The captain of fast-sinking Tintri has abandoned ship, just three months after he came aboard as a lifesaver.
Tintri CEO Thomas Barton, 54, informed the board of his decision on Monday, according to a securities filing. Tintri did not elaborate on the reason for Barton’s departure, but said it was not due to a “disagreement” or matters pertaining to Tintri’s operations.
Shares of Tintri sank nearly 25% on the news, closing Tuesday trading at a new low of 19 cents a share. A new Tintri CEO has not been named, and it may soon be a moot point, given the vendor’s ongoing struggles to acquire new funding, repay debt and retain customers. Tintri officials did not respond to interview requests.
Tintri was unable to make a timely earnings report last quarter, and its shares have been trading under the $1 price minimum needed to retain listing on Nasdaq. Under Nasdaq rules, such companies have 180 days to reestablish the share-price requirement, but it’s not likely Tintri will be around to worry about it.
When it revealed preliminary earnings last week, Tintri said it lacks “sufficient liquidity” to continue operations beyond June 30. That date is the one-year anniversary of Tintri’s initial public offering, a move it undertook to stay afloat financially following years of heavy losses and a drop in venture funding.
Going public has not panned out according to plan. In the same earnings report, Tintri publicly acknowledged for the first time that “existing and potential customers and suppliers have expressed concerns regarding the company’s financial condition.”
According to the filing, Tintri owes $15.4 million in principal outstanding for a line of credit with Silicon Valley Bank and $50 million related to a credit facility with TriplePoint Capital LLC. Another $25 million of junior debt is tied to subordinated notes, bringing Tintri’s indebtedness to $90.4 million. Against that, Tintri has about $42.5 million in aggregate cash and cash equivalents.
Barton is the second Tintri CEO in four months to resign. He took over for Ken Klein, who left the job in March after five years at the helm.
Launched in 2008, Tintri initially marketed its all-flash storage for VMware shops. The company since has transitioned to hybrid and all-flash cloud arrays for hyper-scale environments. Although its technology has received high marks for scale and manageability, Tintri has struggled to sell enough storage to outrun a succession of quarterly losses.
Barton officially started as Tintri CEO on April 2 at a salary of $400,000, with the opportunity to earn $250,000 in performance-based cash bonuses. He added the title of interim CFO in May.
Industry observers considered Barton a good choice, given his background in both enterprise storage and venture investment. Barton joined Tintri from Broken Arrow Venture Capital, a Los Gatos, Calif., firm where he had been a founding partner since 2007.
From 2002 to 2007, Barton was president and CEO of Rackable Systems, a maker of x86 storage servers. Rackable Systems was acquired by Silicon Graphics International after Barton had left the company, and the technology became part of Hewlett Packard Enterprise after it acquired SGI in 2016.
Regardless of how he baited the hook this time, Barton apparently was unable to get investors to bite. Rather than fish from the side, Barton decided to make landfall, leaving Tintri even further adrift at sea.
Maxta MxSP hyper-converged infrastructure is expanding integration with Red Hat. The software-only vendor has added support for Red Hat OpenShift Container Platform, which is built on Red Hat Container Native Storage with GlusterFS file system.
The move is designed to ease migration of containers from VMware vSphere to Red Hat Virtualization. The Maxta MxSP platform supports both hypervisors on a single platform.
Maxta shared storage consists of the vendor’s distributed file system and integrated data services, including automated snapshots and cloning for rapid recovery. According to a Maxta spec sheet, Red Hat deployments require a minimum of three compute servers to maintain a quorum.
Maxta CEO Yoram Novick said Maxta file system provides capabilities for abstracted environments.
“The key capabilities of persistent storage are data integrity and performance. Maxta file system has strong checksums for both data and metadata to address one aspect of data integrity. Maxta also makes copies of all data elements across two or more different servers to protect against server, disk and flash failures,” plus synchronous replication.
For data protection, Maxta supports unlimited automated snapshots and clones for rapid recovery of applications.
Hyper-converged systems consist of a standard server hardware that combines compute, network, storage and virtualization resources in one box. Unlike most HCI vendors, Maxta MxSP is sold only as software, although customers can opt to get MxSP reference architecture from major server vendors.
Maxta has tried to separate itself from other HCI vendors by claiming to eliminate application siloes. A typical HCI stack usually supports one application, whereas Maxta MxSP allows multiple applications to run on a single cluster.
Container adoption is on the rise as solutions have emerged for issues related to persistent storage and data protection. Enterprises are using containers for selected application development to offset costs and management issues associated with large virtual machine farms.
Based on Linux variants, a container represents a slimmed-down alternative to a VM, allowing applications to be swapped between any underlying storage.
Instead of a guest of the full host operating system, a container requires only the slice of code needed to execute its dedicated microservices. Containers are also able to be rapidly deployed at large scale, with the Google Kubernetes Engine starting to assert itself as the preferred orchestration framework.
To date, the dominant practice is for enterprises to launch containers inside a VM. Maxta claims its OpenShift cloud infrastructure eliminates the necessity of separate abstraction layers by allowing containers to run natively without the need of a VM.
Maxta’s OpenShift support follows Red Hat integration in September 2017 for the VMware Escape Pod configuration, aimed at companies that want to reduce or eliminate VMware licensing fees for managing VMs. Novick said Maxta is monitoring customer demand to support Microsoft Hyper-V.
The latest version of Rubrik Alta Cloud Data Management software adds data protection and management capabilities across clouds, for enterprise users as well as managed service providers.
Rubrik Alta 4.2 launched today with the ability to protect and manage Amazon Web Services EC2-native applications in the Amazon cloud. Alta can now index, catalog and protect apps running on EC2 just as it does on-premises applications, according to Rubrik chief technologist Chris Wahl.
Rubrik also unveiled Envoy to help MSPs protect data for multiple tenants and provide self-service for their customers. Rubrik Alta 4.2 also added support for Oracle Solaris and IBM AIX enterprise platforms and integration with VMware vCloud Director cloud management software.
Alta’s EC2-native capabilities come from talking to EC2 APIs and managing data running on AWS. Wahl said the goal is to eliminate snapshot sprawl by managing them with the same application that handles core data protection and management. He said Rubrik Alta does application consistent backups of EC2 instances that use Elastic Block Storage (EBS) services, indexes the files inside and moves them across storage tiers.
“We talk to APIs and pull in the data,” Wahl said. “We crack open and index the files in there. People take EC2 snapshots and tend to go hog wild with them, and you have a lot of data spread across EBS volumes. There’s a lot of data sprawling all over the place with no true lifecycle management. Now you can assign a policy – say a four-hour RPO for this instance – and make sure it’s replicated to a secondary site for a different region. You no longer have snapshots hanging around forever, we make sure they’re sent to the right location and removed.”
Alta works across multiple public clouds, but has no similar lifecycle management capabilities for Microsoft Azure, Google Cloud Platform or other public clouds.
“We’re starting with the gorilla in the room,” Wahl said of AWS. “We’ll get lifecycle management plugged into EC2, and go from there. We find the Azure world is mostly focused on virtual machines, which is a different beast than the APIs running in Amazon.”
Envoy displays an MSP’s Rubrik cluster in a tenant network. It allows end users to customize and manage backup and DR in a private cloud.
Wahl described Envoy as “kind of a proxy end point that can be deployed into a tenant network. An MSP with hundreds of tenants can put this lightweight agent into the tenant network, then log into the Rubrik and talk to their environment to do network-based backup. They don’t have to rely on third-party libraries or APIs, then can talk directly to the workloads by secure proxy. And the MSP customer can get in there to do backup or DR as a service.”
Alta is the release name for version 4 of the Rubrik Cloud Data Management (CDM) platform. Rubrik Alta 4.0 launched in June 2017 with broad on-premises and cloud platform support. Version 4.1 added support for Microsoft Azure Stack, Google Cloud Platform integration and advanced AWS services last September. CDM runs on Rubrik branded appliances, partner hardware or in the cloud.
Time is winding down for Tintri, whose slow-motion fall could come by the end of June. The remaining question is whether the publicly traded hybrid storage vendor can complete a last-second Hail Mary to force overtime.
Tintri postponed a June earnings call and has yet to announce a rescheduling date. The delay likely is tied to several factors. First, Tintri storage sales aren’t growing at a rate sufficient to cover a high burn rate. That first dynamic has created a second: Tintri’s effort to renegotiate loans and attract much-needed operating capital – and thus incur more debt. Not exactly a winning formula to satisfy investors, much less lure new ones.
Short of a major surge in organic growth, Tintri does “not have the ability to repay” existing debt, nor does it have “sufficient liquidity to continue our operations beyond June 2018,” according to a May 31 filing with the U.S. Securities and Exchange Commission.
Public companies are required to disclose investor risks within their financial statements, but it is unusual for a company to specify a calendar date on which it may be forced to suspend routine business operations. It is noteworthy that Tintri cited the date after disclosing it had recently been able to extend the maturity of existing credit lines and loans.
The Tintri storage platform launched in 2008 with all-flash VMstore arrays that catered to VMware shops. It was a promising market, but Tintri got passed by with the advent of cloud and containers. Most of its sales now are for EC 6000 Series all-flash and T800 hybrid cloud arrays, which Tintri markets to hyper-scale data centers and service providers.
Fiscal year revenue of $125.9 million was flat with 1% growth. Tintri product sales accounted for $91 million, with support and maintenance contracts generating deferred revenue of $35.1 million.
Tintri’s losses widened last year, with the company spending nearly $97 million more than it took in in product sales. Total operating expenses topped $222.5 million, including nearly $1 million in restructuring costs linked to a round of layoffs enacted in January, dropping headcount from 561 to 445 employees.
Although it has direct sales teams in nine countries, 90% of Tintri storage revenue is derived from its 447 channel partners.
Less than one year after its initial public offering (IPO), Tintri said it isn’t generating enough money to repay existing debt. It also faces unappetizing choices to close the gap; namely, to satisfy debt by taking on more debt, or to sell more shares, which would dilute the value of shareholders’ equity.
Debt terms were renegotiated earlier this year with Silicon Valley Bank, which reduced the aggregate principal available to it from $20 million to $12.5 million. The revolving loan facility allows Tintri to borrow the money, repay it, and then re-borrow it up until May 2019. Tintri also reworked the loan terms with TriplePoint Capital LLC to extend maturity until April 2019.
New CEO Thomas Barton has yet to publicly disclose a turnaround strategy for Tintri. Barton took the reins in April following the voluntary resignation of Ken Klein, who had led Tintri since 2013. Tintri CFO Ian Halifax resigned several weeks later after Klein’s departure. Tintri declined requests to interview Barton.
Tintri’s slow slide actually began prior to completing the IPO. Spooked by anemic Tintri storage growth, and its staggering debt load, investors forced Tintri to postpone the offering. When it popped one day later, Tintri shares opened at $7 – well off the $11 target price. Tintri expected to net $109 million; it settled for proceeds of $60 million.
The ominous beginning foreshadowed struggles to come. Shares of Tintri, traded under the stock ticker TNTR, hit a high of $7.75 several weeks after its market debut, but have fallen steadily ever since. The stock was selling for 35 cents per share as recently as May. TNTR closed Tuesday at 56 cents.
June ends in 18 days. Will Tintri be able to find a way out of the doldrums in time? We shall know soon enough.
Fast-growing secondary data storage vendor Cohesity closed a massive $250 million funding round today, a total that could give it enough capital to become a public company within a few years.
SoftBank Vision Fund led the Series D round, with participation from Morgan Stanley Expansion Capital and previous investors Cisco Investments, Hewlett Packard Enterprise (HPE) and Sequoia Capital. Cisco and HPE are Cohesity partners, making its DataProtect software available on their servers. Cohesity now has $410 million in total funding since 2013.
Cohesity and Rubrik — both have founders with ties to hyper-converged pioneer Nutanix – have championed the converged secondary storage market with management software running on integrated appliances or across clouds. Rubrik ran its funding total to $292 million with an $180 million round in April, 2017.
Cohesity claims its revenue grew 600% in 2017 from 2016, and it gained more than 200 new enterprise customers in the last two quarters. Cohesity chief operating officer Rob Salmon said the vendor grew its headcount from 200 to 600 over the past nine months or so, and he expects growth rate to continue or accelerate with the new funding.
Salmon said the vendor will expand its sales and marketing while accelerating product development. Japanese-owned SoftBank is expected to push the startup into the Asia market to go with its current presence in North America, Europe and Australia.
Salmon stopped short of saying this will be the final funding round or will lead to an initial public offering of stock. Still, Cohesity seems headed towards an IPO with its impressive revenue growth rate and funding.
“I would expect this check will take us an awful long way,” Salmon said. “We expect that we’ll hit another milestone in the foreseeable future, but we’re not here now to talk about an IPO or if we’ll need more funding. This will help us carry momentum into the market. We have an eye towards continuing to accelerate growth, and also an eye towards profitability and what that brings. We expect to be a big player in this market, and we expect to disrupt legacy solutions in the market. That’s what we’re focused on now.”
Cohesity and Rubrik have had an impact on data protection and data management with what they call converged or hyper-converged secondary storage. Their software uses a scale-out file system running commercial hardware or across multiple clouds to handle all non-primary data. Cohesity uses a broad brush to paint secondary storage, going well beyond backup and even including files that fit in the traditional NAS bucket.
Cohesity’s DataPlatform includes DataProtect software and Hyperconverged Nodes that can be the vendor’s branded appliances or servers from HPE or Cisco.
Since Cohesity and Rubrik came to market, established vendors such as Dell EMC and Commvault have launched appliances with integrated data protection software.
“I would make the argument that over the next three to five years, all secondary architectures will be measured against what Cohesity has done in this area,” Salmon said. “This is the architecture enterprises will measure startups and legacy vendors against.”
Cloud and software-defined products are eating away at traditional enterprise networked storage systems, but the latter category still represents a fairly robust market. In fact, the emergence of managed services providers has given vendors a broader market to sell their storage equipment.
According to the IDC Worldwide Quarterly Enterprise Storage Systems Tracker, factory revenue from external storage systems totaled $13 billion during the first quarter of 2018, jumping 34% year over year. IDC said nearly 99 exabytes of capacity shipped last quarter, up 79% over last year.
Of the top five enterprise vendors tracked by IDC, Dell, Hewlett Packard Enterprise, Hitachi Vantana and NetApp all registered year-over-year gains. Dell, HPE and NetApp saw external storage sales grow by double digits. IBM was only one of the top vendors to decline, with sales skidding 15%.
Dell captured 21.6% of the market to maintain a large lead over No. 2 HPE, with NetApp third.
The latest tracking figures are lower than the $13.6 billion of revenue IDC reported for the fourth quarter of 2017, as the fourth quarter is historically the largest for enterprise storage sales. IDC defines networked storage systems as those that consist of at least three disks (either in a storage array or server chassis) and associated controllers, cables and host bus adapters.
Original design manufacturers generated the biggest impact, bagging $3.1 billion from direct sales to hyper-scale data centers. That marks an increase of more than 80% from a year ago and is roughly one-quarter of total storage investments during the quarter. Revenue from server-based storage products came in at $3.6 billion, tumbling from last quarter’s $4.2 billion.
Sales of all-flash arrays increased 55% last quarter, contributing $2.1 billion. Hybrid flash arrays did even better, with $2.5 billion in sales, up 24%.
Dell shakes off HPE, claims top spot
IDC attributes the external storage rise mostly to stepped-up refresh cycles and broader converged infrastructure deployments. Market leader Dell is a good example of the trend.
On Monday, Dell closed the April quarter with $4.1 billion revenue, up 10% to post its first market-share gain since merging with EMC in 2016. Dell executives cited increased sales of Dell EMC VxRack and VxRail hyper-converged infrastructure as a big reason for the quarterly improvement.
After finishing in a statistical tie with HPE last quarter, IDC said Dell pulled ahead on the strength of $2.8 billion in new sales. That’s 43% higher than its 2017 performance. The figures encompass the combined networked storage systems of Dell and EMC.
HPE storage generated $2.3 billion, good for 18% of the market, but a decline of 20% from last year. IDC reports combined figures for HPE and H3C Group, a joint venture formed in 2017 between HPE and state-owned Chinese company Unisplendour Corp. HPE retains a 49% stake in the venture.
NetApp posted one-year sales growth of 22%. It generated $890 million, or 6.8% of total market revenues. It has been a long, hard road for NetApp to get this far. Until the last two years, the file-storage pioneer lagged competitors in all-flash and hyper-converged markets. It since has turned things around, even bucking trends to grow networked-based storage despite industry-wide declines.
Meanwhile, Hitachi Vantara – formerly called Hitachi Data Systems – had flat revenue growth in storage. Its 3.6% market share is nearly a full percentage point lower than in 2017. That’s not surprising, since part of the vendor’s 2017 rebranding strategy was to deemphasize storage hardware in favor of more services and software.
IBM rounded out the top five with 3% of the market, based on $387 million in revenue. By contrast, IBM’s 2017 share was nearly 4.7% on revenue of $455 million. That’s a drop of 15 percent. On the bright side, IBM started reporting positive revenue growth earlier this year, snapping s string of 23 consecutive losing quarters.
While IDC probably won’t release its hyper-converged market share numbers for the first quarter until late June, it appears Dell will stay No. 1 on the HCI revenue hardware and software charts.
IDC recognized hardware and software HCI revenue separately for the first time in the fourth quarter of 2017. Dell EMC led hardware with 27.8% share, ahead of second-place Nutanix at 19.5%. IDC recognized Dell-owned VMware as the software HCI market leader with 32.4% of the market, with No. 2 Nutanix at 29.5%.
Nutanix, which is switching to a software-centric business model, reported 41% revenue growth for the first quarter of 2018. Dell said its Dell EMC VxRail HCI appliance and VMware’s vSAN HCI software each grew more than that.
VMware reported vSAN licenses grew 70% year-over-year, including vSAN sold on Dell EMC vXRail appliances.
On VMware’s earnings call, last week CEO Pat Gelsinger said the company finished the quarter with over 14,000 vSAN accounts, and its 10 largest deals included vSAN.
Like Nutanix CEO Dheeraj Pandey, Gelsinger said he still sees plenty of room for growth in the HCI market.
“I tease my team saying, ‘how many vSpheres have storage attached to it?’” The answer is 100%,” Gelsinger said. “And I’d say ‘that’s your market opportunity for vSAN, 100% of vSphere attach rate.’ So I am pushing them to continue to make it that simple and easy that we are attaching vSAN to every one of our compute nodes as part of this larger migration to the complete solution, either software or software plus hardware.”
Gelsinger said that migration is well under way as VMware customers have gone from licensing vSAN separately to using it as part of complete HCI bundles such as VxRail. Those HCI packages often include NSX software-defined networking.
“So that’s the shift in the marketplace we are seeing, where I will say people are no longer putting the Tinker Toys together themselves,” he said. “So, the storage piece by itself is a large market that we have lots of growth to go yet.”
Qumulo closed a $93 million funding round today, giving the scale-out file storage vendor “fuel” to compete with the established players in a rapidly expanding market.
BlackRock Private Equity Partners led the Series D round, which brings Qumulo’s total funding to over $220 million. Goldman Sachs and Western Digital also participated in the funding, along with previous Qumulo investors Highland Capital Partners, Kleiner Perkins Caufield & Byers, the Madrona Venture Group, and Valhalla Partners.
Qumulo CEO Bill Richter hinted that this may be the last venture funding the company will need.
“This will fuel the company’s growth for many years to come,” Richter said. “This is enough fuel that we need for the foreseeable future, which is important in this industry.”
He said Qumulo will use the funding to add sales and marketing people, and “especially code-writing engineers” to enhance the Qumulo File Fabric (QF2) software. He sees the market as ripe for software-defined and cloud-based NAS storage in the wake of fast-growing file data driven by technologies such as artificial intelligence, machine learning and 4K video.
Richter said Qumulo is innovating with QF2’s analytics and the ability to run in the cloud, while the established NAS products from NetApp and Dell EMC Isilon are stagnating. Qumulo’s founders were original Isilon developers, and Richter was president of EMC’s Isilon division for three years. He became Qumulo CEO in November, 2016.
“The last generation of storage was all about the box,” Richter said. “The next generation is about the data and the place where data lives. How can we allow customers to interoperate between the public and their private cloud for a true hybrid experience? And how can they really understand their data and not just their storage? Legacy guys, which I was part of for many, many years, were just churning out more boxes.”
Richter said Qumulo has hundreds of customers, including nine leading movie studios and Fortune 500 companies. He said Qumulo will use the funding to grow aggressively from its current 180 employees, although he declined to share specific hiring goals.
Richter also said the funding from Black Rock and Golden Sachs does not mean an initial public stock offering is a short-term goal.
“Eventually that might be in the cards, but now we’re focused on growing Qumulo and creating a long-term sustainable business,” he said. “Don’t expect us to try and put ourselves out to the public market at the first opportunity.”
Despite the cash infusion, Qumulo still faces large challenges. The vendor is far from profitable and is battling giants NetApp and Dell at the top of the market as well as other cloud file system startups such as Elastifile, WekaIO and Quobyte. Object storage vendors are increasingly adding file systems to their products as well.
And despite citing multi-cloud as a big selling point, Qumulo only supports AWS now. Richter said Microsoft Azure and Google Cloud Platform support is on the way. Qumulo is also exploring more hardware partnerships, such as its deal to sell its QF2 on HPE Apollo servers.
“Customers want a better, more modern choice,” said Richter, who now has the funding to fuel those code-writing engineers to help develop that modern file system.
Hewlett Packard Enterprise expanded its M-series Ethernet storage switching with a smaller switch and orchestration software designed to improve management features for iSCSI SANs.
HPE first launched the M-series in 2017, using Mellanox’s chipset. The M-series is one of three HPE storage switching families. The others are the B-series from Broadcom/Brocade and the C-series from Cisco. While the B and C series are Fibre Channel platforms, the M-series is Ethernet-only.
The new SN2010M is a smaller version of the first three M-series switches released in last year. The new switch is a half-width top of rack switch with 18 ports that support up to 25 Gigabit per second Ethernet and four 40/100-GigE ports. Like the larger M-Series switches, it supports zero packet loss and even bandwidth allocation for predictable performance.
The new HPE Smart Fabric Orchestrator (SFO) software handles management and configuration features such as zoning and provisioning that have long been valuable to Fibre Channel but difficult to set up and manage. The design goal is to eliminate the need for SAN administrators to run storage networks.
Marty Lans, HPE’s GM of storage connectivity, said 80% of data is on Ethernet-based secondary storage platforms. That includes hyper-converged storage, virtual SANs and backup data.
“What Fibre Channel does for primary storage, we’ve done for everything else,” he said of SFO’s management capabilities.
That makes Ethernet-based iSCSI storage important for the emerging NVMe-over Fabrics wave, Lans said. HPE has been building out its secondary storage ecosystem through partnerships with vendors such as Qumulo, Cohesity, Rubrik, Hedvig, Cloudian and Scality. It also has its own SimpliVity hyper-converged platform.
HPE’s major primary SAN platforms – 3PAR and Nimble – support Fibre Channel and Ethernet, although 3PAR’s customer base is mainly Fibre Channel and Nimble’s is mostly iSCSI.
“We realized a big part of the opportunity around NVMe is iSCSI-based,” Lans said. “If we can take the features of Fibre Channel and move it to Ethernet, customers have a choice. They can pick Ethernet instead of Fibre Channel. We’re not suggesting that, we just wanted to build another protocol for applications.”
Lans said industry-wide attempts to make Ethernet better for storage – including Converged Enhanced Ethernet and Data Center Ethernet – overlooked the management capabilities.
He said SFO eliminates the need for interoperability testing between different vendors’ switches. “Wouldn’t it be great if you didn’t have to go to a Website and look it up?” he said of interoperability lists. “We wanted to settle the politics for this. We layered on orchestration software and did all the interoperability testing.”
Dell Technologies on Monday projected positive share growth in enterprise storage, the first quarter that has happened since the Dell and EMC merger closed in 2016. The next question is whether the growth in storage is sustainable, attributable to a seasonal anomaly, or requires a winnowing of redundant storage platforms.
Dell EMC storage revenue climbed 10% during the April quarter, generating $4.1 billion, which the vendor attributed largely to a triple-digit increase in sales of Dell EMC VxRack and VxRail hyper-converged appliances.
The vendor also claimed progress in midrange storage sales, a chronic trouble spot, although company executives declined to provide specific revenue figures. In a related move, Dell said it hired several hundred sales reps last quarter specifically for storage.
Only a passing reference was made to sales of the flagship all-flash Dell EMC PowerMax (formerly VMAX), which exited fiscal year 2018 strongly with a $5 billion run rate. Dell executives also made off limits for discussion the status of internal talks regarding a potential merger with VMware, the virtualization subsidiary it picked up through EMC.
Dell EMC rides momentum of cloud, software-defined storage
Dell’s combined revenue last quarter surged 19% to $21.4 billion. That’s on a net loss of $538 million. Non-GAAP operating income was $2 billion, up 42%.
After taking on sizable debt to acquire the EMC storage business, Dell has paid down about $13 billion of the financial obligations, including a $2.5 billion payment last week to satisfy investment-grade notes. All told, Dell’s debt service is roughly $53 billion, excluding debt related to the Dell Financial Services arm.
The Dell EMC storage portfolio is part of the vendor’s Infrastructure Solutions Group (ISG), which also includes PCs, servers and networking. Overall ISG product revenue of $8.7 billion was up 25%, getting a bounce largely from customers using Dell PowerEdge servers to run software-defined storage.
A strong quarter by VMware generated license revenue of $2 billion last quarter, including double-digit bookings for compute management, end user computing, NSX and VSAN/VxRail. Deferred revenue of $21 billion is up more than $3 billion from the year-ago period, due to recurring maintenance contracts and increased customer adoption of Dell’s consumption-based services and software.
Research firm IDC projects spending on storage systems will grow nearly 10 percent in the first quarter. The Dell EMC storage business is positioned to equal if not outpace the market average, said Jeff Clarke, a Dell vice chairman of products and operations.
Clarke said data centers increasingly want to run software-defined storage to support analytics and similar workloads in a multicloud environment. That helped Dell post its sixth consecutive quarter of increased server revenues, although rising DRAM prices pose potential headwinds.
“Storage had a solid quarter as a portion of the Q4 demand (in March). Following positive demand growth in our fiscal fourth quarter, we expect to gain share year over year in storage when the first-quarter industry share numbers are final. This will be our first quarter (with) storage share gains since we closed the EMC transaction,” Clarke said.
So has the flagging Dell EMC storage business finally turned a corner? Clarke sounded bullish on the idea, but acknowledged the recent revenue figures are only a snapshot in time.
“This quarter’s results are an indicator that our actions are having a positive impact. We continue to be focused on improving storage velocity and acknowledge that results maybe lumpy quarter-to-quarter. That said, our FY 19 storage plan is built on revenue growth and to deliver share gain over the full year.”
Despite several all-flash storage moves at Dell Technologies World in May, the only acknowledgement of flash was the new Dell PowerEdge models that integrate NVMe flash drives and support NVMe over Fabrics. Dell reported in March it exited the fiscal year with a $5 billion run rate in all-flash, and that was prior to launching a rebranded VMAX.
All-flash pioneer Pure Storage in April posted year-over-year revenue of 40% and NetApp did even better, closing its year at $2.4 billion and a 43% year-over-year gain. As is its custom, Dell EMC does not provide revenue guidance to Wall Street.
If you read between the lines, it’s possible to imagine that Dell EMC may start streamlining its storage gear. Clarke said the Dell EMC storage road map will aim for “simplification,” which he said started with the reorganization that resulted in creation of the ISG last year.
“Since then we have started simplifying the portfolio into a road map squarely directed at meeting customer needs and winning in the market. We will offer a single industry-leading solution for every segment in which we compete, including entry level, midrange, high-end and unstructured. Those solutions will put forward the best features and innovation from our current portfolio, plus new innovation to ensure we are offering the industry’s best solutions.”
“We are not exiting any market. All the products on our current road map will continue to be supported over their lifecycle,” as part of Dell’s customer loyalty program.