TORONTO – On Wednesday, at their Executive Briefing Centre on the Road event for customers and partners here, NetApp CEO George Kurian made his first visit here since his appointment last summer. In an energetic keynote to the packed venue, Kurian stressed that NetApp’s best days are ahead of it, rather than in the rear view mirror. Today’s IT trends, he said, work in NetApp’s favour, particularly the move to solid state storage, where Kurian said NetApp has the best portfolio in the industry.
“The next decade offers us unparalleled opportunity,” Kurian said. “Customers today are talking about their digital journey, using technology to transform themselves into digital organizations. For example, J.P. Morgan wants to have 99 per cent of their banking capability delivered on mobile phones by the end of the decade. We also think the era of solid state storage is upon us, and we have the best portfolio in the industry for solid state technology.”
Although NetApp is often seen as primarily a hardware company, Kurian told the audience that their core value lies in software.
“We’ve always had disk drives from third party companies, but the real value storage has is access to people’s data, and we think that’s a software-defined paradigm,” Kurian said. “We are using software to blur the boundaries of systems and datacenters.”
Kurian said that this is accomplished through hybrid cloud management, which had been a series of siloes, but which is brought together through NetApp’s data fabric.
“Stitching these siloes together into a single IT architecture is something you have to take on, because denying it is foregoing control of your IT environment,” he said. “Our data fabric has you in control of your data regardless of the landscape it sits on. This is a technology direction we started on three years ago, which allows you to combine on-prem with managed services, and managed services with the public cloud.”
Kurian acknowledged that the transformation of storage systems themselves, which will see spinning disks disappear from primary storage, is another major trend that is well underway.
“HDD storage systems are at a point where they will be superseded by solid state technology, because it has major advantages for primary storage,” he said. “I think it will take three years or a little longer to complete, but the economics are there today. A 16 TB solid state drive is something that wasn’t being contemplated even 5 years ago.
“In that transition from HDD to solid state, we think we have the best portfolio,” Kurian continued. “Solid state was originally the performance play, and for those who purely value performance and who were willing to compromise everything else. Our EF series will serve that part of the market but performance is a narrow part of the market for solid state. That’s because solid state replaces entire infrastructures, and with that, people want all the features of traditional storage systems — but with the efficiency and high performance you get from solid state.”
Kurian stressed to his audience that hybrid cloud and solid state are two examples where NetApp has successfully pivoted the company, with the optimization of their flagship Data ONTAP file system software for solid state, the acquisition of SolidFire, and their EF series giving NetApp all-flash solutions aimed at traditional enterprise infrastructure buyers, application users seeking performance, and next-gen scale-out capability respectively.
“The results are strong,” Kurian said. “Our new portfolios are now the majority of our business, and we saw a 26 per cent growth in strategic solutions.” Their flash business went to a $600,000,000 run rate in a single quarter.
“We are uniquely positioned in a changing IT landscape,” he stated. “We are in the 7th inning of a 9 inning ball game, and our product portfolio has substantially changed from the days when we were seen as doing one thing.”
Kurian took several pokes at the competition, several of which certainly fall into the ‘literary license’ category, although the audience seemed to enjoy them. He stated that their large competitors are trying to build closed stacks, and think innovation in the data centre is all about hardware – something that was debatable three years ago, and seems a stretch today. He also dismissed the threat from below, stating that the landscape for startups has become brutal in the last six months. That is substantially accurate, although high profile startups led by pedigreed veterans still seem to have no problem getting funding, so the pain is by no means universal. Kurian’s dismissal of Dell’s acquisition of EMC as the degrading of a long-time rival through its acquisition by a PC maker produced chuckles from the audience, although it’s doubtful if that’s precisely the same view that NetApp has when designing their serious competitive positioning.
Scott Strubel, Vice President of Americas Channel Sales at NetApp, told ChannelBuzz that the key advantage to NetApp from the Dell-EMC deal is the very real concern that EMC partners will have about how EMC’s hyper-converged lines, particularly, VCE, will fare under Dell.
“EMC had been in a close race with FlexPod, but with the acquisition, EMC resellers should think about what will happen, and how we can offer a materially different future,” he said.
That future will be materially affected by NetApp’s ability to take advantages of the changes that flash has brought to the industry, said Lee Caswell, NetApp’s Vice President of Product, Solutions, and Services Marketing, who provided more detail on that key point Kurian had raised.
“What changed everything was flash,” he said. “Opening up the flash market consolidated the SAN and NAS markets in a way that has never been seen before. You can deploy systems that give you very different characteristics.
“Customers were enthusiastic about flash because disks hadn’t been on Moore’s Law,” he added. “What took a minute now took a second, so that storage now became a revenue producer, not just a cost centre.”
Caswell stressed that flash’s advantages go beyond the obvious that it is both directly faster and cheaper than spinning disks. He referred to a recent Gartner study that emphasized how larger flash deployments significantly cut administration costs.
“The Gartner study showed that you can reclaim half of your management time by eliminating performance tuning,” he said. “Before, that was a constraint, because flash takes time tuning performance. Now however, with cheaper flash, it’s cheaper to buy higher capacity disks than to do tuning. This frees up the best IT people and their skills. It’s a key reason why flash is the fastest growing business in the history of NetApp, and why the fastest-growing new customer segment is fibre channel SAN users.”
Caswell also pointed out that the IT industry has seen this process play out before, with the original explosion of the iPod.
“The original iPod used disks to make an original $300 price point. But it was only after flash became cheap enough to be used for this that you really saw it take off, because you could have thousands of thousands of songs, and a thinner longer-lifed battery, which was more durable because of the solid state.
Thomas Stanley, NetApp’s SVP and GM, Americas Sales, stressed that flash reduces the need for space as well as time.
“Government and enterprise aren’t building more datacentres today, yet internal stakeholders think some parts of their data are too important for the cloud. Going to flash reduces infrastructure, and gives them space capability they didn’t have before. The faster they go to flash, the faster they get space back.”
The process is inexorable, Caswell said.
“We have killed the idea that we were disk huggers. We brought pricing down on flash by 60 per cent over last year, and made it a single SKU to make it easy to buy. We make flash available in three different architectures. We now offer nine years of warranties. We offer a free controller upgrade, and while we acknowledge Pure Storage did this first, we are doing it profitably. We lead with flash, and use the disks for backup.
“Within a year, you will have to justify why you buy a disk,” he said.