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Kaminario is the last private flash-only vendor standing that has not been acquired by a larger company or gone public. That presents Kaminario storage and its K2 arrays with a unique challenge, as it competes against giants EMC, IBM, Hewlett Packard Enterprise, NetApp and well-funded fellow all-flash pioneer Pure Storage.
Kaminario CEO Dani Golan, who founded the company in 2008, claimed Kaminario is growing as fast as the overall all-flash market, despite the crowded and competitive landscape. Golan said Kaminario's revenue has tripled over the last five quarters and is closing in on $100 million in annual revenue. We spoke with Golan about whether the Kaminario storage portfolio will expand to new all-flash platforms, the company's growth rate and how he intends to stay competitive now that every major storage vendor sells flash arrays.
Has the all-flash market developed as you expected when you started Kaminario?
Dani Golan: I kept on saying over the years that this is not a new niche in the market -- this is the market. A few years back, people would look at me like I was weird, but that's not the case anymore. The market has come our way big time. It is becoming the whole market. Our vision of an all-flash data center is an absolute reality.
How has that evolution changed the role of Kaminario in the market? Just having all-flash isn't a differentiator anymore now that almost every storage vendor sells flash-only arrays.
Golan: I like to compare it to Tesla. When GM wanted to come up with an electric car, they did it in small steps. When Tesla did it, they started from the ground up with a design point and built something completely different. Think of Kaminario like Tesla of the storage world. We completely, radically changed the design point.
Dani GolanCEO, Kaminario
When you talk about greater all-flash competition, you're talking about legacy vendors who have been declining. All the big vendors have declined in market share over the last 30 months. You're talking about hybrids trying to retrofit their code to all-flash. None are built from the ground up for flash. When customers are coming to evaluate all-flash, they understand if you didn't radically design your product for flash, you're going to be far less scalable, far less cost-efficient and you cannot truly be next-generation storage. I think that's the heart of the differentiation. While there is more competition, we welcome it, because the market is just at the beginning. We believe all external storage will be all-flash.
Legacy vendors also have flash built from the ground up now. For instance, EMC's XtremIO was designed as an all-flash platform.
Golan: XtremIO was built as a virtualization array. The founder came from VMware -- that was the focus. It was not built for general-purpose use. When EMC acquired it, they retrofitted it and said, 'We're going to push it everywhere.' This is the drastic difference between the narrow-focus architecture that is trying to be widened versus Kaminario, who built from the ground up as general-purpose storage.
We win three out of four times when we're facing XtremIO in the field. The reason we're able to do that is we effectively demonstrate that we are built for general-purpose use and they're not. We're more scalable and more cost-efficient as a general-purpose storage. I challenge anyone who thinks otherwise to take us for a test drive and see what you think after that.
If you win three out of four, why does XtremIO generate more than 10 times as much revenue as Kaminario?
Golan: Obviously, we're a smaller company than EMC. EMC is the market leader in storage, in general. It's a typical EMC strategy. I spent years at EMC. Their practice is to push XtremIO. Ask yourself, were those real sales or did they replace VMAX sales with XtremIO sales? Instead of pushing VMAX renewals, they push XtremIO.
Still, for Kaminario storage arrays to make it, you'll have to be the one replacing those VMAX sales.
Golan: As a younger company that is growing fast, we tripled the size of our company over the last five quarters. We're growing exponentially in every business metric. Our product and our business strategy absolutely work. We know the EMC merger with Dell did not come from a position of strength. It did not come from a choice. EMC is huge, but it has challenging times in front of them. You can see that with its market share in the general storage space.
How do you compete with the larger vendors who can offer heavy discounts when they're in deals against you?
Golan: We have transparency in everything we do, including pricing. We publish pricing on the web; we have a hard guarantee of effective capacity, so customers know exactly what they're getting in terms of pricing capacity and maintenance. We will never jack up maintenance pricing just to move you to the next platform. We have a perpetual array -- that means customers will never pay for an upgrade again. You just keep on growing the platform under the same system. When you want to decommission components on that system, it's on your timetable, not on our timetable. Customers see that's different behavior from the legacy guys.
Many legacy vendors have several all-flash platforms. Even all-flash vendor Pure has added a second platform. Will the Kaminario storage all-flash product portfolio need to expand with more platforms?
Golan: We absolutely recognize that there are other segments of the storage world where it would be important to bring in all-flash arrays. We will have more announcements down the road expanding our addressable market with different protocols, or file and object storage. We believe this should be done under one platform, and not a string of different platforms. If you carefully look at others' strategy of having multiple products, usually, this is compromised and not coming from a sound strategy. We've built an elaborate platform that will be able to do many things in the future with different protocols.
You're going after all the big guys, plus Pure that is all-flash from the ground up and much better funded than Kaminario. Can a small company become a market leader in all-flash as the market grows?
Golan: The market has come our way. The market opportunity is far larger, but our competitors have all-flash arrays, even they're retrofits, even if they're suboptimal. We welcome that. We believe while the market is growing fast, customers are becoming more educated. They understand the difference between marketing and reality. That's why we encourage customers to make sure and test vendor claims.
That's also true versus Pure. We have a lot of respect for those guys, but we believe we have a better product.
We look at this area as an opportunity to disrupt the market, and we're heads-down when we're executing. We're well-funded; our investors are bullish about our execution, our products and our results. We raised $153 million in funding and we believe we're in great positon. Now, it's up to us to execute and create value for customer. The rest will sort itself.
You talk about hitting $100M in revenue in the next couple of years. How close are you?
Golan: We're growing exceptionally fast, and it's actually much closer than anyone thinks. I think it's even less than one year away. That's the best I can say. We're a private company.
Will you need more funding to deliver new Kaminario storage products? Or can the two rounds you had close together more than a year ago take you to profitability?
Golan: Our last round was heavily oversubscribed in first quarter of 2015. We were looking to raise $40 million and had over $100 million in offers. We took $53 million, and then extended it to $68 million. That gave us a war chest to go and rapidly grow the company. We're absolutely in good shape there.
What do Kaminario all-flash arrays do better than the competition?
Golan: Why are we so different than retrofit all-flash? First, we're the most scalable and the easiest to scale. We can truly scale out and scale up. Think of us as a Lego block company -- in reality, you don't know what the future will hold. Sometimes, you need more capacity, sometimes more performance, sometimes more of both. With Kaminario storage, you don't need to know. You can grow anywhere you want. You can add performance, add applications.
The second element is cost-efficiency. Customers don't compare us to the other flash arrays you mention; they compare us to any other infrastructure they have on the floor. We can't just be more cost-efficient than other all-flash arrays; we need to be more cost-efficient than any other approach. Our average price is lower than $1 per gigabyte. I can tell you there is a dramatic difference between our cost structure and everyone else. We have the highest utilization, the best data reduction in the market and we can pass that cost-efficiency to customers.
Last, we allow customers to have mixed workloads. You can run your OLTP real-time systems, you can run big data analytics, you can run virtualization and any mix on our systems. We will give you predictable performance and cost-efficiency. Take all of those -- the most scalable solution, most cost-efficiency and only one that can truly run mixed workloads -- that is a compelling combination to customers. When you tie them together, we're giving predictability in an unpredictable world.
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