CRN Exclusive: Veeam CEO McKay Details Plans For N2WS Acquisition, Says He's 'Not Worried' About Dell EMC Integrating Data Protection Into VMware
With N2WS Acquisition Finalized, Veeam And Peter McKay Look At What's Next
Data protection software developer Veeam's acquisition last week of N2WS and its leading cloud-native Amazon Web Services cloud data protection technology, combined with Veeam's already strong Microsoft Azure and VMware capabilities, gives the company an envious position when it comes to cloud-focused storage.
However, as Veeam continues to grow, it is more and more the target of competing vendors looking to place their bets on moving away from a focus on traditional data protection toward an emphasis on the virtualized and cloud data capabilities that Veeam helped pioneer. That includes Dell EMC's move to integrate data protection with VMware, a move Veeam CEO Peter McKay calls too late and surprising given the importance to VMware of remaining independent.
CRN talked with McKay about the N2WS acquisition and about Veeam's competitive environment. Here's a look at how the company is preparing for the future.
MARK HARANAS contributed to this story.
What is Veeam doing with N2WS?
A little over a year ago, Veeam invested in N2WS. When we looked at the different approaches to data protection, some of the shifting we saw in the market, and the acceleration of some of the public cloud offerings, we made an investment in the company called N2WS. … It was a way to watch that market and see how that business has evolved. And what was clear over the last couple months is they just continued to exceed our expectations. We saw that as very complementary to our business. So we looked at that and with our equity position found it easier to buy [the company]. And that has been our approach. We've invested in other companies. And it's made sense. Some we'll buy, some we won't. This is the first real acquisition that we've made in the two or three years that I have been here. It's probably one of others we'll do as we grow, but the market opportunity for Infrastructure-as-a-Service is $88 billion by 2022. Them being the leader in AWS data protection is something that is very complementary to our business and we felt will change more now as part of Veeam.
How will Veeam treat the acquisition?
We're going to continue to keep it separate from the [Veeam] business, although we're going to leverage the 282,000 customers that we already have on Veeam, and we're going to leverage the core infrastructure that we have that can help drive that market opportunity. But because some of the buyers are slightly different from the traditional Veeam buyers, we felt that by keeping it as a Veeam company rather than a part of Veeam would be a better approach for us to take.
There's a good team that comes with it based in Israel with a strong development team and a complement of good go-to-market expertise that we're bringing in. It's a very compelling acquisition for us to make at this time.
Does Veeam plan on integrating the N2WS technology with Veeam's technology?
Absolutely. There's no question that it will be integrated into the Veeam platform. We will be doing promotions to drive more companies to use it. So we're going to have some promotions we'll offer to existing Veeam customers, and people who buy Veeam can get a license of N2WS as well for 60 days. And when the fully integrated version becomes available, then they can upgrade to that version. So right off the bat we're going to allow the customers to leverage that technology as we're merging the technologies together.
It will always be a stand-alone [offering], but we'll have it more tightly integrated as soon as we possibly can.
What has Veeam done with AWS prior to this acquisition?
We've been able to back up [data] to AWS, from AWS, and in between AWS. If you think about it, when we started in the virtual environment, we built our products specifically for virtual, where most companies were built for physical backups. At the very beginning, we built this natively for VMware vSphere backups. And we tightly integrated into that environment. We continued to evolve that. We now do backups to the cloud, and backups from the cloud, and all that.
What's different with N2WS?
N2WS is natively developed for AWS. It's No. 1 or No. 2 in the marketplace. And it's enjoyed incredible success, really becoming a critical part of the AWS ecosystem from day one. And so that same approach, and the same success, that we had in attacking the virtual environment is what we want to do in the cloud environment in that it's natively developed, meaning it's focused on nothing but AWS. It's a tighter solution that is incredibly leverageable within the AWS environment. And so it will allow our channel partners to enable this a lot better.
Does Veeam offer a similar solution for Microsoft Azure or Google Cloud or IBM Cloud?
Azure has always been our first thought we go to when developing our cloud, and then AWS, IBM Cloud, and now VMware on AWS. We can do the to-and-from [from] Azure as well. [With] AWS, because the infrastructure is dramatically different, it requires you do it the way AWS has done it, where Azure and IBM Cloud and VMware on AWS doesn’t require as much of a bottom-up kind of approach. That's why we did it this way. We can do Azure, IBM, and VMware. Those are the ones we have probably done the deepest. With AWS, you can only go so far. And now we've found a better approach to AWS by leveraging N2WS.
How about Google Cloud?
It's in discussion.
Is N2WS a channel-focused organization, or more direct?
They have a mix. You can buy [N2WS] off the Amazon Marketplace. That's probably half their revenue. And the other half, when they don't go through the marketplace, that's channel-driven. And ultimately it will be the Veeam channel that'll distribute N2WS. That's an opportunity for the Veeam channel to add AWS to their portfolio.
Will Veeam keep N2WS available through the AWS Marketplace?
People go to AWS for a workload. Yeah, we will keep that. But more complex, comprehensive workloads will typically go through a channel rep. That's what [N2WS has] seen. People want to try it, will maybe go to the marketplace. But ultimately, their model is more indirect, traditional channel mode. And that's the way we want it.
Any chance of channel conflict?
Well, I don't know any other way to do it. I mean, if you don't have the marketplace, you miss out on all that opportunity. We don't think it will [happen]. We've always been 100 percent channel. We've always done things that were best for our channel. So if there's a way to do it that minimizes any conflict, we're all for it.
We've just acquired [N2WS]. So we're working on what's the best approach given that they do have the marketplace. Look at all of them, whether it's Google or Microsoft or VMware, they all have their marketplace. And how that fits in the channel is something that we and all the others are looking at to figure out how we [can] avoid channel conflict.
Is there any overlap in channel partners between N2WS and Veeam?
No. They were at the AWS-focused side of things. There may be some on our side they can leverage. … For the 1,000 customers that they had, most of the benefit that they'll get is from our resellers.
Was N2WS a profitable company?
The way we invested was to blow out their go-to-market. So they were [profitable] up until the point where we invested, and then they used the money to grow the business quicker. So it wasn't. And it won't be for a while because we're going to invest more heavily in R&D and sales and marketing that are building up the channel. [Profitability] wasn't a concern of ours.
How do you respond to CRN reports that Dell EMC was tightening the ties between its data protection capabilities and VMware specifically to beat Veeam?
It's kind of interesting. When you think about it, they've decided to do integration into VMware after how many years they said at some point we're going to develop integration into VMware? You're going to start on it? ... What's taking you so long?
It's an opportunity for us. We focus on just driving innovation. We've been tighter with VMware than any other company. We've integrated deeply into vSphere. We've integrated into vSAN, vRealize, VMware's cloud. There's no company with tighter integration with VMware.
What impact from the Dell EMC move could Veeam expect?
If Dell EMC looks at doing more integration, that's fine. I'm not too worried about that because they only have so many developers. [It will take away from] developing more features to do the integration that they probably should've had many years ago.
So I'm not bothered by it. I think [VMware's] value in the market is their independence. The minute [VMware becomes] less independent and more of a Dell technology company, they'll lose a big part of their value proposition in the market. I don't think VMware wants to do that either. My view is, they'll keep a very independent approach, which is all we ask. We'll just drive aggressiveness in our 100 percent channel cloud model and focus. And our innovation and our speed of execution usually win the day.
How has the competitive environment changed between 2017 and 2018?
I think it's still fragmented. There's a whole bunch of new players out there that we compete with, so we're obviously watching some of the smaller guys coming up with different approaches. In terms of the bigger players, I do think they're struggling in the market. A lot of what's going on in the market is replacing legacy. And the people who have the big installed base legacy market [will be impacted by the fact that] the data center refresh is usually everything but legacy. When we grow at 48 percent year over year in a market that's growing 5 [percent] to 7 percent, that tells you that there's a fair amount of market share from Avamar and Commvault and Veritas that is being transferred over to Veeam. I don't see that changing any time soon.