Cohesity extends its reach deeper into the broad market for

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1 IMPACT REPORT Cohesity extends its reach deeper into the broad market for secondary storage FEBRUARY BY HENRY BALTAZAR (/ANALYST-TEAM/ANALYST/HENRY+BALTAZAR) Cohesity took its time building out its scale-out secondary-storage platform, and appears to be having commercial success with its first series of production units. The vendor is looking to add venture funding later in 2017 to expand its sales force and to continue adding to its storage platform. Secondary storage continues to be a big market opportunity that should only grow as the rate of data and workload growth accelerates. The stagnant backup target market, which is a multibillion-dollar opportunity, is the low-hanging fruit that is providing startups such as Cohesity with an opportunity to quickly grow their customer counts and revenue bases. The 451 Take Cohesity and a few other members of the new class of secondary-storage startups, such as Rubrik and Komprise, are getting a fair amount of attention recently and with good reason. While secondary storage may not sound like the most interesting topic, considering the massive changes going on in infrastructure today, a bad secondary-storage decision can impact an organization's environment for years or even decades. Cohesity's DataPlatform is carving into the accounts of legacy backup target players, which is still a sizable market that should continue to fuel its rapid commercial growth. However, Cohesity's true measure will be determined by how well it can leap beyond backup and into analytics, intelligent archiving and test/dev workloads, which is not trivial since the IT professionals driving digital transformation with analytics are unlikely to be the backup administrators at an enterprise. The new integration with Pure Storage's FlashArray should appeal to existing customers that want to optimize their storage utilization while improving their long-term data protection, and we expect to see more array vendors looking to partner with Cohesity. Context Cohesity began taking revenue for production systems in January The vendor's customer count will eclipse the tripledigit range in early 2017, with deal sizes in the six-figure range. It is closing deals with enterprise and midsized customers, and is not competing in the SMB range for secondary storage.

2 Its largest customer has 60 nodes in its environment, and it has a pharmaceuticals customer account running a 24-node cluster in production. Although the vendor believes there is a broad market opportunity for its DataPlatform products, so far financial services, insurance, high tech and healthcare have been its top verticals. Cohesity currently has a headcount of 150, and to date has raised $70m in funding; it will likely add to its funding haul later this year. The vast majority of its sales are in the US, which has four times as many sales representatives as the other regions, and Cohesity opened up offices in Europe in October The vendor currently has 140 channel partners and 18 sales offices, which will continue to ramp up. In late February, Cohesity announced that it has integrated with Pure Storage's FlashArray//M platforms, which will allow Pure Storage customers to leverage Cohesity's technology for long-term data retention for storing snapshots on its systems or in Amazon, Google and Microsoft public clouds. In the deployment, Pure customers will continue to leverage FlashArray's rapid and space-efficient snapshots for quick restores and cloning, while Cohesity's DataPlatform serves as the secondarystorage tier for long-term snapshot storage and eliminates the need for customers to manually back up Pure snapshots. The vendors claim the integrated offering provides superior and simplified data protection compared with legacy backup platforms, which are limited to daily or weekly incremental backups with time-consuming restoration processes. Products Cohesity announced the DataPlatform 3.0 release in June 2016 and began shipping the product in September The newest edition is the Cohesity DataPlatform Virtual Edition, which is designed to provide data protection for remote office/branch office (ROBO) environments and can be deployed quickly on VMware vsphere systems without the need for additional secondary-storage hardware. Virtual edition works with vsphere 5.1, 5.5, 6.0 and 6.5, and requires 4-16 vcpus, 16-64GB of VM memory and 1-8TB of VM storage capacity. File storage support is available for NFS and SMB, and the Virtual Edition can protect or provide storage for VMware VADP, Oracle RMAN, Microsoft SQL, and physical Windows and Linux systems. The vendor is claiming five-minute recovery point objectives (RPO) and sub-minute recovery time objectives (RTO) with this offering. The key technology continues to be Cohesity's SnapTree, which is designed to provide unlimited snapshots with instantaneous access. The vendor claims this capability puts it over the top in competitive engagements against current and legacy backup target platforms, which typically require a time-consuming rehydration process to restore older snapshots. The integrated search capabilities allow customers to find VMs and files across all backed-up VMs. Backup to cloud is supported for AWS (S3 and Glacier), Azure and Google Cloud Platform, with the focus on longtime archival and replication use cases. Cohesity believes its ability to consolidate file share, archiving, analytics, backup and test/dev provides it with a significant advantage against the incumbents, which have multiple products to solve these problems, leading to inefficient silos. The consolidation of data on a scale-out platform also provides an opportunity to gain superior data reduction by stripping redundant files from the centralized store. Another key aspect that Cohesity claims is gaining traction is its platform's ability to help customers understand their dark data to find compliance-sensitive data and other useful content within their fastgrowing repositories. DataPlatform indexes data upon ingest, examining VM and file metadata and files within VMs. The platform's Analytics Workbench has MapReduce built in to run custom queries, as well as an integrated app store to save custom inquiries and workflows for tasks such as pattern matching.

3 Competition The backup target space is a large market opportunity that continues to be dominated by incumbents such as Dell-EMC's Data Domain, Veritas, HPE and HDS. Although copy data management vendors such as Actifio have grown in prominence over the last few years, and also promise similar secondary-storage consolidation benefits, so far Cohesity claims that it does not run into copy data management products in its competitive engagements very often. Fellow startup Rubrik is the vendor that Cohesity is most often compared to, since they are both looking to disrupt the secondary-storage market. At this point, Rubrik has more funding (currently at $112m) and a higher headcount at 250 employees. It recently announced an annual run rate approaching $100m after only six quarters of selling, which is well ahead of Cohesity today, although it is way too early for any player to run away with the market. Other startup players in the data protection and data management space include Komprise and Datos IO. SWOT Analysis Strengths Cohesity's DataPlatform is built on a powerful scale-out architecture that has the ability to eliminate a number of secondary-storage silos within an enterprise environment. The vendor has secured a fair amount of funding early in its development, and appears to be poised for growth. Weaknesses The vendor's commercial traction is still extremely small compared with existing players. Opportunities Secondary storage is a key area that is ripe for disruption. The growth of archiving and analytics use cases and deployments will create opportunities to disrupt the market. Threats The ongoing transition of secondary-storage data to public cloud storage services is both a threat and an opportunity for Cohesity, since it will cut into on-premises backup and archive storage systems revenue. The vendor must establish itself as a viable hybrid cloud player to ensure its longevity. Henry Baltazar (/analyst-team/analyst/henry+baltazar) Research Director, Storage

4 M&A ACTIVITY BY SECTOR Cloud / Infrastructure as a service / Storage as a service (0) ( Storage / Data management / Archiving (37) ( Storage / Data Protection / Backup and recovery (84) ( M&A ACTIVITY BY ACQUIRER Amazon Web Services Inc. [aka AWS] [Amazon.com Inc.] (5) ( Services Inc. [aka AWS] [Amazon.com Inc.]) Dell Inc. (35) ( EMC Corporation (77) ( Google Inc. (213) ( Hitachi Data Systems Corporation (18) ( Systems Corporation) Microsoft Corporation (159) ( Oracle Corporation (123) ( Pure Storage Inc. [fka Os76 Inc.] (1) ( Inc. [fka Os76 Inc.]) SpringSource Inc [fka Interface21] [VMware] (40) ( [fka Interface21] [VMware]) Figures shown indicate number of transactions COMPANY MENTIONS (PRIMARY) Cohesity (/search?company=cohesity) COMPANY MENTIONS (OTHER) Acti o, Amazon Web Services, Data Domain, Datos IO, Dell Technologies, EMC, Google, Hitachi Data Systems, Hewlett Packard Enterprise, Komprise, Microsoft, Oracle, Pure Storage, Rubrik, Veritas, VMware (/search?company=vmware) CHANNELS Cloud Transformation, Data Platforms & Analytics, Information Security, Service Providers, Storage (/dashboard?view=channel&channel=2) SECTORS All / Storage / Data management / Archiving (/search?sector=510) All / Storage / Data Protection / Backup and recovery (/search?sector=512) All / Cloud / Infrastructure as a service / Storage as a service (/search?sector=913)

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