The question ‘Where is Chad Sakac?’ got answered this week: by Chad Sakac. The former president of the Dell EMC converged infrastructure division (formerly known as converged platforms) said he will join Dell’s Pivotal Software subsidiary in April to guide development of the Pivotal Container Service.
Sakac appeared to be the odd man out following a February reshuffling of the Dell Infrastructure Solutions Group (ISG). He informed readers of his blog this week that Dell EMC and the converged products are “in my rear-view window.” He did not specify his new job title, saying only he would be the “glue” among Dell EMC storage, Pivotal Cloud Foundry (PCF) and VMware product development for DevOps customers.
Pivotal Container Service (PKS) stems from VMware’s partnership with Google. The “K” refers to Pivotal’s reliance on the Google Kubernetes orchestration framework.
“My role is to be part of the team that is laser-focused on driving the success of Pivotal Container Service (and the rest of PCF) together with the teams at VMware and Dell EMC. The job is simple – helping make our aligned Dell Technologies developer platform come together…” Sakac said.
Dell Technologies in February realigned ISG, placing VCE converged infrastructure under the Servers unit, headed by Ashley Gorakhpurwalla. The converged and hyper-converged infrastructure products, including VxRack/VxRail and Nutanix XC Series, shifted to the Dell EMC storage division, led by EMC veteran Jeff Boudreau.
Dell EMC’s management moves emerged against a backdrop of other potential changes under consideration. Dell Technologies CEO Michael Dell has acknowledged his company is exploring strategic options to unload debt related to $60 million EMC merger in 2016.
Options reportedly being mulled include an initial public offering of the Dell EMC storage business, or allowing VMware to acquire Dell Technologies in a reverse merger. It’s also possible – some experts say it’s likely, in fact – that Dell will keep its present structure intact. The vendor has not publicly disclosed a timetable for its decision.
Reorganizing ISG appeared to leave Sakac without a clearly defined role. Matt Baker, a Dell EMC senior vice president of strategy and planning, said at the time that Sakac would “continue to be a valuable part of the organization” who was “working hand in glove with the executive team to carve out his next role.”
That role now appears to be defined. On his blog, Sakac said he supports the Dell Technologies reorganization as a way to make converged storage a more useful tool to support development of cloud-native applications.
“The CI business is finding a new gear. In 2017, we lost some ground – but maintained our No. 1 position. That trend changed in the second half – and the CI business and primary storage show that. CI is essential to the primary storage business of Dell EMC. There are thousands of customers who depend on Dell EMC CI to be the foundation of their data center(s) – and have moved up to consume infrastructure,” rather than as a building blocks.
Intel launched a new P4510 Series of U.2 solid-state drives (SSDs) equipped with its 64-layer triple-level cell (TLC) 3D NAND flash and enhanced firmware, enabling greater storage density and lower random read latency than the prior P4500 model.
The enterprise Intel P4510 Series is the first datacenter SSD to use Intel’s latest 64-layer 3D NAND designed for bulk storage. The company began shipping client SSDs with the denser 64-layer flash technology last year.
The Intel P4510 PCI Express (PCIe) SSDs began shipping at at 1 TB and 2 TB capacities last year to cloud service providers (CSPs) and is now making available 4 TB and 8 TB drives to CSPs and channel customers. Intel expects to ship the new P4510 SSDs to OEM partners later this year.
The prior P4500 model used Intel’s 32-layer TLC 3D NAND technology. The highest capacity available for the P45000 SSDs in the U.2 form factor was 4 TB. Intel also lists 8 TB P4500 options in the new “ruler” form factor, named for its long, thin shape.
The latest Intel P4510 PCIe SSDs are 2.5-inch, 15-mm U.2 form factor. Intel plans to add lower power 110-mm M.2 and 7-mm U.2 P4511 datacenter SSD options later this year.
Intel claimed the new P4510 SSD boosts sequential write bandwidth up to 90% over the older P4500 model and improves quality of service up to 10 times. Firmware enhancements allowing granular I/O prioritization help the Intel P4510 SSD to cut mixed workload latency by up to two times and read workload latency by up to 10 times, according to Intel.
The Intel P4510 Series supports non-volatile memory express (NVMe) 1.2, with four PCIe 3.1 lanes, as well as the NVMe Management Interface (NVMe-MI) for operational insight.
Hot-pluggable U.2 SSDs
Intel enabled additional management and serviceability features in the P4510 SSDs through its Volume Management Device (VMD) and Virtual RAID on CPU (VROC). The VMD and VROC platform-connected technologies help to facilitate hot pluggability with U.2 SSDs, LED light management to help users locate failed drives, and RAID configuration simplification and acceleration, according to Intel.
Industry-wide, U.2 SSDs currently account for approximately 25% of the unit volume of NVMe PCIe SSDs, and they will become the majority in 2019, according to Greg Wong, founder and principal analysts at Forward Insights.
But Greg Matson, director of SSD strategic planning and product marketing at Intel, said Intel will push the Enterprise & Datacenter SSD Form Factor (EDSFF) 1U Long and 1U Short as the “preferred and optimized” form factors for 3D NAND SSD bulk storage this year. Intel introduced the early version of the EDSFF SSDs as the ruler form factor at last year’s Flash Memory Summit and then worked to get EDSFF standardized.
Matson said 1U Long SSDs allow massive capacity scaling, and the EDSFF SSDs are PCIe 4.0- and PCIe 5.0-ready and support up to 16 lanes.
“While we think U.2 is a pretty darn good form factor for storage, it’s not as good as EDSFF,” Matson said. “We can make much more thermally efficient platforms requiring about half the airflow, and about half the airflow is also less than power than the U.2 form factors.”
Matson said three of the four major drive suppliers and several “tier 1” ODMs and OEMs, including Quanta and Supermicro, support EDSFF. He noted that Intel has already shipped ruler SSDs to IBM Cloud and Tencent, one of the largest cloud service providers in China.
NetApp attributed strong product revenue growth last quarter in part to two-a-days – it’s averaging two displacements of rivals’ all-flash SAN systems every day.
Success in NetApp cloud and flash sales fueled a strong quarter, as revenue increased eight percent year-over-year to $1.52 billion. Product revenue of $920 million increased 17% over last year.
On NetApp’s earnings call Wednesday night, CEO George Kurian said the vendor made solid gains with its all-flash arrays, including NetApp FAS, EF and SolidFire storage. Annualized net revenue from all-flash jumped nearly 50% to $2 billion.
Demand for all-flash FlexPod – sold with partner Cisco’s compute and networking — helped to boost converged infrastructure sales by 50%.
“Our growth in all-flash has helped us gain strength in both the SAN and converged infrastructure markets,” Kurian said. “Through our competitive take-out program, we average two SAN displacements per day. That enables us to gain share in the SAN market, and expand wallet share with our existing customers.”
Central to the NetApp cloud strategy is an integrated Data Fabric that allows customers to more easily manage data across local storage and multiple hybrid clouds. NetApp cloud Data Fabric extended last year to add NFS file storage as a service in the Microsoft Azure public cloud.
Products introduced last quarter are in preview with selected customers, including NetApp Cloud Volume for Amazon Web Services (AWS) and support for VMware on AWS. Those offerings are expected to be generally available in 2018.
Other product rollouts included a software upgrade for NetApp AltaVault backup, including the addition of Microsoft Azure Archive Blob, plus the introduction of SnapMirror for the SolidFire ElementOS operating system.
Kurian dodged questions on reports that rival Dell EMC is considering strategic options to pay down debt. Although he did not name Dell EMC directly, Kurian said NetApp’s pivot from hardware to cloud infrastructure makes it a more formidable competitor against “our largest competitor.”
Dell EMC has to figure out how to “rationalize a completely confusing product portfolio. They lack a competitive flash offering with a road map to the future, and they’ve got to get a cloud story,” he said.
NetApp took a $506 million loss, the result of an $856 million one-time charge on repatriated capital due to new tax laws.
Kurian said the new tax law will provide “added flexibility” as a result of corporate rates getting slashed to 22%. NetApp plans to bring back an additional $4 billion parked offshore during the next 12 months.
NetApp closed the quarter with $5.6 billion in cash and short-term investments. The higher domestic cash balance is being used to pay down $800 million in bonds it issued issued last year.
NetApp’s revenue guidance for the fourth quarter ranges between $1.525 billion and $1.875 billion, or an 8% increase year over year.
All-flash array startup E8 Storage has expanded into reference architecture with the launch of a software-only version.
The new product, E8 Storage Software, runs on rack servers from Dell EMC, Hewlett Packard Enterprise (HPE) and Lenovo. Customers can buy SKUs through channel partners, or purchase the software-defined flash directly from E8 Storage as an integrated nonvolatile memory express (NVMe) appliance.
E8 Storage Software is qualified with Dell EMC PowerEdge R740xd and PowerEdge r64, Hewlett Packard Enterprise ProLiant DL360 and DL380 Gen 10, and Lenovo ThinkSystem SR630. The validated hardware systems need to run Red Hat Enterprise Linux of CentOS 7.3 or higher.
The reference stack includes server chassis with 32 GB to 64 GB of memory, Intel Skylake processors, 24 NVMe U.2 hot-swappable SSDs, two 128 GB RAID 1-enabled M.2 boot SSDs with RAID, and two 100 Gigabit Ethernet (GbE) Mellanox Connect X4-C remote direct memory access network interface cards.
The E8 software-defined flash allows 96 clustered hosts to read and write to shared storage. The vendor’s flagship E8-D24 rack-scale system has dual controllers and scales to 140 TB of effective storage with high-capacity SSDs. E8 Storage also is previewing its E8-X24 block arrays with customers running the IBM Spectrum Scale parallel file system and Oracle Real Application Cluster environments.
Thje recent addition of host-level mirroring enables E8 Storage to market its software-only flash storage on its S10 entry-level appliance to enterprise customers. The S10 has a single-controller and has been used mostly with proofs of concept.
“Customers in database environments want us to fit into their existing disaster recovery environment, rather than running an additional layer. Larger customers may want to do their own integration. We think smaller customers will still want a (turnkey) appliance,” said Julie Herd, E8 Storage director of technical marketing.
The NVMe standard is based on Peripheral Component Interconnect Express (PCIe) protocol. It is designed to squeeze the most performance from software-defined flash storage. Rather than running traffic through network host bus adapters, an application uses PCIe to talk directly to storage.
NVMe flash storage is maturing to the point that some industry observers predict an uptick in mainstream adoption in 2018. The NVM Express organization, a consortium of industry partners, is expected to help advanced NVMe over Fabrics technologies this year.
E8 Storage and other NVMe flash startups are jockeying for position, while established vendors Hitachi Vantara, IBM and Pure Storage are bringing systems to market built with custom flash modules.
Herd said the reference architecture stacks will help E8 Storage take on more workloads. “We are a block system, so this will help us tackle file-based workloads, and also broadens the market for our channel partners.”
Gartner now gives hyper-convergence a Magic Quadrant of its own, and places Nutanix as the leader in the upper right-hand corner.
Dell EMC, VMware and Hewlett-Packard Enterprise also sit in the leaders’ quadrant with Nutanix in the hyper-converged Magic Quadrant Gartner released this week. So Dell Technologies is also sitting pretty as owner of Dell EMC and VMware, and an OEM partner of Nutanix.
Previously, Gartner included hyper-converged systems as part of its Magic Quadrant for Integrated Systems.
Gartner defines hyper-converged infrastructure (HCI) as “a category of scale-out software-integrated infrastructure that applies a modular approach to compute, network and storage on standard hardware, leveraging distributed, horizontal building blocks under unified management.” It adds in the hyper-converged Magic Quadrant report that HCI vendors can build their own appliances with off-the-shelf infrastructure, or sell HCI software in partnership with system vendors or resellers/integrators. They can also sell HCI software directly to end users, or as HCI-as-a-service on-premises or in a public cloud.
Gartner credits HCI pioneer Nutanix with overcoming the IT world’s reluctance to invest in a new vendor, and raising confidence level in its product’s performance to continue to scale deployments. Gartner puts Nutanix’s customer base at more than 7,800.
Nutanix also won points for its robust management and self-service interface and choice of its KVM-based AHV hypervisor as an alternative to VMware ESXi. Nutanix’s negatives include lack of broad appeal to remote offices, departments, edge implementations and SMBs, according to Gartner.
Dell EMC is ranked high mainly due to its VxRail appliance and VxRack rackscale system. Those run on Dell PowerEdge servers and integrate with VMware technology and Dell EMC products such as Avamar, DataDomain, RecoverPoint and CloudArray. But Gartner points out that VxRail uses a different software release cycle than VMware and often lags behind the latest version of VMware’s vSAN HCI software.
Gartner ranks VMware vSAN separately from the Dell EMC HCI products, because vSAN is also sold as standalone software and packaged with other vendors’ servers. Gartner said VMware sells the broadest set of hyper-converged systems, but customers must pay extra for features such as deduplication, compression and erasure coding, and vSAN customers have reported performance and stability issues.
HPE bolstered its hyper-converged platform with the February, 2017 acquisition of SimpliVity, which is now sold on HPE ProLiant servers. Gartner says HPE doubled its HCI customer count to around 2,000 since the acquisition. HPE scores points for SimpliVity’s data services that include backup and disaster recover capabilities, but is cited for lack of flexibility with support only for VMware hypervisors and all-flash configurations.
Gartner lists Cisco, Pivot3 and Huawei as challengers in the hyper-converged Magic Quadrant, Stratoscale and Microsoft as visionaries, and Scale Computing, DataCore and HTBase as niche players.
Despite all the talk about object storage over the years, it has yet to push scale-out NAS out of the enterprise for storing files that take up hundreds of terabytes to petabytes of capacity. But early object storage vendor Caringo reports progress, with a 40% year-over-year sales increase in 2017 due to a heavy expansion of the footprint of previous customers along with an intake of new customers.
Caringo also reported 50% growth in the fourth quarter compared to the previous year. Adrian Herrera, vice president of marketing at Caringo, said most of the increase is due to previous customers adding capacity to their Caringo Swarm object storage implementations.
“We are seeing customers start with hundreds of terabytes and expanding to multiple petabytes,” he said.
Herrera said Caringo Swarm scale-out hybrid cloud object storage is picking up steam with the media and entertainment companies. Caringo has partnered with Reach Engine by Level Beyond, Pixit Media and CatDV to serve that market. He said as companies become more familiar with the Amazon S3 API, they warm to object storage.
“It’s really because of the Amazon S3 API acceptance,” Herrera said. “There are some asset managers that we have been certified with and their adoption of the S3 API makes it easy for us to plug into their solutions.”
Herrera said Caringo Swarm sales are also growing in local and federal government and high performance computing markets.
Still, with its target customer storing such large data sets, the sales process remains lengthy for object storage deals.
“It’s not uncommon to see a deal take about a year,” Herrera said. “Object storage deals take a long time. But it is compressing. The sales process is accelerating because people are a lot more comfortable with object storage.”
Jon Toigo, CEO and managing partner at Toigo International Partners, credited Caringo with helping to lead the wave of object storage vendors embracing Amazon Web Services’ public cloud.
“Many object-level storage companies, citing client cloud storage preferences, started emulating Caringo by adding Amazon Web Services storage compatibility to their kit,” Toigo wrote in a December 2017 Storage Magazine article. “Some added file system-like interfaces to help users who understood the hierarchical file systems better than mystical object storage and access methods.”
Kaminario is the latest vendor to deemphasize hardware in favor of a solely software-defined approach.
Under its new strategy, customers will buy Kaminario storage as a reference stack from global reseller TechData Corp., which will integrate the software on standard appliances. The companies inked a distribution deal in January.
Kaminario on Wednesday released the first product under the new software-only model: Kaminario Cloud Fabric, a usage-based utility aimed at midsized IT services providers. Cloud Fabric licenses customers to access composable infrastructure on demand with all-flash K2 storage arrays, the Kaminario flagship.
Prior to the deal with TechData, Kaminario relied on contract manufacturers to build K2 all-flash systems, but it owned the hardware inventory and associated financial and forecasting risk.
TechData will capture hardware revenue, while Kaminario storage revenue going forward will be solely from software licenses. Josh Epstein, Kaminario’s chief marketing officer, said TechData will handle asset tracking and inventory.
“All of our IP historically has been in software. We don’t do custom hardware engineering. To date, we have shipped our arrays as a fully integrated appliance, but we are moving to a software-only operational model. This move positions us for better operational and financing efficiency, and we’ll pass those efficiencies on to our customers,” Epstein said.
Amazon, Facebook, Google and other hyper-scale cloud data centers run on infrastructure built with proprietary hardware stacks from white-box servers. Epstein said Kaminario Cloud Fabric gives midrange service providers a similar advantage.
Kaminario Cloud Fabric is an enterprise-wide software utility licensed per consumed storage, regardless of where users are located. The goal is to qualify Kaminario storage with general purpose servers. K2 all-flash arrays to date have exclusively used Supermicro enclosures and SAS SSDs.
Epstein said many of Kaminario’s larger storage customers want to buy IT as a service. He said cloud and SaaS customers account for roughly 85% of Kaminario’s business.
“They want to move to a hyper-scale environment, but there is a lot of risk associated with vendor lock-in, regulatory concerns and overall pricing. We want to help them mitigate that risk.”
The Cloud Fabric license incorporates the standard Kaminario storage software stack, including the VisionOS operating system and Kaminario Clarity analytics and monitoring. Integration of Kaminario Flex automation and orchestration will be added upon general availability later this year.
Igneous Systems today closed a $15 million Series B funding round to help expand marketing of its hybrid cloud backup and archiving platform for file data.
Igneous Hybrid Storage Cloud consists of the startup’s software packaged on commodity appliances that protects data on-premises and in public clouds. The startup handles all the management of the data, which includes analytics and the ability to replicate it to the cloud.
“We consolidate backup and archiving with as little or as much on-prem, or as much or as little in the cloud as the customer desires,” Igneous CEO Kiran Bhageshpur said. “We deliver all as a service, even if the infrastructure is in the customer‘s data center. The customer does not monitor anything, they don’t get any alerts, they don’t worry about things completing or not. Our software takes care of all that.”
Bhageshpur said the funding will allow the company to add systems engineers and sales managers, mainly in North America. “We are hyper-focused on expanding our go-to-market side,” he said. Igneous Systems has about 40 employees today, Bhageshpur said.
The Igneous Hybrid Storage cloud has been generally available for less than a year. Bhageshpur said Igneous is still in the “low double digits” of customers but they include Fortune 250 and Global 2000 firms. He said the typical Igneous Systems customer has “lots of file data, as in hundreds of millions of files to billions of files, and hundreds of terabytes to petabytes to tens of petabytes of data. And the data is in multiple systems in multiple locations.”
“We index data no matter where it lives,” he said. “We scan data, store data, and move data off to the cloud. We do a global search of all that data that is being backed up. And we will extend that functionality because we index everything. You’re talking about hundreds of millions to billions of objects. All of that is searchable in Google-like fashion. We tell you things like how much data do you have, what is your change rate, and what’s the rate of access of your data. Our vision is to take that to the next step. Storage analytics is the first piece, but there are other things we can do that looks more deeply into that data.”
Igneous Systems’ subscription pricing starts at about $30,000 a year for 200 TB of usable data under protection. Bhageshpu said Igneous includes all its current core features in the subscription price but will add new functionalities for a premium.
“This is strictly hypothetical, but say we build in compliance enforcement,” he said. “If a customer says, ‘Provide insights into a GDPR violation,’ that would be an added charge.”
Vulcan Capital and Orca Bay Capital joined original Igneous Systems investors Madrona Venture Group, New Enterprise Associates, and RedPoint Ventures in the round. The round brings the company’s total investment to just over $41 million.
Bhageshpu said Stephen Mullaney is joining the board as an independent director. Mullaney was the CEO of network virtualization startup Nicira, which VMware acquired in2012 as the underlying technology for its NSX software-defined network platform. Mullaney left his SVP role at VMware in 2014 and currently sits on several boards, including Barracuda Networks, Metaswitch Networks, Tigera and Tula Technology.
Is the Dell EMC storage merger causing buyer’s remorse?
According to published report, Dell Technologies is considering a return to the public market to satisfy the massive debt incurred from its 2016 merger with EMC. Options under consideration include an initial public offering of stock or a reverse merger with VMware, ofwhich Dell already owns a majority stake.
The news comes less than 18 months after the Dell EMC storage merger was finalized, uniting the world’s No. 1 server vendor with the largest enterprise storage vendor by revenue.
Going public is one of several options reportedly being explored, but no decision has been reached. Dell EMC executives would not confirm the published reporting, which was first reported by Bloomberg. The company’s board of directors is expected to meet soon to hash out strategic options.
An interesting sidelight to a potential stock offering involves the impact on valuation of VMware. Dell owns 81% of VMware. A reverse merger would allow Dell to free up liquidity, while avoiding the expense and additional scrutiny of an IPO. VMware revenue surged nearly 14% last quarter to $785 million from licenses, reflective of more companies moving to the cloud.
Dell bought most of EMC’s interest in VMware as part of the deal, offering it as tracking stock that was used to help finance the merger. It’s also possible Dell could acquire the remaining stake in VMware and spin it off as a separately traded equity. Shares of other EMC Federation properties, such as Cloud Foundry or Pivotal Software, also could be offered as separate shares.
Greg Schulz, senior advisory analyst at Server and StorageIO, said Dell EMC faces storage challenges common to most legacy vendors.
“The demand for storage continues to grow, but so too do the options for customers to choose where, how and from whom they will consume it. Cloud providers are challenging traditional storage vendors, as are dynamic startups. It’s a dynamic buyers’ market, which means storage vendors need to start thinking in terms of new opportunities,” Schulz said.
Legacy Dell EMC storage gives way to VxRail, VxRack converged infrastructure
Dell EMC is carrying roughly $46 billion in debt financing related to the merger, and $3 billion in debt maturities start coming due in April. Part of the debt will be serviced from cash reserves of nearly $12 billion, but Dell apparently is exploring other avenues as a hedge against revenue declines related to its legacy networked storage.
Network and server revenue soared 32% during the last quarter, but Dell EMC storage revenue of $3.7 billion remained essentially flat for the second consecutive quarter.
Dell EMC closed last quarter carrying $52.5 billion in debt, up $2.6 billion from the prior quarter. The total debt balance increased in part due to VMware’s $4 billion bond issuance and about $300 million in increased structured financing for Dell Financial Services.
In separate but related news, Dell EMC said it is reshaping its Infrastructure Solutions Group (ISG),which encompasses networking, servers and storage – a move that recognizes how its traditional storage business is ceding ground to VxRack and VxRail converged infrastructure. The Dell EMC ISG unit is headed by longtime Dell executive Jeff Clarke, who took over when EMC veteran David Goulden retired last year.
Company officials disputed published reports that said the ISG shakeup was aimed to bolster Dell EMC storage revenues. However, the shifting strategy will use converged and hyper-converged platforms as the “tip of the spear.”
“Dell EMC has rolled out a new internal structure, designed to help simplify our organization for clear lines of decision making, get our products to market faster and align our teams to our biggest priorities. This will allow our product teams to accelerate active roadmap decisions as well as long-term product strategy and innovation,” Dell EMC said in a prepared statement explaining its decision.
“This new structure includes moving our converged and hyper-converged solution teams into the core product teams they work with most, to get Dell EMC innovation in the hands of our customer more quickly.”
Dell was a public company until 2013, when Michael Dell took the company private in a $25 billion transaction underwritten by equity firm Silver Lake Partners, which also provided $1 billion to orchestrate the EMC takeover. More recently, Silver Lake has ponied up a reported $5 billion to back networking giant Broadcom Ltd.’s buyout of Qualcomm Inc.
Commvault generated $180.4 million in revenue last quarter, which was its biggest revenue quarter ever but still missed Wall Street’s expectation of $182 million. The company blamed the small shortfall on large million-dollar deals that were pushed out during the September quarter and then failed to close in the December quarter.
The backup and data management company’s revenue represented an 8% increase over the prior year and 7% sequential increase. Commvault lost $59 million in the quarter, which CFO Brian Carolan attributed to two large non-cash income tax charges.
“We had a good sequential increase in our software growth, solid billings growth and strong operating cash flow,” CEO Bob Hammer said on the Commvault earnings call with analysts. “I’m also encouraged by our progress on certain key strategic initiatives, including the launch and early traction of our Commvault HyperScale appliance and good funnel build with our Commvault HyperScale software.”
This is the second straight quarter that Commvault missed expectations. While Commvault’s revenue miss was not as large as in the previous quarter, Hammer said his company’s inability to close big deals by the end of the quarter caused it to fall below expectations again.
“As we have discussed for many quarters, we are currently reliant on a steady flow of large six- and seven-figure deals, which come with additional risk due to their complexity and timing,” he said.
Hammer said some of the large deals from the previous quarter did close last quarter, but not as many as he expected “and close rates were below historical levels,” he said.
A Wells Fargo Securities analyst report called the Commvault earnings “modestly disappointing” but said the vendor remains positioned for growth.
“Commvault’s modest revenue miss was driven by an increase in subscription contributions, which accounted for 20 percent of total software license revenue and the impact to revenue reflects lower pricing on subscription versus traditional perpetual licenses,” the Wells Fargo report stated. “Our conversation with Commvault management noted that the payback period on subscription licenses are about three to five years.”
Hammer said the move to a subscription pricing model has confused some customers.
“While we also need to improve our close rates on these deals, large deal closure rates will likely remain lumpy,” he said. “We are also moving to new pricing models. While we are happy with the progress we are making on subscription pricing, our transition in pricing models has cost some market confusion, which we are rectifying.”
On the Commvault earnings call, Hammer said his focus for growth for the coming year is to help large enterprises move to the cloud and mitigate risk from cyberattacks such as ransomware.
Commvault is also counting on its HyperScale Appliance, which is built on Fujitsu hardware that is virtualized via Red Hat Linux and uses the Red Hat Cluster OS for a scale-out file system. The HyperScale platform hit the market in late 2017 and hasn’t generated much revenue yet.
Hammer denied Commvault’s closing problems are due to tougher competition. Besides large data protection vendors such as Veritas and Dell EMC, Commvault is also under fire from rapidly growing rivals Veeam Software, Cohesity and Rubrik.
Commvault HyperScale launched at least in part to battle similar integrated appliances from Rubrik and Cohesity.
“We bump into them every day,” Hammer said when asked about those smaller rivals. “I mean it’s the lower end of the market, but we clearly see those competitors out there. And fortunately we got into market relatively quickly with our HyperScale appliance.”