp started as actually a software defined storage business long before that was a term. The first capabilities that NetApp delivered were software based on commodity hardware. And over the years, we had to also get into the hardware business. But most of our value historically has always been in the software. And it's really been, how do we ensure the data doesn't get lost? How do we move the data efficiently? How do we make copies? And all of those things which are frankly more data oriented than storage oriented, although they were sold with the storage systems. What's changed now is branching out beyond just the NetApp system to be able to carry that capability to the cloud and to other places that people want to keep their data. So what does that mean from a CTO hat on from it? I mean, it used to be, it was waffle and it was the operating system and that was sort of the core focus of the company, the products. Still, I'm sure, great products. But it sounds like from a technical perspective, you've had to evolve. Can you talk about that? Well, we have. We've had to take those capabilities which we used to tightly integrate with hardware and build an appliance and sort of peel them apart and say, we can take this capability and put it somewhere else, for example, in the cloud. And that same capability in the cloud now allows us to essentially treat that element from a data point of view, treat the cloud just like another NetApp target. And that's what allows us to rapidly and easily move data back and forth. Talk to us about from an evolution perspective. I'm glad you brought that term up, Dave. How has NetApp's customer base helped facilitate this evolution to be able to give them the values that they're demanding in terms of multi-cloud, different vendors? What's that as a CTO that needs a lot of customers? I think it's been a very synergistic sort of thing, which is our customers, as they move to the cloud, almost force us to figure out how can we continue to help them as they move their data to the cloud. And as we do that, the customers and new customers say, oh, that capability I didn't realize I could leverage and they find new ways to leverage their data in the cloud and on traditional hardware in this kind of emerging hybrid environment. And that's very crucial for a lot of our customers. So I want to go back to what you were saying before, about you were always a software defined company. 10 years ago, if you looked at it, hardware companies, storage companies would sell a product. They would mark up a Seagate disk drive 10X. But the real value was in the software, wasn't it? I mean, I don't know how many hardware versus software engineers work at NetApp, but I'm guessing it's way more software engineers than there are hardware engineers. So is that essentially what you're doing to change your business? You're now selling software function? We are, and we're doing it in two different ways. We sell software that you can put, a customer could put on their own hardware, sort of traditional software defined storage. But increasingly, we also sell software as essentially sell storage or data management as a service in a cloud platform. And then the customer doesn't even think about the software. The cloud provider may have to think about it, and we have a lot of relationship with cloud providers to do that. But at that point, it just becomes a service to the developer or the user that's building on that platform. Some of the announcements coming out this week with IBM with respect to cloud AI, for example, what are some of the things that excites NetApp about what you're going to be able to help your customers achieve based on some of these new innovations? Well, I think the work that IBM's doing in the whole area of AI, machine learning, is tremendous, and we're benefiting in many ways. One is we're a user of that technology ourselves. We're increasingly using machine learning to analyze massive amounts of data from our customer base so that we can get, we have a solution called ActiveIQ, which collects that data, 70 billion data elements, and allows us then to understand the behavior of our systems and our software in the field, make recommendations proactively to customers. For example, a single customer may have a configuration that isn't optimal. We know that because we see all the other customers. We can see that their configurations are giving better results. And so that allows the whole marketplace to benefit. And that's leveraging a lot of the AI in machine learning technologies. That is one of the areas where there's a lot of synergy between in our work with IBM, we're often the storage that's underlying the machine learning and we're using the machine learning at the same time. So, as you sort of go to market or partner with IBM, NetApp actually, people may not know this, has always had a long relationship with IBM. IBM for years resold your filers and probably still does for all I know, but how is that relationship evolving and changing? Well, I would say it's mostly evolving in the sense that it's not just at the level of storage. It really is moving to this data layer as IBM is defining their platform. We're a key partner in helping understand how to bring new capabilities in storage and data management to support their new capabilities in cognitive computing, AI and machine learning. How does that change the way in which you develop products? You have to be more sort of API friendly and... As we build our products today, we have to think about how to make our products at each layer a kind of platform for the next layer. So, even though IBM's building a platform at a lower layer, they're also accessing our capabilities through APIs and you could argue we're turning our data fabric into a platform. And does it change? I mean, people use the word future proof. How do you future proof your products in that world? Well, I think that the beauty of APIs is that allows you to continually innovate at just below the APIs without having to disrupt everything above it. And that's why this sort of layered approach with clean APIs allows innovation of the storage layer, innovation of the data management layer, innovation in the AI and machine learning layers, all the way up to the end user application. Without the old world model, where everything was sort of monolithically built, if you make one change, everything breaks. And so it's allowing us to move much more quickly with our rates of innovation, independently of the other layers, the other players who are innovating as well. So NetApp has reinvented itself a number of times. You've done it again. I mean, I remember NetApp, when it started out, it was like workstation storage. And then it was internet storage. And then after the .com bubble blew up, it was enterprise, you know, storage. Then you changed your name. Well, and we started with just file, filers as you said earlier, and then we expanded into unified storage doing both NAS and SAN. We also supported initially just NFS, and we supported SIFs. We supported huge transformation as we went into the virtualization world with VMware. So this is, we've continually evolved, and we're doing it again. And so how would you characterize, you know, sort of the current wave? You said before, about the data. I think the current wave is really, if you think about our traditional or our historical business as being the appliance business, I think we're going in free directions right now. One of which is extending away from the integrated appliance to the software defined, put our software on your own storage or your own system. We're also moving in a direction to put it on the cloud and partnering with cloud vendors. And we're moving in a third direction, which is moving higher up in value to data management, not just the storage elements. So certainly a customer could take our software today and use it purely for storage in the cloud or on a white box. But what they find is there's a lot of value in the higher value data management, and that's where we're working with IBM and others. Yeah, and you've always focused on the data management piece of it. Now that correct me for a moment, kind of reluctant to go out and, for instance, buy a backup software company. You'd rather partner with folks like that. We do that through partnerships. That philosophy has not changed. It hasn't changed dramatically. There may be some areas where we have deep expertise and we extend a little further and there'll be other areas where, frankly, we don't have that deep domain expertise and we provide the capability for others to extend that into broader data management. So as we've kind of touched on the evolution of NetApp, we've talked with a number of folks today alone, Dave, about the spirit of innovation as a culture within an organization. Is there a programatized innovation group or lab within NetApp that really helps to drive where those three directions that you talked about? Well, yes and no. I have a small advanced technology group that experiments and looks at things well beyond the roadmaps. But really innovation belongs, is done across the company. Every engineering team is thinking about how to go beyond their roadmap. They're driving innovation. We have a lot of communication across the company between my advanced technology groups and the individual business unit development teams because in many cases, those feed each other. We find new challenges talking to the current business unit developers and they find new ideas talking to some of my team might be looking out three, four years out in the future. A great example of that is very hot topic right now is blockchain and we're looking very hard at how could we use blockchain to, again, rethink the way that you handle and manage data through its lifecycle. Could you use this as a way to organize data management so that we know the authenticity of the data? We know who's seen the data. We know who's touched the data. And once you can do that, you can think of lots of applications in data security, in data lifecycle management, in data provenance, across the whole spectrum. So as a multi-multi-billion dollar company, storage company, software defined, whatever you recall, when you see a company like Filecoin get launched, cryptocurrency, peer-to-peer storage, you know, the tendency of established very credible players might be to laugh that off, but we've laughed off a lot of folks. You know, they've learned our lesson there, but what do you make of a company like that, trying to disrupt, you know, S3, for example? Yeah, I think it's very interesting. We look at those very carefully. We try to understand what's the unique proposition that has value. Sometimes there's a unique proposition that just has visibility, let's say. Maybe that's not as valuable. And sometimes there is really no uniqueness. They're just playing the game slightly different way. My own personal view is that all of the excitement about, and whenever you put the name Coin in it, that's always disturbing right now, all the excitement about the cryptocurrency relationship to blockchain, I don't think is going to, in the long-term matter that much. On the other hand, these distributed ledger technologies, which blockchain is one, I think are going to be fundamentally important. And I think we're going to find them turning up in core elements. I mean, if you think about, you mentioned Waffle early on, if you think about several years ago, there's a lot of discussion about log-structured file systems and all. Could you use something like a distributed ledger technology to create that log in an immutable, distributed way where I don't have to trust any individual system? I don't have to worry about availability in the same way because there are multiple copies. The blockchain or the distributed ledger manages that. It could change fundamentally the way we architect these systems. It's not going to happen overnight. But that's what we're looking at. We are looking at every one of these little startups that have new ideas. Well, what I'm fascinated by, I mean, Filecoin's interesting because they raised $250 million in like 30 minutes, forget about the crypto craze. That's more than a series A for a storage company. So, and seemingly some smart guys who see what happens with the innovation piece. The other interesting thing to me about blockchain is this whole new sets of protocols being built out. And there's an incentive for developers to actually develop them versus the government who years and years ago developed SMTP and DNS and IP, et cetera. Well, to be fair, the government funded that, but it was done by the same developers. But this way there's a different source of money. Yeah, but those guys didn't make any money. No, that's true. Nobody made any money off of Linux, really, I mean. So now there's a huge incentive for developers to do that. So I'm really curious as to where the next wave of innovation is going to come from as an advanced technologist. You got to look at that and say, I'm going to keep an eye on that. Oh, absolutely, I mean that's why we're watching it. Do you think blockchain, I know we got to go, but there's a lot of concerns about scaling, you know. Well, that's why I try to distinguish between blockchain and distributed ledger technologies. There are a lot of emerging technologies that are fundamentally similar to very abstract level to blockchain, but are implemented differently. You have to remember, blockchain was built for cryptocurrency and it was built to be inefficient by design. Yes, right. And so taking that same idea and saying we're going to use it for these high performance applications is probably not the right approach, but going back to the idea that I can have a distributed, fundamentally untrusted network and I can create a trusted ledger, that's pretty interesting. And there are a lot of interesting emerging technologies that I think some of those will become the core. And use cases for sure. Distributed databases have never been easy. It's always been challenging for scale, performance, latency, et cetera. I wonder, what can those problems be solved? You think about the challenge of data prominence and in the world of GDPR and all of these things, the ability to say I know where all the data is, I know where it came from, I know who's touched it, all of the discussion going on, probably here at this conference about GANs, where you can make video that looks just like you, but you weren't in it, for example. How do you keep track of the data? So I know this really came from that camera, it was really you and not a video reproduction. That's going to become more and more important and that's where I think these technologies could become really valuable. Something we've talked about, data prominence for 20 years, but we've never really been able to implement it at scale. Well, and you see the explosion of all the stuff, fake news and the like, Facebook's now more powerful than the UN and 2020 election is going to be about fake news. And so things like that are really technologies that can solve that problem. Hopefully have legs, so. I think so. Awesome, thank you. Great, well thank you. Thanks so much for stopping by and sharing what's going on at NetApp, kind of walking this through your evolution and some of the exciting things coming. We wish you great rest of your fiscal year. Great, thank you very much. Thanks, thanks. For Dave Vellante, I'm Lisa Martin. 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