NetApp CEO George Kurian On HCI, Cloud, And Acquisition Strategy

NetApp Looking At Leadership Roles In Flash Storage, Cloud, HCI

Anyone who thinks NetApp is a storage company may need to take a new look. NetApp is on a tear in the IT world. Yes, it is the second-largest vendor of flash storage and of storage in general, and has the fastest-growing flash storage business. But the company also has partnerships with hyperscalers like Amazon Web Services to seamlessly extend data management across on-premises and cloud environments and has a nascent hyper-converged infrastructure offering unique in its ability to tie to enterprise operations.

NetApp CEO George Kurian recently spoke with CRN about where the company is going into the future, including a look at NetApp's acquisition strategy.

Here's an in-depth look at what is happening at NetApp.

What is NetApp's current position in the IT industry as a whole?

We've had extraordinary momentum. We finished the last fiscal year the strongest we've done in many, many years, and certainly with the best momentum we've had since I took over as CEO. We are winning new customers, winning new workloads within existing customers. We are seen as the leading innovator in helping customers build hybrid cloud solutions. And we are very, very well positioned for the next stage in workloads like artificial intelligence.

So overall, I'm really excited. We've really transformed the business, as the results are clearly showing.

You talked about 'new workloads' and mentioned artificial intelligence as an example. Can you talk more about what you mean?

Fundamentally, NetApp has always been about helping customers drive their business performance using data. We have historically done it within the data centers. Increasingly, we are enabling it across all of the places where they put their data, whether it's in their data centers, their hosting environments, or the public clouds. We are able, in concert with the public cloud providers, to achieve levels of performance and business impact that never existed before. We've had customers in the genomic space, for example, be able to sequence 1 million genomes in parallel leveraging the massive compute power of the public hyperscaler cloud providers with the industry-leading technology that we have for data. That allows the customer to bring a new level of innovation to their business. And, in this particular case, also make the world better with data, something that we feel particularly proud of.

What are some other examples?

New examples of workloads like artificial intelligence depend on high-performance, scalable storage. Many artificial intelligence workloads run on file systems like NFS, and we have been the historic leader in that space. We announced an artificial intelligence architectural solution together with Nvidia in May. And we're excited about the possibilities the new era promises.

Is NetApp designing its new products specifically to meet the needs of these new workloads, or repurposing existing products?

We've optimized our products substantially to deal with architectures like the cloud to deal with the scalable mixed workload performance that AI requires, and to allow customers to keep a very large data set always active so that they don't have to deal with data aging out of an analytics or an artificial intelligence environment. We've done a lot of things to get ready for the new era of IT and are well-positioned for it.

What is the competitive environment for NetApp and the storage industry?

It's always competitive. We see a path to being unique in the sense that we are the only player in the market that is able to deliver innovation within a customer's data center and to enable customers to leverage innovation in the cloud with their data. I think that positions us uniquely vis-à-vis all the different players in the market. The fact that all three of the major hyperscalers have chosen to work with NetApp gives us enormous credibility when we are talking to customers.

When you say unique in your ability to work in the cloud, what is actually unique? What is NetApp doing that no one else is?

Many of the players, I would characterize them in two ways. Either they have no cloud strategy, [where] their entire purview is, cloud is bad, on-premises is good. Or some of them will say they have a cloud strategy, and it is really running on a proprietary software stack top-to-bottom on the cloud.

We allow customers to use the advanced services that the hyperscalers provide, meaning the advanced data analytics, the machine learning tools, the serverless function-as-a-service capabilities in these cloud providers, but we bring the data to these services. That's what's unique, unlike anybody else in the industry.

And how's NetApp helping channel partners monetize that?

We have some [recent] exciting announcements about new programs and new certifications that will help our channel partners expand their revenue sources, profit margins, and position them strategically alongside the discussions that we have with the cloud providers and with customers. So we're really excited about what [we've announced] for the channel. … We see this as an opportunity for the partner community to, just like we've transformed our position with customers, similarly strategically transform their position with customers alongside us.

Can you give us an example?

For both the cloud as well as for hyper-converged, we have enhancements to our data visionary loyalty program with new certifications, new enablement programs, efficiency guarantees, and services offerings that give partners the ability to both expand their knowledge of and capabilities in these parts of the market as well as expanded revenue streams through consulting advisory capabilities that we're going to give them.

Where is NetApp in terms of its hyper-converged infrastructure offering?

We have had several customer wins. It's early for us in the market. But just like we've succeeded in solid state and in cloud, we believe that we have the right solution as the market transitions from the early adopters, which usually have a very simple use case, to the mainstream market. We are excited to continue to bring the solution to market and expand its capabilities. And we're excited by the response we've seen.

The value proposition statements that we've made about our architectural approach and our solution appear to be resonating with customers.

When you say, 'the right solution' for HCI, how are you defining 'right?'

What you see in the hyper-converged infrastructure market is that the initial use case was for a single-function, small office or branch office appliance that essentially replaces direct-attach storage and a small server. As you transition from that sort-of greenfield use case to a data center implementation, customers require you to interoperate with the other assets in the data center, whether it's storage or compute or network implementations, monitoring tools, orchestration methods, and so on. They want efficiency in the way that they scale their systems. And we are much, much more efficient than what the incumbents have. And we want to run things like mixed workloads in a highly automated fashion. And we believe that, because of our deep understanding of these use cases, we have a compelling offering. And we're going to demonstrate that in the market.

What's next in terms of NetApp's HCI offering?

It's been in the market about six months. We are going to continue to expand it. We have a release cadence of every few months [when] we announce new enhancements to it. So you'll continue to see us enhance it. We've expanded our investment in both go-to-market and in engineering substantially to capitalize on the opportunities.

How are channel partners looking at NetApp's HCI?

Our approach is differentiated, so it allows the channel partners to bring a solution to customers who look to build either a private cloud or look to deploy a hybrid cloud solution. There are not only traditional services like deployment and implementation services, but there are many consulting and advisory services that partners can take advantage of as they look at migrating customers from a legacy environment to a true hybrid environment. And so that's part of [our new] channel program.

NetApp has been evangelizing its Data Fabric architecture for some time now. Is this something partners are making money on?

Every time you sell a NetApp storage system, Data Fabric is an extraordinarily important component of the value proposition. I think as we have progressed the innovation in the Data Fabric, we now have not only the compelling technology that we bring, but the compelling support that the world's biggest hyperscalers bring. And so it allows partners a unique opportunity to work with us and with the hyperscalers. No other traditional enterprise vendor gives you that ability to not only deliver value to a customer's data center and a customer's IT department, but also simultaneously deliver value to their cloud architects, their business line owners, in working alongside the biggest hyperscalers.

It's been a lot of hard work to get us here. But with the Data Fabric deployed and endorsed by the biggest hyperscalers, we're in an extremely good position. And we intend to capitalize on it.

What are some future directions you are looking at for Data Fabric?

Data Fabric will get richer both in terms of the capabilities of the fabric and the capabilities of supporting workloads like AI. I think if you look at the world of IT, it will be a hybrid world, a hybrid multi-cloud world. You will see us not only support customers' data sets within their data centers and the public cloud, but also extend to the edge and all of the places where people put their data. We've seen really good progress, and there's a lot more innovation to come.

Last quarter, we saw Dell EMC make what looked like a good recovery in the storage market. Do you see Dell EMC as a competitive threat?

They've always been a formidable competitor. We see that we have a different path to offer customers than what they offer. And I think there's a place in the world for both of us. We bring customers' data to the innovation that the public clouds have, as well as radically simplify their data centers. I think Dell EMC has a different approach. We think that there will be an increasing number of people that will choose our approach because it's far more efficient and delivers more business value over time. But I think there's clearly a place in the world for both.

Are you looking over your shoulder at Pure Storage at all? In terms of flash, Pure is growing almost as fast as NetApp is.

The main thing we've learned over the last several years is that it's really important for us to listen to what customers are thinking and to intercept market transitions, not necessarily to be the first to market, but be the first to mainstream market. … We have the innovations to lead in flash. We have the innovations to lead in cloud. And we have a really, really good architecture that we think will give us innovations shortly in the hyper-converged world.

So we're not particularly worried about what any competitor has. I think we're really focused on what our customers require. And we work with the ecosystem because we are a believer that focus matters, that you really have to be world-class at what you do. That allows us to partner with everybody in the industry: the hyperscalers, the computing manufacturers, the chip manufacturers, the SSD suppliers.

But almost any vendor can say that, right?

I think that many vendors would say that in what they declare. But they don't demonstrate it in how they operate. We do. We were first to market in solid-state with 16-Tbyte and 32-Tbyte SSDs. We were first to market with end-to-end NVMe. We have an open way of addressing converged systems. We are working with the world's biggest hyperscalers. We are not just saying we partner really well. We are actually demonstrating that in action.

What it the latest situation in NetApp's FlexPod partnership with Cisco?

We have very good momentum. We just announced some FlexPod offerings to allow customers to use FlexPod in new ways, as a service model, for example. FlexPod continues to deliver value to both our channel and our customers. We continue to innovate around ways for customers to use FlexPod.

Could NetApp's HCI strategy some day overlap that of its FlexPod converged infrastructure?

We see hyper-converged and converged as solving two different use cases. They've always solved two different use cases in our belief. As we've said, there's public cloud, there's stand-alone storage, there are converged systems, and there are hyper-converged systems. And these all have different use cases. And we genuinely believe that. So we think there's a place in the world for all of them.

It's been some time since we've seen NetApp make any acquisitions. What is NetApp's acquisition strategy?

We've had differentiated technologies that we have acquired to help us accelerate our leadership in flash storage. Last year, we acquired [Plexistor] to support our storage-class memory. We've demonstrated some early concepts. You'll see that soon. We [acquired SolidFire] to help us accelerate our relationships with the hyperscalers. And we have the foundation for what we think is enterprise-grade [hyper-converged infrastructure]. So I feel good about the acquisitions we've made.

We are selective in how we acquire and how many [companies] we acquire. I think a key part of my management philosophy is extraordinary amounts of focus. We deliver on what we choose to do. There are lots of reasons to be open to acquisitions. But we are very deliberate about what we choose to acquire.

Are there any technologies that you think NetApp would consider acquiring going forward?

We have a really good portfolio of technologies that are in our basket today. I don't feel like we have any holes. I think that are in position to help customers get value out of their data, and to do so in a hybrid model is a very strategic position. There are a lot of interesting ideas for how to expand our value proposition there. But we're going to be selective about where we choose to play. But the convergence of data, hybrid cloud and business is a very interesting place to be.