EMC is the 800-pound gorilla in the storage space with a market cap over $US60 billion.
But every incumbent gets disrupted by a new startup at some point, and EMC has plenty of young, hungry companies nipping at its heels. One of them is Pure Storage, a five-year-old company that has raised over $US470 million at a roughly $US3 billion valuation.
The company says it increased revenues 8x last year, which would be the highest growth rate in storage history. And when you’re growing that fast in this space, that means you’re eating EMC’s lunch in one way or another.
“If we go head-to-head against anybody, we win 75-plus per cent of the time,” Pure Storage’s president David Hatfield told Business Insider. “And we compete with EMC more than anybody given their market share.”
Although it continues to be the king of the traditional storage market, EMC has been facing stiff competition in the market for all-flash solid-state disks (SSD), a storage type that Gartner predicts will take 20% of the traditional high-end storage arrays by 2017. Flash is the same type of storage used in USB drives or smartphones, and generally has 10X better performance and speed, while taking up less space than the more commoditized, hard disk drives (HDD).
Hatfield says the biggest challenge for Pure Storage has been just raising the awareness of flash storage’s effectiveness. “Our biggest challenge is having people realise we actually cost less money, and it’s 50 times more reliable than a mechanical disk (HDD),” he says. Yet Pure Storage has still been able to sign customers across all kinds of industries, from big enterprises like LinkedIn and Workday to traditional retailers like Sears and Gap. It also signed deals with the CIA and the City of Davenport in Iowa.
So what’s the secret sauce? Hatfield says it’s simply in the software. Pure Storage’s software makes flash more reliable and available than the traditional hard disks, compressing data to maintain that leverage over competitors. In fact, Gartner ranked Pure Storage as one of the top three leaders, alongside EMC and IBM, in its Magic Quadrant for All Flash Arrays in August.
Another sign of Pure Storage’s success is how former EMC employees have been defecting to the startup. It got to the point last year where EMC ended up suing Pure Storage and the 44 employees who jumped ship, alleging they stole EMC’s intellectual property and trade secrets.
“I think the incumbents are going to try and do whatever they can to slow down the innovation and the adoption in the marketplace. But there’s definitely a lot of interest from the incumbents (employees),” Hatfield said.
With over 750 employees worldwide, and investments from public market long term investors like Fidelity and T. Rowe Price, Pure Storage may not be too far away from going public. Hatfield declined to comment on anything related to a possible IPO, but he said Pure Storage already operates like a public company, reporting to shareholders in the same way a public company would.
We asked EMC to respond to Prue’s claims, and here’s what they said:
“Pure has a track record of exaggeration on many topics, including its market position as related to EMC. The analyst community has consistently reported that EMC is #1 in all-flash array deployments. EMC continues to deliver market-leading results in our EMC II business — and those results directly contradict Pure’s claims. We believe this latest statement is nothing more than hype ahead of Pure’s rumoured IPO.”
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