Storage Vendor Execs On Why Public Cloud Won't Crumble Their Businesses

Is the public cloud a threat that will cannibalize storage vendors' value proposition? No, said a panel of storage executives from leading storage vendor companies.

On the panel, held at a Raymond James investor conference in New York last month, storage executives from EMC, Tintri, SolidFire and Nutanix agreed that it isn't time to write off on-premises storage because the public cloud isn't the end-all-be-all solution that some clients may think it is.

Tintri CEO Ken Klein said on the panel that the public cloud is "catalyzing growth" for storage as it drives IT decision-makers to build their own private clouds. There's a lot of options out there, he said, and it's not a "winner take all" market where Amazon, Azure and Google will be the only ones able to succeed.

[Related: Storage Showdown: Top Vendor Execs Get Heated About Whose Storage Vision Is Best]

"We're seeing the fastest area of growth for us is private cloud deployments where, fundamentally, they want speed to service, they want the agility and they want to control it," Klein said.

The problem people get into when discussing the public cloud is that they think it has to be one or the other, when hybrid seems to be the name of the game for enterprise customers, Senior Vice President of EMC Global Sales Engineering Chad Sakac said. For example, he said Nike, a customer of EMC, has two sides of its IT, an internal private cloud where the fitness company is evaluating hyper-converged and converged infrastructures, and then a second digital media side that is "aggressively" using AWS at the same time.

SolidFire CEO Dave Wright agreed that the cloud was having an impact, but said the storage vendors would feel it more at the lower end of the market than in the enterprise market. The cost benefit analysis for small companies, with only one rack of gear and a few hundred virtual machines, makes the cloud extremely appealing, and on-premises solutions "almost laughable" in a couple of years, he said.

"I think that is going to be a dynamic we'll see over the next couple of years: Yes, large enterprises are not getting rid of their infrastructure anytime soon -- they have too many legacy applications, they have too many control requirements, regulatory or otherwise, that they have to keep things inside their walls ... But, there is an entire lower end of the market, and that lower end of the market is going to affect the IT vendors, it's going to affect the resellers, the distributors and other folks who make most of their money off of that ... That is going to shake up the dynamic for a large number of that IT spend," Wright said.

However, Nutanix Senior Vice President of Marketing and Product Management Howard Ting said that the enterprise market opportunity is still there for the public cloud, particularly for disaster recovery and archives. For example, he said eHarmony has all of its own infrastructure, but uses the cloud for disaster recovery for cost reasons.

"Even large enterprises like that, there are scenarios whether it's archival or DR where they need this "support" from the public cloud when there are bad things that happen. You'll see large enterprises start to do that. It may not be their primary data, but for backup or DR, those types of use cases, they'll use the public cloud because they can deliver more cost-effectively and in a more stable manner," Ting said.

NEXT: Cloud Not Always Most Cost-Effective Option

However, Ting emphasized that, while there is some benefit for backup or disaster recovery, cloud isn't always the most cost-effective option for end users. First, he said there is no depreciation benefit with the public cloud. Second, for steady workloads, the monthly bill is small, but when multiplied over time it gets "pretty expensive," he said.

"I think a lot of people recognize that in the end-user community ... The economics are underestimated, underappreciated and miscalculated," Ting said.

A bigger issue, Tintri's Klein said, is that once end users commit to the public cloud, it is very difficult to leave, comparing it to "Hotel California."

"Bottom line is, I think we end up in a hybrid world. It's both. It's a dialectic of both on-prem and in the cloud," Klein said.

The executives all agreed that there is still more than enough opportunity in on-premises storage, and they don't expect that opportunity to dwindle anytime soon. The "real opportunity," Tintri's Klein said, is the $1 trillion estimated IT spending market, of which Amazon, Google and Azure still only hold a fraction.

"I think, fundamentally, there's a bit of much ado about nothing. The cloud is everything, yet it's nothing. Fundamentally, it's going to cause change in the data center, not just in technology but in business models. That's the perceived threat. IT spending is $1 trillion right now -- what is Google doing right now? They're around a $4 to 6 billion run-rate ... but it's that $1 trillion opportunity that's the real big opportunity for companies that are on this panel," Klein said.

PUBLISHED JAN. 16, 2015