Hot Vendors: Nexenta Helping to Define the Software- Defined Enterprise

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1 VENDOR PROFILE Hot Vendors: Nexenta Helping to Define the Software- Defined Enterprise Donna Taylor IDC OPINION Software-defined storage (SDS) is the latest buzzword in the industry, but it's also a buzzword with bite. It has the potential to offer end users a lot of flexibility and better economics without vendor lock-in concerns. CIOs looking for solutions that map to their goals around convergence, intelligence, hybrid architectures, agnostic platforms, and cloud would do well to look closely at SDS' potential. Nexenta is a privately-held U.S.-based company addressing the software-defined storage (SDS) market. Nexenta offers SDS based on OpenSource ZFS technology. Armed with open-source software and 18 active patents filed so far (and at least ten more expected this year), Nexenta is well-placed to take advantage of this growing area. IN THIS VENDOR PROFILE This IDC Vendor Profile details the technologies, products, and go-to-market strategy of Nexenta, a privately-held U.S.-based company that addresses the software-defined storage (SDS) market. SITUATION OVERVIEW Several major trends are driving the tsunami of data to unprecedented levels social media, mobility, the Internet of Things, and Big Data are creating massive amounts of structured and unstructured data. As organizations increasingly migrate to the cloud to manage this data deluge and bring costs down, the desire for virtualization grows and becoming a software-defined enterprise is one alternative in a sea of storage choices. To achieve this end state, companies require software-defined storage for their software-defined data center (SDDC). Together SDS and SDDC afford companies a great deal of flexibility to address the latest infrastructure trends around hybrid architectures, agnostic platforms, convergence, intelligence, and cloud. Depending on the SDS solution selected, industry leading organizations can benefit from unified systems, simple and automated data management, better performance and scalability, all at a lower cost with no vendor lock-in. The net effect can be an increase in innovation, competitive advantage, and an improvement in efficiency. The opportunity to achieve a software-defined enterprise plays especially well to the public sector, including government, education, & healthcare, as well as the data-heavy private sector in which scalability, storage management, and cost considerations are high profile concerns. February 2014, IDC #RS53W

2 Company Overview Nexenta offers open source based software solutions that allow companies embracing cloud and Big Data technologies to reduce storage costs without compromising on features, performance, or reliability. Nexenta is privately-held and headquartered in Santa Clara, California. Nexenta has more than 2,500 paying customers, plus another 2,500 users of the community editions of their flagship NexentaStor product. Target verticals include government, education, healthcare, finance, media & entertainment, and cloud service providers that leverage Nexenta software to provide highly scalable, cost effective storage to their hosting infrastructure. Together these NexentaStor deployments to date represent more than 900 petabytes of raw storage capacity. Nexenta has recently undergone a number of management changes in an effort to steer the company to new heights. To support this transformation, Nexenta has secured additional venture capital to further grow its employee base and accelerate overseas expansion. Nexenta software solutions are designed to be hardware/protocol/hypervisor agnostic. The company currently has two main offerings: NexentaStor turns cost effective standard x86 servers and disk enclosures into reliable, full featured unified storage systems capable of scaling to hundreds of Terabytes of capacity. NexentaStor concurrently supports block and file access with a complete suite of data services (snapshots, clones, thin provisioning, inline deduplication, compression, and asynchronous replication). Reference architectures with Dell, Cisco, Super Micro, and others deliver high performance all-hdd, all-ssd, and hybrid configurations. NexentaConnect is specifically designed to alleviate the storage performance challenges common in virtual desktop deployments through advanced caching and inline I/O elimination. Deployed as a virtual machine, it can either be used to offload legacy SAN and NAS infrastructure or be configured to consume direct-attached storage (DAS) in converged infrastructure deployments. Nexenta announced the upcoming launch of NexentaStor 4.0, a major update to its unified block and file offering. NexentaStor 4.0 further improves performance, security, availability, and scalability of the solution. It specifically contains major enhancements to the set of asynchronous replication services that are included in the base product license. These enhancements should further open the door to Tier 1/business critical use cases. Nexenta has a total of 18 active patents filed and expects to file at least ten more this year, the majority of which focus on the upcoming object storage product, NexentaEdge. NexentaEdge will be available later in 2014 and will help industries that deal with large amounts of unstructured data better manage these workloads. With a vision encompassing file, block, and object, Nexenta will turn its attention next to NexentaFusion, a unified management solution that will address all of these assets via a single pane of glass. At its essence, Nexenta is a software company whose products enable hardware independence by standardizing on a single open storage operating system across diverse workloads via block, file, and object access, allowing its customers to cost effectively support advanced cloud and Big Data workloads. Its feature-rich product offerings include inline deduplication, snapshots, cloning, and full integration with hypervisors IDC #RS53W 2

3 Company Strategy Customer Focus Nexenta is a truly global company with 40% of 2013 revenues from the Americas, 40% from EMEA, and 20% from APAC, including significant growth in Japan and China via third party vendors. Within these geographies, customer type varies, with a significant number of large enterprises and hosting service providers and an equal number of small to medium business. Key verticals include the public sector (state and local government), healthcare, and education, as well as media & entertainment, financial services, and cloud hosting providers. Most companies need storage solutions and those experiencing growth of unstructured data, regulation, new archival needs, or a desire to orchestrate their resources and services more dynamically, create opportunities for companies like Nexenta. Typical workloads include virtual servers, file servers, back-up, and archival, among other tier 2 storage needs. Customers can choose how to engage with Nexenta and on what platforms. Nexenta is certified on a variety of hardware platforms via OEM'd solutions and SKUs from technology partners like Dell, Cisco, HP, Super Micro, and others. The resulting infrastructure can enable CIOs and IT leaders to realize simpler, more scalable, better managed, and more cost effective environments on which to grow their businesses. Partnerships Nexenta has partnered with some of the best-known vendors in the business, including Cisco, Dell, and VMware, as well as others. The right partners can make-or-break a company's growth and expansion, and these partners offer Nexenta not only an entrée into global markets, but the service, support, and channel access required to drive adoption of the SDS value proposition. Furthermore, an existing customer base in EMEA via these partnerships should help the company and its channel partners further penetrate this market. Channels & Global Expansion With over 5,000 worldwide customers, Nexenta has found a nice balance to its business and partnerships around the globe. Partners like NAS UK Ltd, one of the largest U.K. resellers, have partnered with Nexenta to offer a complete software-defined storage solutions with hardware designed for specific customer needs. In the software-defined space, the biggest customer concern is typically how they will get support if help is needed. To allay these concerns, Nexenta is focusing its distribution efforts on channel participants (distributors/re-sellers/etc) that can provide the support needed. In this effort, VARs are key. To help address these challenges, Nexenta is continuing to scale its worldwide channels by leveraging established distribution partners in North America, Europe, and the Asia Pacific markets. It recently signed Getech, its first EMEA distributor in the U.K., and top Japanese distributor, Ascentech. Getech and Ascentech are strong in virtualization sales, which should make it easier for Nexenta to demonstrate the value of SDS. Nexenta's goal is to sign distributors in targeted countries and approach both C-level executives and business units to drive awareness and adoption across the channel IDC #RS53W 3

4 To establish itself, Nexenta has also added offices in various countries, including Amsterdam (its largest presence with EMEA-wide marketing and engineering), a support organization in the U.K., as well as North America and other countries, which will have sales managers, sales engineering, channel account managers, and business development managers. Market Insight SDDC and Data Security This year the EU is anticipated to make sweeping changes to the areas of data privacy and protection as early as May. Many would say that these changes are a long time in coming, but both sides (vendors and end users alike) may experience both benefits and drawbacks from the decisions that are made. Just as virtualization pooled server and storage resources, the software-defined datacenter (SDDC) enhances visibility into physical layers of data and by extension, security. Nexenta believes that flexible software components and the unification of standards over time will confer advantages such as real-time observability of activities unheard of in the past. While security risk does exist due to the software defined nature of the SDDC, it also increases the ability to perform pattern analysis, to identify potential security risks faster, and to manage security in the datacenter via a single control plane. As a result, Nexenta believes that these advantages far outweigh the immediate concerns of end users today. It should be noted that true data security does not reside in the storage layer alone - storage vendors focus on supporting multi-tenancy and multi-user secure isolation, while deferring data security to the application layer. Further, internal to the end-user end-to-end data integrity is possible using SDS to eliminate/avoid data corruption. Traditional file systems store a data block's checksum physically next to the data. If the checksum algorithm is strong (and not all file systems are), reading the checksum and comparing it to the data will detect an error within the data block. With Nexenta, there is never a need for a file system check. Nexenta never modifies data in place, and new data is written to a new space. Only when the entry point to the file system is updated is the state of the file system actually changed. FUTURE OUTLOOK The adoption of software-defined solutions depends a great deal on the uptake rates for virtualization in general. Given the interest in virtualization from both the vendor-side, as well as the end-user side, IDC is seeing the maturity of virtualization technologies move from the server to storage and ultimately, to the network. Buzzwords in the industry can often lack substance. However, software-defined solutions address many of the end-user pain points. While several large tier 1 storage vendors offer their own version of software-defined storage, it is typically tied to their own product offerings. Nexenta, on the other hand, decouples the software entirely from the underlying infrastructure, offering the end-user ultimate choice via open-source, vendor-agnostic solutions. At present, Nexenta offers a compelling value proposition to end users. However, much of the attraction, thus far, has been driven by end-user cost considerations. As more competitors enter 2014 IDC #RS53W 4

5 this space, cost savings are likely to narrow, but the large margins typical in the software space may make the thought of price-cuts by large vendors a tough pill to swallow in order to compete effectively with Nexenta on this basis alone. Smaller vendors and start-ups may attempt to piggyback on Nexenta's trailblazing efforts and essentially, leap-frog them in this space. However, Nexenta's open standards, combined with its growing patents, will likely help it to secure a longerlasting place in large enterprises' IT shops via its branding, partnership, and channel efforts. ESSENTIAL GUIDANCE Channel partners will be critical to initial and sustained success in Europe. They not only provide an essential route-to-market, but also offer a full range of services that customers have come to value and expect. Today large vendors are increasingly resorting to negative campaigns when attacking those it perceives to be competitors. While they may be loathe to admit that they're looking in the rear-view mirror at (and worrying about) smaller and/or lower market-ranked vendors, Nexenta has a real chance to erode the shares of larger, more-established vendors, especially in the EMEA region, by developing and maintaining strong partnerships with leading vendors, credibility in the industry, and the channel support that's crucial to gaining market share. The key question is, "how much does a customer want to mess with what's under the hood?" This can vary greatly, depending on whether the customer is an enterprise, mid-range, or small business. To date Nexenta is focusing on their sweet spot. LEARN MORE Related Research Valuing Data from Cradle to Grave: How Big Data and Flash Memory Change the Way Customers View Data (IDC #RS51W) Big Data: Information is Power (IDC #RS52W) 2014 IDC #RS53W 5

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