 Live from New Orleans, it's theCUBE. Covering VeeamON 2017, brought to you by Veeam. Welcome back to VeeamON in New Orleans, everybody. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante and I'm here with my co-host for the week, Stu Miniman. We're going to talk cloud service providers. Cloud is obviously a very hot topic this week at VeeamON. Matt Chesterson is here, he's the CEO of Offsite DataSync and he's joined by William Bell, who's the Vice President of Product Development for Cloud and Enterprise Services at PhoenixNAP. Gents, welcome to theCUBE. Thank you. So, let's start. What's happening at VeeamON? You heard what I said about, you know, cloud seems to be a major theme here. What are you guys seeing this week? We're seeing the same thing. So, today is officially cloud day at VeeamON and some great announcements that are going on. So, new product announcements with V10, so we're excited about that. William, anything you'd add to that? Yeah, I mean, the general session this morning covered so much around cloud and what that's going to mean to the end user at Veeam, right? And how the ecosystem is being built and working both with the hyperscalers and guys like us. So, so much talk in the industry about the big, really the big three, maybe you throw a China cloud in there or a Japan cloud in there. How is it that folks like you all can differentiate from the likes of AWS and Azure and Google? Maybe you could start building- Azure, yeah, service. I think that's really the key is that customers need a help. You mean I could talk to you? You could talk to me. We can actually help you achieve an outcome that you're looking for with your business. That's not something that you're going to get from a hyperscaler, period. You don't have a little device I can put in my house that I talk to instead? No, no devices, no books, no operating systems to install. So, your value prop is really high touch. High touch, right? High touch, for us it's high touch global, right? So we can help you do the same things that you're trying to accomplish anywhere in the world talking to the same people, right? And that's our kind of commitment. Okay, and yet you've also got infrastructure behind that. We do. So why wouldn't you, for example, what could a viable strategy be say, hey, I'll put that high touch in front of AWS or Azure? Sure. Why not? Well, for us it really comes down to margins, right? At the end of the day is that we derive margin from infrastructure just the same way we do from the service angle of that, right? And so if it's only service and there's no margin on the infrastructure, it's a tougher business to scale, right? We also can capture markets that are uncaptureable, right? This isn't a cloud business for us, right? We're data center owner operators. We're doing things that customers need that are not cloud-centric. How about you guys, Matt? And a little different story here. You guys are more specialist, right? Yeah, a little bit different. So service is always important. We've taken the approach with the public clouds of kind of going with the tide. So layering products and services that go with that. Example today, or yesterday I think it was announced with the scale-up backup repositories being integrated with storage like Glacier. I'm sure there's a product play in there for a service provider like us so that we can offer that as a service too. So kind of taking that momentum and working with it. So integrating with what's already going on. It's going to be a tough tide to fight if we don't kind of direct it in the way we want. So we're going to take that and going in the direction of how can we use it and how can we benefit from it. Yeah, Matt, can you build on that Veeam as a partner? I think as Peter McKay told us, 30% of their business is to the, you know, thousands and thousands of service providers they have. You know, where do you, you know, find opportunity products growth when it comes to Veeam? Yeah, good questions, Stu. What Veeam's doing, they make it very easy for us as partners in the cloud, of course, so that when something's delivered, they make it cloud-available as well. So as you can see, users of Veeam can direct their backups and archives to the cloud private public, but they've also made that available and are going to make that available for us. So they're a great partner. They always think about cloud and cloud first so they don't just develop a product that can be used in and around service providers, but that we can take and capitalize from it as well. So, William, what I want to add on there, you're also a VMware partner and maybe talk to what it's like being a VMware and Veeam and do you go beyond the VMware piece too with Veeam? Yeah, so I mean, in Veeam's ecosystem, it's very VMware and Microsoft are very important to both of them, right? And because of where Veeam started, Hyper-V's a large part of their business and growing still very rapidly part of their business, right? And so we're forced to address both sides of that. When we go to build our own infrastructure, when we're going to offer our own services, we've made a commitment to VMware today, right? And we're building services around that ecosystem, including the stuff that's happening with Veeam. But let me talk about Veeam as a partner, right? Veeam has been singularly the best manufacturer partner that we've worked with up into this point. Maybe it doesn't mean that somebody else, maybe not tomorrow, but at least up into this point, they've helped both of our businesses really grow. I couldn't agree more. And grow in branding and grow in product diversity and grow all over the place. Explain that more. What are they doing? Is it simplicity? Is it pricing? Is it community hub? It's dedication to us as a partner. So you hear of partner relationships in the community. Veeam has taken it to a new level. They're truly a partner with us. They care about how our business is doing and how they can develop us and how they can find out what we don't have experience with and then help us. So design a program or introduce us to the right folks or make the right alliance relationships. So they genuinely look at it. So are they a channel for you or are you a channel for them? Both. Yeah, sometimes you don't know. The lines are not exactly clear and that's good. Yeah, I think that those unclear lines mean an increase in all kinds of things for both of our companies mutually, right? We're here. We started together in this Veeam ecosystem three and a half years ago, I guess now. And as the first five service providers that were teamed up with Veeam. And we're also both standing here with gigantic platinum sponsorships at their show because it's become that important to us and our business. And you guys, you sell to your customers that do and everything. They got one of everything on their floor. I'm sure diverse. You've seen a bunch of folks on stage this week. We saw Microsoft today, Hewlett Packard Enterprise. We saw Cisco yesterday. What kind of relationships do you have with the big whales? So we aligned really well with Cisco. In fact, that's what we power our networks with and we use their Cisco UCS series for everything we power in our data centers too. So it's great to see them here and interact with the team and they're a great partner for us. And HPE Nimble Storage is our other clear cut top partner, right? And with this ecosystem, there's a great marriage there both on the integration side, but from powering these Veeam powered cloud services like Offside Backup and Zask Recovery requires a lot of storage, right? To take that data in and hold it and replicate it and do things with it. And so our partnership with HPE Nimble's large. In some of the expansion that we're seeing of Veeam talked about the kind of new 10 years where they're going. Some of that is as a service. So how do they talk about that dynamic of potentially being competitor now to the 18,000 great partners that they've had? You know, I think a lot of it's caught up in a bit of semantic problems, right? In semantic issues. Veeam is doing a lot of things that are going to enable services and as a service. I don't see them building solutions that would compete, right? They have a great example of what it looks like to do that with Veeam Cloud Air being set to VMware centric partnership. That was a headwind that they were unable to overcome even at the size of VMware, right? Going out and building and being a service provider and building an infrastructure service, trying to take their software company and become a service provider. It doesn't work. Same for us. Well, I'm not going to go start building backup software. So if you think about the meta, the mega phases of cloud, and it's, do we've been doing this for a long time? And I think back to the early Veeam worlds that we did. We had so much discussion around cloud. And back in the early days, it was kind of, you know, after Amazon announced, you know, AWS and cloud sort of got coined. It was an experiment. It was for startups and that was, you know, pretty clear. And then in sort of 2008, when the economy tanked, a lot of CFOs said, all right, shift CapEx to OpEx. And that was sort of the next phase. And then coming out of the downturn, a lot of lines of business said, hey, we got cash. We need speed. Let's go and start to invest. And then after that, IT sort of embraced it and now seems to be whatever term you want to use, cloud broker or just they've sort of captured the religion and they're not hanging on to LUN provisioning anymore as a practice. Now I'm wondering if that is a reflection of your world, or because you in your case are a specialist and you guys are more service oriented, did you ride those waves? Was it different ways? Maybe William, we could start with you. So our first product line was a 250,000 square foot facility in Phoenix, Arizona, right? Building a Colo, the network access point. That's the heritage of the Phoenix Snap, right? The name. And so we were relying on CapEx, people to go in and buy equipment and stick it in our facility. Everyone had already decided they didn't want to build data centers. Like right in 2010, everyone's like, you know what, $10 million to get my data room up, no thanks, right? But they were committed to buying hardware and we took advantage of that and grew that business. And we started to address the OPEC side, you know, in 2012 kind of moving forward. And at least we believe we're prime positioned because at the end of the day, it's going to be both. All OPEC's is not the answer, right? I truly believe that. And that's part of that hybrid story as well. And Matt, what about you guys? I mean, you're again, being specialists in all kinds of things, DR, recovery, et cetera, did you take a different journey? Yeah, Dave, we did. And I heard the term even this week, born in the cloud. If it makes sense, we're a cloud company that had that vision from the beginning. So we didn't build the facility, but that's certainly what we do is leverage space power bandwidth that we partner with, with switch and supernap facilities for our data centers. And we believe that customers are and will continue to move into the OPEC model, into the cloud. So both production workloads and DRAS backup as well. It's interesting to see that mixed, especially as things from EMA are announced that that really becomes one. So the workloads of DRAS are soon within 15 minutes or 15 seconds can become a production workload. So if customers aren't necessarily moving their infrastructure to the cloud, it's going to happen one way or the other, whether it's the model of they don't want to purchase hardware any longer or they've had some sort of failure or disaster, they're going to move that way. Right, yeah. I want to let you speak a little bit more about your customers. There was a great line I thought from Mark Rosevich, which said that the C-suite doesn't come asking for infrastructure as a service. They want to figure out how to take their business to the next level. Where are your customers in that kind of cloud strategy and how are you helping them along that journey? Yeah, we have a discussion with them. We try to understand what their business objectives are and what they're trying to achieve by either pushing to the cloud or understanding what the cloud is. And there's a spectrum there from, as I mentioned before, backup, disaster recovery as a service, infrastructure as a service. And not all things line up to one single service or way you can put it in the cloud. So we try to understand what their business objectives are and say it's going to make the most sense to put some of the workload in the cloud, but some applications stay on site and you have a DRAS replication to get them off site. So really engaging and understanding what their businesses are and getting out of the hood of what they're trying to achieve. Yeah, I think that at the end of the day we are focused on a hybrid future, right? We truly believe that customers will search for the cloud experience, the business optimization for a period of time where they're saying, you know what, I don't care, I want this outcome, go get me the outcome. At some point it will come back. They will be like, okay, we have the outcome. How can we optimize this outcome? Are we spending the right amount of money to achieve this outcome? And the moment they do that, they will find that OPEX purely and blatantly, if you just say I'm all in, I'm always on, I'm only OPEX, you will spend more money on that over time. If you pick and choose the things that you are incapable of doing or would cost you more to do through CAPEX and staffing, then you can basically position both of those things to maximize value. Horses for courses, gentlemen, we have to leave it there. Thanks very much. Of course, thank you guys so much. Appreciate it, absolutely. All right, keep it right there, everybody, Stu and I will be back with our next guest we're live from Veeam On 2017, this is theCUBE.