 From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. Hi everybody, welcome to this breaking analysis in this CUBE Insights powered by ETR. I'm Dave Vellante and this episode is about data protection. You might be saying, Dave, why are you going to bore us with the conversation about backup? Well, it's interesting. The market is actually quite hot. You know, over the last 18 to 24 months, there's been well over a billion dollars, probably 1.3, 1.54 billion dollars raised just from companies like Rubrik, Cohesity, Druva, Zerto and a number of other startups like Clumio is a name you might not have heard of and I'm going to mention a couple of others. So you have this situation where these upstarts, particularly Rubrik and Cohesity, are really challenging the install-based players and they're spending a lot of money on marketing and on engineering and sales and they're going to market and they're really shaking things up and I want to talk about that dynamic, share with you some ETR data and talk about some of the other players like Veeam who was a rocket ship because of the virtualization trend, how are they faring in this kind of new market and why is this market gaining so much attention today? And what does this mean for incumbents? What does it mean for customers who can achieve escape velocity and what are some of the likely outcomes that we see? The market's very confused right now. If you look at the Gartner Magic Quadrant and compare that to, for instance, the Forrester Wave, Dell EMC's not even in the Forrester Wave, Gartner Magic Quadrant has Rubrik not as a leader and it's just all over the place and so what I want to do is use some ETR data and some context from theCUBE to share with you our audience what we are seeing in the marketplace and kind of what it all means. So let's get into it. Alex, if you bring up the first slide. I first want to make a statement about the overall storage market. The ETR data set, which is incredible, doesn't drill down into backup although it does have pure play backup vendors in the data set. So I want to start with storage because it's the superset of the data protection market. So what this chart shows is all the sectors and it shows the net scores. Remember net score is, they ask every quarter, are you spending more, are you spending less, are you spending the same? They subtract the less from the more and that gives you net score. So this is the net score for the three periods of October 18th survey, July 19th survey and the October 19th survey. And you can see the red line shows, storage is kind of on the back burner. Yeah, it's upticking a little bit from previous surveys but it's got a net score of 18. That's crappy. I mean, it's not really a hot market I've talked in previous episodes and breaking analysis as to why really two main factors that I cited, cloud guys eating away at the traditional storage array business and flash injected so much capacity and performance into the equation that data center managers are saying, hey, I don't really need any more storage right now. So storage is kind of on the back burner. You can see I blew it up here and you can see sort of how it's playing. You see the hot sectors are analytics, cloud computing, container platforms, data warehousing is making a comeback. I've talked about snowflake on previous breaking analysis, machine learning and AI and new workloads, robotic process automation, even virtualization. These are the hot sectors that are driving spending. But I will tell you, storage ultimately is going to be there. It won't be down forever because people are always going to need storage. These new workloads are going to require new storage and obviously backup. If you go to the next slide, Alex, you can see some of the vendors here. So we've sort of established, okay, storage is right now it's down, it's not one of the hottest sectors, but you can see there's some companies in here that are pretty hot. Rubrik leads the list with a net score of 53%. Now the shared end, might be a little hard for you to read here, but the shared end out of the last survey, 1300 respondents from the ETR survey answered what their spending intentions were. And then the individuals mentioning specific companies, in this case Rubrik, 55. So it's kind of a small shared end. You can see Pure Storage, a company that we've talked about previously, continues to show strength, 48.1%. Down slightly from the previous quarters, but still really the only clear share gainer in the overall primary storage market. Again, Rubrik, you can see Nutanix is up on the list. Veeam is actually quite impressive. I'm going to show you some data in a minute that I think will impress you in terms of Veeam's continued staying power. You see Veeam on there, Cisco's on the list. God knows why Cisco's on the list. Their storage is not perceived as leading, but they do have offerings and Cisco's so big. People just kind of say, yeah, we're buying from Cisco. You see Cohesity there. We'll dip this past survey, but still very strong. Again, I'll show you some other data there, et cetera. So you can see the point is, even though storage is down, there are a couple of shiny stars, like Rubrik, like Nutanix, Pure Storage, Veeam, Cohesity, et cetera. So let's dig into that a little bit. Before I do that, I just want to share with you some trends on this slide with regard to the backup market. I underscore backup because it's no longer just the backup market, it's evolving. So there's pressure on the overall storage market, but data protection is actually really hot right now. It's captured a lot of venture capital. Startups are moving in. I'll mention a few that you might not have heard of. Why? Well, several reasons. One is the data explosion continues. It's growing at an exponential rate and it's kind of non-linear. Digital transformations are all about how you leverage data. And so if you're making your business a data business and a digital business, well, you better have a way to protect it. So things like ransomware are coming into play and people are really concerned, obviously, about ransomware. So data protection evolves and expands, sort of transcends backup into business continuity. Cloud and hybrid cloud are some other trends that I'll talk about in more detail that are driving opportunities for what were traditionally known as backup and really now are evolving into sort of these new areas. Last decade, it was about moving from tape to disk. Tape sucks, that was kind of the data domain mantra. And they were the hot company of last decade. They did an IPO, they reached escape velocity, they sold for 2.5 billion. But today, the data domain platform that EMC bought and now is Dell EMC is kind of old school, right? It's these new guys that are coming after that. So while data domain pioneered data duplication and higher performance backup moving to storage, today it's a whole new conversation. And people have come to the realization that the primary and active storage is only about 20% of the stored data. All the less hot data, I don't want to say inactive stuff. It's not cold storage, but it's files and objects and copies and replicas and backups. That's 80% of the marketplace today in terms of the volume of data. Not necessarily the spend, you know, OLTP stuff, primary storage is expensive, flash arrays expensive, but huge opportunity, especially in terms of data growth. That's where all the data growth is happening, all that unstructured data. So today the conversation is evolving to data protection, data management, data assurance, particularly with containers. So you think about spinning up containers, spinning down containers, you know, dozens, hundreds, thousands of containers. How do you keep track of that stuff? How do you protect that? How do you assure that your data's not leaking, that you're not exposed? And so that's a really hot area that you're seeing a number of startups focus on. So real focus on recovery becomes much more important for a digital business. How fast can I recover? Security, compliance, this notion of data assurance, CDM on this slide, which is stands for copy data management, a practice that was really popularized by Actifio. DevOps, really supporting DevOps through a data management platform, being able to give live copies or near live copies of data so that, you know, tests can be tested on much more fresh data and compressing that cycle time. Analytics becomes more important. I talked about ransomware before. Well, you can look at the backup corpus and do analytics on that to see if there are anomalies and anomalous behavior just in terms of bad actors coming in. So all this stuff joined with cloud and hybrid cloud and is sort of bridging the legacy business and it's bringing out a lot of new challengers to the incumbents. So let's take a look at some of that data from ETR. Alex, if you go to the next slide, this is the ETR data set on backup vendors. So what I've done here is pulled out of storage the pure play data protection folks. So I can, you know, call them backup vendors they hate when I call them backup. No, we're much more than backup. We're data management. Now data management means a lot of things to a lot of people, but nonetheless they are expanding and transcending pure backup. So credit to them. This is the net score timeline from January 2017 to the latest October survey from enterprise technology research. And you can see here, I've pulled out Rubrik, Cohesity, Veeam, Commvault and Veritas. And Rubrik leads, as I say, with 53% net score followed by Veeam, 44%. So you can see Veeam really hanging tough. The Cohesity just relatively new to the survey jumped up, jumped down a little bit in this quarter. You'll see that. You'll see that in the ETR data. Anyone get too freaked out about it? I think Cohesity still got some tailwinds and momentum does Rubrik, but look at Veeam. Veeam's ascendancy came from really Veeamware. They were the Veeamware specialist and they were all virtualized. And now they do bare metal, they're doing cloud and multi-cloud and they back up Office 365 and so that's the SaaS platform. But look at how well they've held up. Quite impressive there with Veeam. Made a major push into the enterprise, kind of pivoted back to SMB, but still does a lot of business in the enterprise and you can see them showing up here. What's relevant to me is the shared end. In other words, out of the 1,300 in the total survey, how many are responding to these vendors? Rubrik, 55, relatively small. Veeam, 155, much larger. So a bigger install base, Cohesity, 42. Kind of just getting started in the ETA data set. Commvault, 105. So, Commvault's a $700 million company in revenues on a trailing 12 month basis. They get about a $2.2 billion market cap. They just bought HeadVig. They're moving toward a SaaS model. They launched a product called Metallic. They get a very, very large install base. You can see their net scores. Yeah, where they're holding relatively well. They're smaller, obviously, they're lower than those top three. And then you can see Veritas. Veritas is the big whale in the business. They kind of, mostly, they're almost a pure place software company. They do have an appliance, but they really are the leader, a leader here. And have had a big market. They went private. They got bought by Symantec. Symantec didn't know what to do with them. They fumbled around with it. They did a private equity deal. That was going okay, but they had some management turnover, private equity squeezed them a little bit, even though they made some investments in the platform. And so Veritas has some challenges. They have to serve the install base, but at the same time, they got to compete with the new guys. And all the new guys, Cohesity and Rubrik in particular, are attacking the Veritas install base, certainly Commvault, and as well, Dell and EMC. You can't have a discussion, really, around leadership and backup and data protection without talking about Dell EMC. They're so large. So, Alex, if you go to the next slide, you can see the net score for Dell EMC. The N here is 348, much, much larger than some of the other guys that I just mentioned. I'm actually looking at Veritas 97, even though I have a large install base. So Dell EMC, but here's the caveat. This is all of Dell EMC storage. So it's not just the pure play backup. The previous slide, I was showing you pure play data protection vendors. This is all of Dell EMC. So it includes all their primary stuff, all their flash storage, all their storage, not the other parts of their business, not the compute and analytics and other stuff, just storage. So I'm using this as a proxy. Okay, so this is not Dell's data protection business only. And so let me make some comments there and I'll comment on Dell's data protection business. You can see it came out of the downturn, past 2009, big uptick. And Joe Tucci used to say, we're going to come out stronger. We're going to invest through the downturn. We got the cash. We're going to come out stronger. And that's exactly what happened. They came out very strong, but then, you know, cash flow started to get squeezed. They expanded their product portfolio. It was like product du jour, all these mega launches. And it just got too confusing for customers. Salesforce got confused. They got less productive. And then Dell or EMC at the time was really relying on VMware. It's the value in Dell. I'm sorry, I keep saying Dell. Value in EMC at the time was really in VMware. And you can see that kind of steady decline in the net score. And that's what happened. Elliott management came in, they squeezed EMC, kind of forced them, forced their hand and then Dell ended up taking them private. Let me make some comments about the Dell acquisition and specifically Dell EMC's data protection business. Dell EMC took its eye off the ball in storage generally, but specifically in the data protection business. It fell behind. It wasn't investing fast enough. It had some management changes. It put Beth Phalen in charge a couple of years ago now and her task was, okay, she was tasked with shoring up this business. But they had to get some new products out. They had to focus on some of the lower end of the market and then have to refocus on the higher end of the market. So they've really begun to get their act together again in data protection and really refreshing the data domain piece of the portfolio, bringing Avamar and data domain together and becoming much more competitive. Having said that, they lost some ground, okay? So they've got that same challenge as Veritas. They've not only got the new guys coming at them with this modern data platform, they've got to service the existing install base and sort of manage that cash flow. They're now a public company again. So a lot of pressure on those guys. I want to go back to the previous chart, Alex, if you will, and then the one that shows Rubrik, Cohesity, Veeam, Commvault and Veritas, the pure plays. There's some other dynamics that I want to talk about here. HPE exited the software business. It's core software business. It sold off to Micro Focus and as part of that, it sold off Data Protector. When it did that, it opened up a whole new partnership opportunity for these emerging companies, particular Cohesity and Veeam are actually reselling through HPE. HPE's got a massive channel and those two companies are doing very well there. I said you can't talk about Data Protection without talking about Dell EMC. Same thing for IBM. You got to talk about IBM. IBM is a huge install base and IBM bought Tivoli years ago, Frank Moss's company and then they served mainframes and it was this big complicated platform, kind of still is. And so IBM had to make a move. So it was getting killed in the marketplace by Veeam in particular, so it created Spectrum Protect Plus. And IBM has really gone after software defined. It's begun to modernize its platform going after containers, as I mentioned, is a hot area. But it's still got that same problem. It's got to service the install base and so they're sort of doing that balancing act. But they definitely had to refresh the portfolio and it's done a good job there with Spectrum Protect Plus. Couple of the companies that I haven't mentioned, Druva is getting into that whole data management space. So Cohesity and Rubrik kind of redefining back up into data management. Veeam goes back to the basics, really talks about backup and data protection, data management as being the future. So it's kind of trying to deposition Rubrik and Cohesity as much more in the future and not here today. And so they're sort of playing that marketing game and very effectively, as you can see by its net scores. Again, Druva hopping on the data management bandwagon. Xerto, kind of a DR replication expert. Clumio is calling BS and all these guys and saying we're going pure SaaS model. And Clumio does SaaS for pure SaaS, pure software for just AWS, small company, but it's raised a bunch of dough. It's raised about $50 million I think. But here's some other names you might not have heard of. Castinio, Valero, Trilio. These guys are going hard after containers and what I referred to earlier as data assurance. So the big question is who's going to be able to achieve escape velocity for the upstarts? Who's going to be able to hold serve for the incumbents? Let me make a couple of comments on that. I think storage eventually is going to bounce back as I say some of those hot emerging workload areas like AI, they're going to need storage. Analytics is going to be driving the need for these types of things, security, data assurance, data protection, storage will, don't bet against data. So storage will I think eventually bounce back. And unlike compute where Intel makes all the margin, storage is more like networking where you get really good margins. It's a 60 plus percent gross margin business. Pure storage has almost 70 percent gross margins. Cloud is the wild card here. I predict you're going to see the cloud vendors begin to dramatically expand their portfolios. And he's beyond just going to S3 simple object storage. Okay, yeah, we got Elastic, a block store, EBS from Amazon, Microsoft has similar storage as this Google. They are going to double down on storage. They're going to look at storage as a bigger opportunity and that is a wild card. It could continue to pressure the traditional storage guys but look, let's face it, it's a hybrid world, still a ton of stuff going on-prem. So I think that the overall market will bounce back. I think data protection as a subset in data management is going to grow faster. It has some tailwinds. I think it's got an expanding TAM and those tailwinds are digital data, digital business security, data assurance, this new management capability that I talked about, DevOps and container protection, container platforms as I showed you earlier in the ETR data is one of the hottest areas going. And I think you're going to see some consolidation. You saw a Commvault bought a HeadVig. You're going to see some exits. Veeam is now talking about doing an IPO. It just took in a half a billion dollars in investment. So its investors are going to want an exit. So our cohesities and rubrics, which together have raised almost a billion dollars. So you're going to see some M&A, I think specialists like Zerto and Druva are probably going to be targets. I think you're still going to see Dell become much, much more aggressive, kind of getting their act together. The big incumbents, IDM, Veritas, refreshing their portfolio. Again, their challenge is the innovator's dilemma. So I do think you're going to see some, at least one, maybe two, the favorites there would be Cohesity and Rubric is achieve escape velocity. I don't think there's enough room for three to be like blockbuster IPOs that can survive long term. But I think this data management thing has legs and we're going to continue to watch it here. Thanks to you for watching. Thanks to our friends at ETR for sharing this data. This is Dave Vellante for Cube Insights powered by ETR. We'll see you next time.