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451 Research - Tintri "Impact"

451 ResearchTintri sees storage sales grow, stays on course for IPO in 2015

Analyst: Tim Stammers Al Sadowski
9 Mar, 2015

Tintri says that since it began shipping its products in 2011, it has won over 600 customers, which is more than twice as many as it claimed about 15 months ago. That represents a total of over 1,600 sales of Tintri's hybrid disk-and-flash systems, with revenue growth of 140% during 2014, the company says. Tintri designed its systems to store data for virtual servers and desktops, and one of their unusual features is the ability to be managed at the level of individual VMs or virtual servers. The company has recently expanded its coverage, from its starting point of VMware's virtualization platform, into Microsoft Hyper-V and Red Hat Linux virtualization.

This VM-level management advantage might appear to be weakened by the forthcoming release of a VMware feature called VVOLs, but 451 Research believes the reality is very different. This year, Tintri plans to increase its appeal to OpenStack users and to launch a program that it hopes will boost its sales to service providers, which already account for about 20% of Tintri's business.

The company says it intends to be ready from a financial and operational perspective to go public in 2015 – provided financial market conditions are right.


The 451 Take

It was never going to be easy to enter a market for hybrid storage systems that is dominated by a handful of big suppliers. However, unlike those OEMs' offerings, Tintri's device was designed from scratch to marry flash and disk in one system, and its VM-level management is only one benefit of its overall virtualization-specific design. Those are not inconsiderable advantages. They have clearly allowed Tintri to compete well against existing suppliers selling older storage systems, and have given its products a promising long-term outlook. 


Context

Founded in 2008 and based in Mountain View, California, Tintri shipped its first storage system in 2011. The company has raised $135m in VC funding, with the most recent round in February 2014 and that raised $75m. Three months earlier the company had changed CEOs as part of a progression from product to business development. Tintri co-founder and former VMware engineering chief Kieran Harty swapped the CEO's office for that of CTO. The CEO's post was filled by Ken Klein, who previously ran Wind River Systems, an embedded software supplier bought by Intel for $884m in 2009. During 2014, Tintri made a number of senior staff appointments covering sales, marketing and the CFO's office, as detailed in 451 Research's previous report about Tintri. It also began expanding its overseas sales channels. A year ago, Tintri said the majority of its sales were made in North America. During 2014, the company announced overseas reselling and distribution deals, and it now says roughly 35% of its sales are made outside of the USA, and that 90% of its sales are channel-driven. Headcount at the company is about 330, including what Tintri says are over 50 sales teams.

Customer base

Applications for Tintri's midrange to high-end device cover a wide range of mainstream IT workloads, include test and development; Exchange, SQL Server, Oracle and SAP applications; and storage for virtual servers (VSI) and virtual desktop infrastructure (VDI).

Tintri's customers continue to be a mix of midsized and large organizations, with over 50% enjoying annual revenues exceeding $1bn. Five Tintri customers are among the 15 largest in the Fortune 500 list.

With that many large customers, repeat business is strong, and Tintri says it sees follow-on sales within 18 months of first purchase averaging 2.7 times the first order. The company says that about 20% of its business is now with service providers. Tintri's website lists roughly 20 reference customers, including SunGard and two other regional service providers.

Tintri says it does not discuss its average deal size, but says deal size has been growing. One reason for this has been the launch of a new top-end series of devices in November 2014, the largest of which carries a list price of $253,000. Others have been increasing take-up of encryption, replication and other software options.

Product 

Tintri's VMstore storage system is a midrange to high-end array, powered by dual active-passive controllers. It is described in detail in this previous report.

The VMstore stores data only for VMware vSphere, Microsoft Hyper-V and Red Hat Enterprise virtualized servers and desktops. Tintri does not support use of its systems to store data for physical servers or desktops, although some customers create virtual file servers that use a Tintri VMstore as a back end.

The company describes the VMstore as being performance architected and tuned to store data for VMs, and says that it has inbuilt QoS controls that allow it to use more of its capacity than rival devices. According to Tintri, when rival products use more than about 70% of capacity, they suffer the 'noisy neighbor' problem, in which some applications hog storage resources at the expense of others. Tintri says its inbuilt QoS eliminates that problem.

VMware VVOLS

Tintri's major competitive edge of VM-level management might appear to be blunted by VMware vSphere's imminent VVOLS feature, which is designed to make the same VM-level management possible in many other storage systems. However, there are a number of reasons why 451 Research believes Tintri's advantage in this area is not dramatically affected by VVOLS – as Tintri has always maintained. Indeed, VVOLS might actually sharpen Tintri's advantage.

The degree of support for VVOLS in existing storage systems is set to vary widely, and some older systems will never support VVOLS at all. This is because VM-level management requires storage systems to handle orders of magnitude more data objects than previously, which is beyond the ability of older designs. That fact helps to protect Tintri's advantage within the VMware realm.

However, since late 2014 the company has been providing VM-level management not just for VMware vSphere, but also for Hyper-V and Red Hat Linux virtual servers, and any mix of those three platforms. For Hyper-V and Red Virtualization, there is currently no equivalent to VMware's VVOLs feature.

Finally, VVOLs has attracted much attention, which has highlighted the benefits of VM-level management. This is a positive development for Tintri. The company's current VM-level management is not based on VVOLS, but according to Tintri is more effective. We note that it includes an important function that is not yet covered by VVOLs, namely VM replication. Nevertheless, Tintri plans to update its VMstore systems this year to support VVOLS, in order to provide a choice for customers.

Bigger and better boxes

Tintri has been steadily increasing the size and performance of its largest systems. The most recent increase occurred in November 2014, with the launch of the VMstore T800 series. The largest of these devices provides up to 78TB of raw capacity, or 100TB effective capacity (after RAID and system overheads, and including Tintri's assumption of 2.2:1 reduction ratio for de-dupe and compression) and 140,000 IOPS.

However, in keeping with its virtualization-specific stance, Tintri says the number of VMs that its systems can handle says more about them than their TB capacity, or notional IOPS numbers. The T800 can handle 3,500 VMs and 10,000 virtual disks in just 4U of rack space, according to Tintri, which it says is far more than other systems.

On the software side, Tintri has been shipping a tool that consolidates the management of up to 32 local and remote VMstore devices since 2013. Now the company is at the stage of adding refinements to its product to further suit larger customers and service providers.

In November 2014, a point release of Tintri's operating system added data encryption, a software kit for automated administration using VMstore's management API, and integration with VMware's SRM disaster-recovery feature. That was the release that also added VM-level management for Hyper-V and Red Hat Linux. In February, Tintri released 'management pack' software that links into VMware's vROps (vRealize Operations Management Suite.)

OpenStack

451 Research's OpenStack Market Monitor predicts that the OpenStack market will exceed $3bn by 2018. Like most storage vendors, Tintri's roadmap includes support for OpenStack based on existing and potential customer demand. As its customers begin experimenting with OpenStack for DevOps and data analytics, the company wants to ensure that applications work in existing environments as well as within OpenStack.

Specifically, Tintri is building its own Cinder (block storage) driver that maps virtual machines directly to Cinder volumes. Tintri claims its differentiator is more granularity and reduced latency at the VM level. The driver will support provisioning, snapshot capabilities and cloning natively. The goal is to offer VM-aware on-demand resource sharing across OpenStack, VMware, Red Hat (RHEV) and Hyper-V. We would expect Tintri to be an OpenStack Foundation sponsor in time and likely code contributor.

Service provider program

Per the company, 90% of its sales are channel driven and about 20% of its revenue comes from service providers – mostly hosted private cloud, desktop aaS and disaster-recovery workloads. Tintri positions its products to these service providers with what it feels is a differentiated value proposition based on time to market and predictability. Its service provider program offers monthly pay-as-you-grow leasing and no up-front commitments. Tintri plans to remotely monitor its boxes on service providers' premises, and automatically send gear to the service provider when capacity usage reaches a threshold.

Tintri claims storage can be deployed in under 15 minutes, deploy thousands of VMs per day and have customers up in running in minutes. Storage for more than 100,000 VMs can be managed from a single management console, allowing for predictable per-VM costs, according to Tintri.

Competition

As for any supplier of midmarket primary storage, Tintri faces multiple competitors. Because of their market shares, the devices that Tintri will most often compete with are EMC's VNX and NetApp's FAS series arrays. However, those and all other incumbent storage suppliers' hybrid systems were originally designed to be powered only by disk, and have been retrofitted with flash. Against this type of competition, Tintri will highlight the fact that its device was purpose-designed to marry flash and disk, and will detail what it claims is its far more efficient use of flash – as well as, of course, its virtualization-specific design.

However, Tintri is not the only supplier of purpose-designed, midrange hybrid storage systems. The highest-profile supplier in this category is Nimble Storage, which completed a successful IPO in 2013, and its revenue is still climbing quickly – although it does not expect to become profitable until next year.

Another fast-growing supplier of hybrid storage designed from the ground up is Tegile, which pitches the ability of its systems to provide both file- and block-level access to data across multiple protocols, and to be configured as hybrid or all-flash arrays. Startup NexGen has recently returned to a state of independence and sells a ground-up designed hybrid array that features strong QoS controls. 

Another source of competition is the emergence of hyper-converged systems that are allowing suppliers such as Nutanix, SimpliVity, Maxta and VMware to claim fast-growing sales. However, the market share being taken by hyper-converged systems is still very small. Even at its current fast rate of growth, hyper-convergence will take some time to materially affect Tintri's prospects, and it remains to be seen how much conventional SAN-attached storage will be displaced by the new architecture.

SWOT Analysis

  • Strengths
    Tintri has developed a product with distinct technical advantages, and built a sizeable and growing customer base.
  • Opportunities
    The cost of flash continues to fall, and customers continue to face growing storage performance problems. If Tintri can continue to convince potential buyers that its purpose-designed hybrid storage is more effective than current OEM offerings, its sales will grow.
  • Weaknesses
    Tintri cannot make any eye-catching marketing claims to be selling new forms of storage, such as scale-out or hyper-converged storage.
  • Threats
    Tintri has not yet reached safe ground or critical mass, and the overall storage market may fail to appreciate the realities of VVOLs, and Tintri's virtualization focus. 

Reproduced by permission of The 451 Group; © 2015. This report was originally published within 451 Research's Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: www.451research.com 

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