Specialist
Former executive at Veritas Software and Druva Inc
Agenda
- Data protection, insights and recovery solutions industry and key types of offerings and innovations
- Growth drivers and different business models across the industry
- Evolving competitive landscape including Veritas, CommVault (NASDAQ: CVLT), Veeam, Cohesity, Rubrik and Druva
- 1-3-year outlook for the industry, indicating potential winners and losers
Questions
1.
How would you define and describe this industry? The Interview’s title mentions data protection, insights and recovery, but I have heard references to everything from data back-up and recovery to data protection insights and storage, while some call it data management. I think people increasingly understand less about industry developments because many of its companies are not public, as you mentioned.
2.
Can you build on your definition of the industry and its primary solutions? It seems largely driven by back up and recovery in the data centre but there are also on-premise and cloud solutions. You touched on some types of data and information, highlighting the most relevant types of hardware form factors. Can you expand on the category’s most important aspects?
3.
How far along would you say we are in cloud transition and digital transformation as it pertains to back-up and recovery? It seems conflicting that everyone is moving to the cloud but a bulk of revenues still come from legacy back-up and recovery solutions – perhaps because enterprises are transitioning more slowly. Could you
characterise the distinction between enterprise vs mid-market? How might the cloud transition evolve and how will that impact the industry’s winners, losers and economics?
4.
Can you expand on the industry’s economics? You suggested that storage unit- or terabyte-level pricing for legacy solutions has remained stable vs there being a pricing collapse with the cloud transition, perhaps explained by increasing competition and cloud providers starting at a much higher level. What are the pricing implications as more companies transition from legacy to hybrid to cloud? You outlined the history of transitions from pure legacy to CommVault to Veeam to hyperconverged appliances. What do you think those legacy-oriented companies are, should or will be doing to address those pricing issues? Might they acquire some of the cloud-based companies?
5.
Can you outline the cloud providers that should be experiencing the 30-50% growth you referenced? What companies should we pay attention to in that category?
6.
What are your TAM and growth expectations for the overall market across the next 1-3 years? CommVault recently referenced a TAM in this category of upwards of USD 40bn within three years and mentioned a CAGR in revenues of about 7%, but there are a lot of moving parts. You touched on how shifting to the cloud from the data centre impacts pricing.
7.
You referenced the transition to the cloud from legacy solutions, noting the revenue gap that companies experience when making that transition. There is also the comparable concept of creative destruction where a player such as Veritas is perhaps not aggressively pursuing a cloud strategy because it would accelerate the dismantling of its legacy business. Is there a way forward for these true legacy providers? You dismissed the long-term viability of some legacy solutions but a lot of people have talked about the demise of legacy technology occurring more quickly than anticipated. Although Veritas is not winning many new logos and the company has a lot of downsells – so cutting pricing when doing renewals – the technology’s stickiness seems to have exceeded expectations. Do legacy providers have to commit to the cloud, perhaps with big acquisitions? Is there a way around that or are these companies cooked, as you seemed to suggest?
8.
If you were making decisions for some of these larger legacy businesses, what actions would you take to pursue growth on the cloud side or stem the tide – or at least push it out? What could or should these businesses do?
9.
You mentioned Druva, but how do you assess Actifio and the other smaller and emerging businesses? How does Google’s December 2020 agreement to acquire Actifio dovetail with what you mentioned around cloud providers, storage and alliances? What about Acronis and Arcserve? How would you characterise that grouping within this broader category?
10.
Those unfamiliar with the industry might assume there will be consolidation because it is a big category with growth remaining on the cloud side and a lot of providers. Are you suggesting that rational actors who know this category will not pursue consolidation? What could spark M&A activity? Would it be value driven or something else?
11.
Acronis and Veeam both raised significant capital over the past month or so, suggesting continued interest towards investing in companies considered to have opportunities. Do you expect companies to continue tapping in to new fundraisings to pursue new opportunities that they may have been too small to pursue before? How should we frame the context of those actions?
12.
Which companies do you expect to emerge as winners in this category in the next three years? Where are they now vs where they might be in 2024? Who might fall further behind over that period?