 from our studios in the heart of Silicon Valley, Palo Alto, California. This is a CUBE Conversation. Hey, welcome back, everybody. Jeff Frig here with theCUBE. We're in our Palo Alto studios here today for a CUBE Conversation. It's a little bit of a dog days of summer. Conference season is a little bit slow, so we're excited. We can kind of take a step back and we're going to look back actually in time. We're excited to have a very special guest, Rich Colbert. He is the field CTO at Dell EMC. But really what we're talking about today is data domain, is 10-year anniversary of the data domain acquisition. So Rich, first off, welcome to theCUBE. Thanks, Jeff. Excited to be here. Thanks for the invitation. Appreciate it. I can't believe we were talking before we turned the cameras on that you joined in 2006, and yet it's been 10 years. I'm like, wait, 2006 was more than 10 years ago. How can that be? We're just getting old. I don't know. Things are changing too fast. No, it's like a trip down memory lane, and it just seems so long ago. And yes, in a way, it also seems like yesterday. I mean, things have gone so quickly. So we're also joined in this segment by our top data analyst, also the founder of Wikibon and co-CEO of SiliconANGLE Media, and founder of that as well. So Dave Vellante is joining us all the way from Boston. Dave, good to see ya. Hey, Jeff. Hi, Rich. Good to talk to you guys. Hey, Dave. So let's take a quick trip back 10 years ago, actually maybe 11 years ago. Things were starting to heat up. There was a lot of different vendors out there, a lot of different players, and things started to consolidate. So I wonder if you can give us a little bit of your perspective of what was going on, Rich, and then we'll get Dave's perspective. Yeah, it was an interesting time. Right before the data domain acquisition, we actually went through some economic times in 2008, and the markets were changing, and some companies were becoming more successful. Some companies were struggling through that time. Customers were also looking for ways to save money and do some interesting things there. So it was a mixed feeling set through that time. Data domain had IPO'd in 2007, and we were kind of going through this explosive period of growth, but across the board, we just saw so many things change all at once, and we really were surprised, I think, when initially it was NetApp that announced that they had intentions to buy us, and I think that was due to some of the economic factors at play, and then, of course, EMC stepped in and started a bidding contest with NetApp for the company. Right. So Dave, I wonder if you can share your perspective. You're sitting as an analyst. You've got Joe Tucci, the godfather of storage back in Boston. What were you seeing in terms of the kind of the market dynamics, and was it a surprise when NetApp decided to make a move? Well, you know, first of all, I had left the storage industry for quite some time, and then when I started Wikibon, we looked at storage and nothing had changed except one thing, which was data deduplication. That was new, and tape was finally, I always hated tape, tape was finally being attacked, so it was an amazing time. And EMC at the time, we had some obviously great management, you had Frank Slutman running Data Domain, you had Joe Tucci who always balanced out acquisitions with organic in-house R&D. And when Tom Georgians and NetApp said they were going to go buy Data Domain, EMC swooped right in and said, no way. So it was somewhat of a defensive move, but at the same time, when you talked to the M&A guys, they said, no, no, it's not just defense. We can actually make this a growth play, and that's exactly what happened. Data Domain, I think at the time, Rich, was probably a couple of hundred million dollar company, and then they popped that into EMC and scaled that to well over a billion dollars and maintained the franchise and then grew it quite dramatically beyond where all the expectations were for the market, the market time at the time was probably around a billion, and I think IDC, Rich, has it over three billion today. Yeah, one of the things that, so don't quote me on all the numbers because I'm not watching the market caps in stocks, but I think we'd gotten up to about a $500 million run rate in terms of sales, and prior to the crash, I think our market cap was actually significantly higher, so our price came down, which is one of the things I think that attracted NetApp to the game. So the interesting dynamic inside the company was that the NetApp offer was kind of the first one, so they were working with the Data Domain leadership and they were speaking with us. EMC was more of a kind of unsolicited offer, so there was less communication, and I remember there was a morning I was at San Francisco airport going out to meet a customer, and Joe Tucci put out a full page ad in a local newspaper, and we were reading that, and that was his way of communicating to the people at Data Domain saying he wants to welcome us into the family, it was quite a moment. Well it sure was, and of course you guys were fierce competitors, Data Domain was fierce competitors with EMC, fighting for the install base, and then all of a sudden the cultures, it somehow worked, EMC was very good at acquisitions and it made it work, I mean I sort of was an outside observer, but you were there, Frank Sluman came in, did a spin, kind of running the data protection organization, but a lot has changed since then hasn't it? I mean, back then you stored a little bit of data, I think you were counting it in terabytes, today we live in a petabyte scale world, maybe you could talk about what's changed. Well, the scale and performance certainly has changed, I think the Data Domain platform today is about a thousand times larger than it was when it first came to market, and in fact when we were being bid on by NetApp and EMC we had a flagship product, I think it was the DD690, behind the scenes we had a system that was coming out that was double that size, and EMC nor NetApp knew about that, so once the deal closed they got to find out that our size had just doubled and our performance had doubled at the same time. But you're right, you kind of talk about the dynamics inside of EMC, EMC had a very large data protection division, they had Avomar, NetWorker, Centeras, VTLs, they also had an OEM arrangement for a competing product with the Data Domain platform, so it was really like, compared to going to Hogwarts, where you have all of these different houses, and we came in with Data Domain, and I think the glue that really helped it come together was Joe Tucci tapping Frank Slutman on the shoulder as the leader to bring this together and taking what was the Bura division and reforming it as the BRS division, and I think we came together very quickly as a team, even though people came from all of these different backgrounds standing for these different products. So Rich, let me follow up on that, because there's a lot of M&A activity going on right now, and not very many big M&A deals are ultimately successful, it turns out. So you said a little bit about Joe and Frank coming together, but what are some of the other attributes that you would say that made it work, that actually did what everybody hopes on an acquisition, which is take great technology, put it into a big sales machine, and watch it grow and grow and grow. I think part of it, quite frankly, just comes down to the product and being differentiated, because there are a lot of products out there, and if you take a step back, they have good things that they're doing, but it's very hard to find a product that says, hey, you're doing something that even if you put the blueprints out there, it's very hard for other people to follow in those footsteps and create a similar value proposition. And I think in this case, it was a differentiated product, and it had a lot of energy of its own, and I think from an EMC perspective, they just stood back and said, let's take this momentum and play it out and see how far it can take itself. Unfortunately, I think a lot of times, they don't do that, right? A lot of times, acquiring companies don't just take this great thing and kind of get out of the way and add the juice where they can, but try to change it. So that's a really nice statement on Joe Tucci and what he was able to accomplish. Yeah, he was fantastic for us, and his support was tremendous, but also his delegation and kind of seeing how this, kind of having a vision of how this business unit should be formed, I think was very pristine. And then now you're part of Dell. So obviously, Michael Dell, big personality as well, the Dell technology stories, he's doing a great job of pulling all these pieces together and kind of reinvigorating the brand coming back out of the little side bar and taking it private for a while and come back. So I wonder if you can talk about that integration, how's that going as you've gone through it now a couple of times? Well, I think it's been very exciting for us because the one piece that EMC had always been lacking had been the compute part of the picture. And now we have really the ability to go in and talk about the entire stack with our customers. And that's a lot more powerful than saying here is an element of it. And then if you want to go and add compute to that to perhaps put in your virtual or physical servers, then we're going to need to partner with somebody and it's just a much cleaner story for men to end. Right, right. So the big, big change obviously that wasn't around 10 years ago that is around today is public cloud. Huge impact not only directly in taking workloads to the public cloud, but also I think much more importantly, changing the way people think about provisioning, thinking about the way people think about elastic capacity. So as the market has evolved, the rise of AWS and the other public clouds, how has that changed what you guys are doing? How are you reacting to that? How has that a new opportunity to kind of grow the maturity of the core products? Yeah. Well, the thing is we have taken a lot of approach that's been learning and evolving as well, right? So developers and applications really figured out AWS and the public cloud early. I think data protection has followed along with a couple of years of lag in terms of doing that. So our perspective is we learned as well, right? So 2015, 2016, I think there was some resistance. And I think ultimately when we started to follow those workloads into the cloud, there was a little bit of a lift and shift. What we've learned is that the architecture really matters when you get to the cloud. So the efficient use of resources, the ability to do things in a cloud-like way, to use, for example, object storage, instead of block storage when the case presents itself. So we took our products and virtualized them and followed them into the cloud, but we realized that just taking the on-premise version of the product and putting it in the cloud itself isn't enough, right? Because at the end of the day, the customer is paying for all the underlying resources. And so if your architecture isn't efficient from a cost perspective, as well as a performance perspective, it's not going to be a viable solution. And so 2017, 2018, we've really seen a big acceleration in our adoption in the cloud because we have adapted our architecture to be more cloud-friendly and more cost-effective for our customers to deploy. But it was a learning experience for sure. And I think we're continuing to learn and continuing to develop in that space. And there's a lot of opportunity ahead of us. The other big change I think that's come that we see over and over and over is really data as an asset. Not only as an asset, but as a huge valuable asset that drives your business, drives your analytics, but then becomes actually something that drives your company value. And I think we see that in the Facebooks of the world and the Googles of the world and why they have these crazy high valuations relative to their revenue and their profits because they're getting value for the data. Great news for you, right? It used to be a sample of the data, it was a pain, it was expensive to store, I didn't want to keep it all. Now everyone wants all the data, they want to analyze it in real time and they want to put it in a place where they can actually put multiple applications across that same data set to do all kinds of new analytics. So again, super opportunity for you guys, people aren't storing any less data. No, absolutely. Yeah, no, the data amount being stored is definitely growing. One of the things that we're seeing that's kind of pervasive is this idea of really using the right data at the right place at the right time to accessibility to whether it is a data lake or it is your protection copies or an instant access of your protection copies. There's a lot of different things customers are doing with data, but it's no longer a one size fits all proposition like it was back in the tape automation days where I'm just throwing all of this stuff into a box and never accessing it again. So the dynamics are changing and continue to evolve. I expect that if we have this conversation two or three years down the road, we're going to see some amazing things happen in the next couple of years. In some of it, we're not predicting now, we're going to find out as customer demand and as innovation guides us along. Right, because then the other big piece is the media, right? We've talked about tapes and the original data domain was in response to some issues with tape and we have spinning rust as everybody likes to call it and now of course flash. So again, sea change in terms of capability, the cost is coming down. It's no longer the super high end thing just for super high value applications. So very transformative opportunity on the media side as well, on the flash side as well. You hit on a couple of really key things. Data domain was very successful because it became viable and practical to displace tape automation and nobody was a fan of their tape automation environments. And now I think we're going to see that same shift. Spinning disc is right now being relegated to archival and backup purposes but we're going to hit an inflection point very soon I think where every instance of spinning disc probably can be questioned. And so we are actually getting ahead of that curve and coming out with all flash products as a choice for a customer. So we'll still have spinning disc for some backup use cases but we'll also be able to offer customers a choice of the data domain technology on an all flash set of platforms that will give customers a chance to get out of the spinning disc business as well. Right, right. But Jim, I wonder if I can chime in here. You guys were talking about the technologies and the cloud and the architecture. It's interesting, data domain really started out and don't hate me for saying this but it's a feature product and the key feature was data deduplication. Data domain had the best. You had a lot of guys doing post-process. You had some guys trying to do server side at Avamar itself, for example but data domain really killed it with regard to data dedu. And this feature product became a platform and had an architecture beat became this unicorn times two plus plus. And so I wanted to ask you Rich about that architecture and where it can go. You're talking about different media now, beyond spinning disk. It used to be just a kind of a dumb target. You've now got integrated appliances. You've got software that's integrated there. So it's, you talked about the scale and the capacity. Where do you see this architecture going? I wonder if you could comment on that. Yeah, well I think a lot of that belongs in the realm of the data management software that speaks to it. And by having a distributed ecosystem and having things like distributed segment processing so we can take data domains technology and extend it out into those data management activities because a lot of what's happening in the market is as new workloads are coming into the market they're having their own methods and native tools built in for data protection. And to be able to leverage those and have a highly consolidated effect on the back end is still extremely valuable to our customers. And you're right, it was a differentiated product from a deduplication standpoint but really the feature was that I can keep my 30, 60 or 90 days worth of copies that are separate from my primary copies. So I'm putting them somewhere safe. I can even put them under different governance from my primary storage or my primary application owners. And it's practical and feasible. And prior to that the only real way to do that was with tape automation. Deduplication has become more of a broader word itself and it goes beyond what data domain does. So there's deduplication in primary storage but if you look at primary storage deduplication it's good but it's designed to help you reduce the use of primary storage by two or three times. It doesn't touch on the 30, 60, 90 days of retention that data domain does. So there are similar technologies and a common use of the word but they're two different use cases that remain separate I think. Yeah, and you know as a former practitioner the other, you were I think a former customer the genius, part of the genius of data domain was its ability to just plug in to existing processes. You didn't have to change things up and so it was an easy in but it's impressive that you've been able to keep that architecture going. I wanted to ask you about market share. Data domain has always had a 60 plus percent market share. I think it's at 60 now but it's like the Cisco of purpose built back all appliances. You're able to sort of dominate that little segment of the market which is getting bigger. But now you've got a lot of new entrants. You got a lot of VC money pouring in. A lot of noise in the marketplace. I feel like you guys maybe a couple of years ago took your eye off the ball and now you've got this renewed sense of vigor. You know maybe it was partly the acquisition but you know we've talked to Beth Fainland about this a number of times. You've really refreshed the portfolio. So I wonder if you could talk about that and my question is what gives you confidence that you can continue to maintain your dominance? Yeah, that's a great question and things have really changed. I think starting around 2014 we were having some internal conversations about things like simplification and the consumerization of IT and all of those dollars that you're talking about are really being poured into companies that are trying to take a different approach. They're going into the white space that we had kind of left open which was simplicity. If you look back 10 or 15 years and you look at the data management and enterprise backup software space, enterprise backup software has been complicated and as you add more use cases it has become even more complicated and the customer base is no longer tolerant of that. That's something that maybe 10 or 15 years ago that was kind of a badge of honor to be working with complex and people just don't have the time for that. There's a lot of IT generalists and folks that are out there that don't want to go to training class you know five days or 10 days out of the year to learn how to use a product. So that was a really good thing that we're seeing in the marketplace in terms of making products simpler, easier to use and more approachable with things like discoverable functionality. We certainly have put a lot of effort into going in that direction because we think that's the right direction. But what gives me confidence is the underlying storage value proposition about efficiency and performance and scale is something that we still think that we have a strong upper hand on. And when it comes down to that we take cloud as an example. Our data reduction in the cloud we think allows a much lower cost to serve and you know the customer is going to pay for that cloud storage or that cloud compute regardless of which vendor they're trusting in terms of their solution. So simple only goes so far we think that we can get there with simple but we don't necessarily see our competition having the efficiency, scalability and so forth that we've already had. So that gives me a lot of confidence. So when you talk to customers what's the big problem, the big hairy problem that they're trying to solve in your space and how are you guys helping them? So one of the two big problems I see is really a lot of IT teams are confronted with they've got a digital transformation going on they've got a cloud strategy going on and IT isn't necessarily being invited to the table early enough or often enough to go ahead and help with that process. So what you have is you have a cloud team building applications, bringing things online and then the data protection, the backups, the snapshots, whatever they're doing to make sure that that data is safe is a bit of an afterthought. And you know I think of DevOps and I think about the ops part and I've never really come across an application team that wanted to own the business responsibility for the risk of backups recovery replication and all of that. And I think IT has a lot of established practices that would be good to inform how those things should be built. So the number one thing that I'm talking to with my customers when we're talking about this whole tectonic shift in the way things are being done is that IT and the digital transformation or the cloud team do need to speak early and often and proactively about how they approach data protection because they continue to need to have a strategy that evolves and make sure they keep themselves protected as they start moving these critical workloads into the cloud. It's an age old problem with backup and data protection. People think of it as a back, as a bolt on, as an afterthought and your point is right on, it's got to be a fundamental part of any transformation. It's just like security, you can't bolt it on or it just doesn't scale. Yeah, and it's very much like, you know, back in the day when open systems was just coming of age there was a lot of operational discipline that the mainframe teams had and the mid-range teams had but the open systems was the wild west and eventually open systems learned and a lot of that was knowledge sharing about best practices and MIS became IT. Now IT is becoming DevOps and digital transformation. We're seeing a lot of that same dynamic happening again and my main point is just start those conversations and if you're on the IT side start those conversations proactively. You might not be getting invited to the digital transformation party, invite yourself. Well, Rich has been quite a 10 years and as I was just watching an Andy Jassy interview if you think the last 10 years have been crazy you ain't seen nothing yet. So it sounds like you guys are in a great position to stay agile and I'm going to steal your line that it's no longer an honor to work on complicated systems, that's great. Yeah, it's been great being here. Thanks for having me and looking forward to maybe coming back in 10 years and seeing what changed. Well, hopefully we won't wait 10 years. So Rich, thanks for stopping by. Dave, thanks for checking in from Boston and it's great to see you as well. Thanks you guys. Thanks Dave. Thanks Jeff.