<div>Technology hardware companies are not exactly the darlings of the investor community. Despite the size and heft of the leaders among the pack, many analysts paint a picture of low-margin, high volume business, while others derisively refer to them as box sellers. IBM sold off its desktop business — which began the PC revolution — to Lenovo some years back.<br /><br /> Pummelled by years of low valuations at the bourses, Michael Dell took his namesake company private. It took a boardroom coup for HP to overcome the convulsions created by a CEO who wanted to dump the company’s hardware business. On the storage side, EMC and NetApp are finding their legacy business and size a liability in responding to young challengers.<br /><br />Surely, hardware sounds so Old Economy and definitely boring? But amid all this, Deccan Herald recently stumbled on two nimble-footed hardware operators with Indian pedigree, which seem to be doing some pretty exciting work, innovating in their niches, and growing their business by spades. One of them, Nimble Storage, is a NYSE-listed Silicon Valley-based company founded by Indian American professionals; and the other, Netweb Technologies, is a New Delhi-based unlisted, family-owned firm.<br /><br />It pays to be focused<br /><br />Both are highly focused in a few niches. Nimble is purely a storage company, and within that offers a mix of flash- and disk drive-based breakthrough offerings that combine performance as well as capacity at aggressive price points. Netweb Technologies operates in the three areas of supercomputing (which it calls high performance computing or HPC), storage, and servers. In all three verticals, its unique value proposition (UVP) is the offer of specs, pricing, and tailor-made solutions.<br /><br />Nimble was founded by Indian Americans Varun Mehta and Umesh Maheshwari. Varun had previously worked in NetApp and was one of the first employees of EMC DataDomain. Umesh has a PhD in storage architecture from MIT. The itch which led them to found Nimble was their discovery that traditional storage companies made customers buy different types of storage for different uses. <br /><br />“With virtualisation, customers are able to bundle multiple applications onto a single, server platform. They discovered that something similar was just lacking on the storage side,” Radhika Krishnan, vice president for product marketing of Nimble Storage, told Deccan Herald. The company was founded in 2008. Radhika claims traditional storage giants find their historical business a drag on inventing new things.<br /><br /> “Take the example of NetApp. When you have a file system architecture that was invented about 20-25 years ago, it’s just not modern enough to accommodate all the newness of flash to be retrofitted on top of it. It’s kind of like laying the foundation of a single-storied house constructed about 20 years ago, and then suddenly wanting to convert it into a skyscraper. There’s really no way to make that work,” says Radhika. Nimble chose flash drive to lay the foundations for its storage architecture.<br /><br />For Netweb, HPC brings in about 40 per cent of its annual revenues. The rest is equally split between servers and storage. Netweb has around 250 HPC installations, mostly government research and development (R&D) labs. <br /><br />In high-end servers, it has marquee names like Juniper, Infosys, etc. as customers. Infosys is Netweb’s customer for OpenStack, a line which was started a year back. “You can build your Hadoop installation based on OpenStack. Infosys found our solution very, very competitive and we were able to deploy it for them,” Sanjay Lodha, chief executive officer of Netweb Technologies, told Deccan Herald. In storage, Netweb offers what it calls a “complete storage solution, i.e. unified storage”. Sanjay said, “In unified storage, the same storage is able to meet all the growing needs of the organisation. It can act as a NAS (network attached storage), and can act also as a SAN (storage area network). One can start with 16 terabytes and can scale up to four petabytes.”<br /><br />Growth has been a breeze<br /><br />Netweb is a zero-debt high growth company. Revenues for the financial year ended March 31, 2015, were around Rs 100 crore, Sanjay said. It grew at around 30 per cent last year. In fiscal year 2015-16, Netweb is targeting to grow 50 per cent to achieve revenues of Rs 150 crore. The CEO said the company enjoyed net profit margins of around 8-10 per cent. Interest from investors was high, but as of now there are no plans to dilute the family’s 100 per cent equity, the CEO said. “We have thought about listing. But we are not very clear on it. We have been getting lots of interest from equity investors. At this point, we want to increase our valuation. Until we become a Rs 500-crore company, it’s very difficult to take out much,” said Sanjay. He is targeting to reach the goal in another five years.<br /><br />Nimble went public in December 2013 by listing at the NYSE. In the financial year which ended on January 2015, it logged revenues of $227.7 million and grew 81 per cent year-on-year. But the searing growth has come at the cost of margins and profits. Its non-GAAP operating margins were a negative 17.1 per cent for fiscal 2015. GAAP net loss for fiscal 2015 was $98.8 million, compared with a net loss of $43.1 million in fiscal 2014.<br />Innovate to stand out<br /><br />Innovation is part of the DNA of both the companies. Nimble had a good reason for selecting flash as its storage medium. One thinks of storage usually as disk drive. Flash, however, is semiconductor-based storage. As Radhika explains it, “Any time you had a spinning disk, there was actually time involved with the mechanical parts moving and the rotor accessing the right kind of data...there would be delay extracting the data and retrieving it...so that problem no longer exists with flash because it is all semiconductor-based. It tends to be very, very fast. That’s the UVP of flash.”<br /><br />Nimble then went beyond flash. “We essentially use a combination of the flash drive and the disk drive. Both have strengths and weaknesses. We capitalise on the strengths of both to give customers the very high performance that they need without compromising capacity,” Radhika said. This allows Nimble to be very aggressive on price. <br /><br />“We offer five times the price performance of an EMC or a NetApp. If a client needs six racks of EMC gear to support X number of customers, they are only going to need half a rack of Nimble to support the same customers,” she claimed.<br /><br />Sanjay mentioned an innovation that Netweb did for its HPC computing clients using Big Data analytics. “For Vodafone, we did segmentation. A user in Delhi may be re-charging for around Rs 100 a month. So immediately after he recharges, a second SMS goes out to him saying if he recharges for Rs 200, instead of Rs 100 now, he gets Rs 50 talktime extra. And he is likely to recharge since he thinks about the benefit he is getting out of it. This second SMS is a complete analytical solution. It is designed and provided by us. It’s not a product that can be given to everybody. But something that we customised for Vodafone. It’s called Big Data stack,” he said.<br /><br />It pays to be first<br /><br />Both Nimble and Netweb claim to have some unique capabilities. When Netweb bid for C-DAC, Pune’s PARAM Yuva II supercomputer tender a couple of years ago, it was the only Indian company to qualify, along with IBM and HP. <br /><br />Probably its previous experience of installing a supercomputer at The Institute of Mathematical Sciences, Chennai, in the 1990s, helped. Netweb’s tender offer of around Rs 20 crore for 400 machines that made up the supercomputing system proved a winner, considering that the cost itself came to Rs 35 crore, according to Sanjay. <br /><br />He said Netweb designed and provided complete end-to-end installation. Today, the benefits are available to everybody in the form of improved weather predictions, he pointed out.<br /><br />Nimble’s claim to fame is to hit the market first with an on-demand storage service. Radhika explained, “Let us say you had 20 customers this month and the following month 10 of those customers go away. We will only have you pay for the actual amount of storage that your customers use.” <br /><br />In this way, Nimble allows its customers to shift paying for storage from a capital expenditure (capex) model to an operating expenditure (opex) model. The advantage is that opex can be expensed from the topline.<br /><br />Tapping the cloud push<br /><br />The push towards cloud hits hardware makers both ways. On the one hand, as small businesses shift to the cloud by renting space, the demand for on-premise servers and storage would decline. At the other side, demand for servers and storage should increase from cloud providers. This sounds simple enough, but it’s easy to get trapped at the wrong side of this churn. Both Nimble and Netweb seems to be handling the transition well enough.<br /><br />Radhika said, “We now have 500 cloud service provider customers out of the total 5,000 that we now have. They are buying Nimble gear, and in turn, are offering cloud services to their customers.”<br /><br />Netweb is following a slightly different model. While not providing a cloud platform in general, it is seeing great traction in its new business of offering high performance computing for rent which it offers from Parwanoo in Himachal Pradesh. “Pharma companies and oil and gas companies want HPC machines for limited functions for a short-term. There’s so much demand that there’s a waiting period of 15-18 days for people to get a log-in access to our system,” Sanjay said. <br /><br />In storage, it’s identifying high-end functions for big businesses which they would always want to keep in-house. For instance, post-production work by broadcasters and movie studios. Files from a film shot using multiple cameras are all dumped into one machine. Scores of people may want to access same files at the same time for editing. Netweb makes it possible by providing the storage and software infrastructure. “Such work will never shift to the cloud,” Sanjay says confidently.<br /><br />First-mover advantage<br /><br />Nimble Storage <br /><br />Claims to be the first to offer storage on demand<br /><br />How it works How it happened<br /><br />Assume a cloud provider has <br />20 customers<br />Assume 10 of those went away the next month<br />Nimble only charges for actualstorage consumed<br />This allows the client to shift from capex to opex <br /><br />Netweb Technologies<br /><br />Claims to have pioneered supercomputer installations in India<br /><br />How it happened <br /><br />C-DAC called for tenders to upgrade PARAM Yuva <br />Netweb had previously installed a supercomp at Chennai<br />It beat IBM and HP to win the C-DAC tender<br />It designed, installed 400 machines for PARAM Yuva II<br /><br /><em>Radhika KrishnaN, VP for product marketing, nimble storage: If EMC had the luxury of being able to start from scratch, if they could afford not to worry about their VMAX, VNX, ViPR, DataDomain and all of that, then they might be able to do what we have done five years from now.</em><br /><br /><em>Sanjay Lodha, CEO, NETWEB TECHNOLOGIES: We have some very big MNC competitors in the spaces we operate. But we have our own value proposition. It is very difficult for somebody to match our specs and pricing. Where they try to restrict capacity, we provide unlimited user licence.</em><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /></div>
<div>Technology hardware companies are not exactly the darlings of the investor community. Despite the size and heft of the leaders among the pack, many analysts paint a picture of low-margin, high volume business, while others derisively refer to them as box sellers. IBM sold off its desktop business — which began the PC revolution — to Lenovo some years back.<br /><br /> Pummelled by years of low valuations at the bourses, Michael Dell took his namesake company private. It took a boardroom coup for HP to overcome the convulsions created by a CEO who wanted to dump the company’s hardware business. On the storage side, EMC and NetApp are finding their legacy business and size a liability in responding to young challengers.<br /><br />Surely, hardware sounds so Old Economy and definitely boring? But amid all this, Deccan Herald recently stumbled on two nimble-footed hardware operators with Indian pedigree, which seem to be doing some pretty exciting work, innovating in their niches, and growing their business by spades. One of them, Nimble Storage, is a NYSE-listed Silicon Valley-based company founded by Indian American professionals; and the other, Netweb Technologies, is a New Delhi-based unlisted, family-owned firm.<br /><br />It pays to be focused<br /><br />Both are highly focused in a few niches. Nimble is purely a storage company, and within that offers a mix of flash- and disk drive-based breakthrough offerings that combine performance as well as capacity at aggressive price points. Netweb Technologies operates in the three areas of supercomputing (which it calls high performance computing or HPC), storage, and servers. In all three verticals, its unique value proposition (UVP) is the offer of specs, pricing, and tailor-made solutions.<br /><br />Nimble was founded by Indian Americans Varun Mehta and Umesh Maheshwari. Varun had previously worked in NetApp and was one of the first employees of EMC DataDomain. Umesh has a PhD in storage architecture from MIT. The itch which led them to found Nimble was their discovery that traditional storage companies made customers buy different types of storage for different uses. <br /><br />“With virtualisation, customers are able to bundle multiple applications onto a single, server platform. They discovered that something similar was just lacking on the storage side,” Radhika Krishnan, vice president for product marketing of Nimble Storage, told Deccan Herald. The company was founded in 2008. Radhika claims traditional storage giants find their historical business a drag on inventing new things.<br /><br /> “Take the example of NetApp. When you have a file system architecture that was invented about 20-25 years ago, it’s just not modern enough to accommodate all the newness of flash to be retrofitted on top of it. It’s kind of like laying the foundation of a single-storied house constructed about 20 years ago, and then suddenly wanting to convert it into a skyscraper. There’s really no way to make that work,” says Radhika. Nimble chose flash drive to lay the foundations for its storage architecture.<br /><br />For Netweb, HPC brings in about 40 per cent of its annual revenues. The rest is equally split between servers and storage. Netweb has around 250 HPC installations, mostly government research and development (R&D) labs. <br /><br />In high-end servers, it has marquee names like Juniper, Infosys, etc. as customers. Infosys is Netweb’s customer for OpenStack, a line which was started a year back. “You can build your Hadoop installation based on OpenStack. Infosys found our solution very, very competitive and we were able to deploy it for them,” Sanjay Lodha, chief executive officer of Netweb Technologies, told Deccan Herald. In storage, Netweb offers what it calls a “complete storage solution, i.e. unified storage”. Sanjay said, “In unified storage, the same storage is able to meet all the growing needs of the organisation. It can act as a NAS (network attached storage), and can act also as a SAN (storage area network). One can start with 16 terabytes and can scale up to four petabytes.”<br /><br />Growth has been a breeze<br /><br />Netweb is a zero-debt high growth company. Revenues for the financial year ended March 31, 2015, were around Rs 100 crore, Sanjay said. It grew at around 30 per cent last year. In fiscal year 2015-16, Netweb is targeting to grow 50 per cent to achieve revenues of Rs 150 crore. The CEO said the company enjoyed net profit margins of around 8-10 per cent. Interest from investors was high, but as of now there are no plans to dilute the family’s 100 per cent equity, the CEO said. “We have thought about listing. But we are not very clear on it. We have been getting lots of interest from equity investors. At this point, we want to increase our valuation. Until we become a Rs 500-crore company, it’s very difficult to take out much,” said Sanjay. He is targeting to reach the goal in another five years.<br /><br />Nimble went public in December 2013 by listing at the NYSE. In the financial year which ended on January 2015, it logged revenues of $227.7 million and grew 81 per cent year-on-year. But the searing growth has come at the cost of margins and profits. Its non-GAAP operating margins were a negative 17.1 per cent for fiscal 2015. GAAP net loss for fiscal 2015 was $98.8 million, compared with a net loss of $43.1 million in fiscal 2014.<br />Innovate to stand out<br /><br />Innovation is part of the DNA of both the companies. Nimble had a good reason for selecting flash as its storage medium. One thinks of storage usually as disk drive. Flash, however, is semiconductor-based storage. As Radhika explains it, “Any time you had a spinning disk, there was actually time involved with the mechanical parts moving and the rotor accessing the right kind of data...there would be delay extracting the data and retrieving it...so that problem no longer exists with flash because it is all semiconductor-based. It tends to be very, very fast. That’s the UVP of flash.”<br /><br />Nimble then went beyond flash. “We essentially use a combination of the flash drive and the disk drive. Both have strengths and weaknesses. We capitalise on the strengths of both to give customers the very high performance that they need without compromising capacity,” Radhika said. This allows Nimble to be very aggressive on price. <br /><br />“We offer five times the price performance of an EMC or a NetApp. If a client needs six racks of EMC gear to support X number of customers, they are only going to need half a rack of Nimble to support the same customers,” she claimed.<br /><br />Sanjay mentioned an innovation that Netweb did for its HPC computing clients using Big Data analytics. “For Vodafone, we did segmentation. A user in Delhi may be re-charging for around Rs 100 a month. So immediately after he recharges, a second SMS goes out to him saying if he recharges for Rs 200, instead of Rs 100 now, he gets Rs 50 talktime extra. And he is likely to recharge since he thinks about the benefit he is getting out of it. This second SMS is a complete analytical solution. It is designed and provided by us. It’s not a product that can be given to everybody. But something that we customised for Vodafone. It’s called Big Data stack,” he said.<br /><br />It pays to be first<br /><br />Both Nimble and Netweb claim to have some unique capabilities. When Netweb bid for C-DAC, Pune’s PARAM Yuva II supercomputer tender a couple of years ago, it was the only Indian company to qualify, along with IBM and HP. <br /><br />Probably its previous experience of installing a supercomputer at The Institute of Mathematical Sciences, Chennai, in the 1990s, helped. Netweb’s tender offer of around Rs 20 crore for 400 machines that made up the supercomputing system proved a winner, considering that the cost itself came to Rs 35 crore, according to Sanjay. <br /><br />He said Netweb designed and provided complete end-to-end installation. Today, the benefits are available to everybody in the form of improved weather predictions, he pointed out.<br /><br />Nimble’s claim to fame is to hit the market first with an on-demand storage service. Radhika explained, “Let us say you had 20 customers this month and the following month 10 of those customers go away. We will only have you pay for the actual amount of storage that your customers use.” <br /><br />In this way, Nimble allows its customers to shift paying for storage from a capital expenditure (capex) model to an operating expenditure (opex) model. The advantage is that opex can be expensed from the topline.<br /><br />Tapping the cloud push<br /><br />The push towards cloud hits hardware makers both ways. On the one hand, as small businesses shift to the cloud by renting space, the demand for on-premise servers and storage would decline. At the other side, demand for servers and storage should increase from cloud providers. This sounds simple enough, but it’s easy to get trapped at the wrong side of this churn. Both Nimble and Netweb seems to be handling the transition well enough.<br /><br />Radhika said, “We now have 500 cloud service provider customers out of the total 5,000 that we now have. They are buying Nimble gear, and in turn, are offering cloud services to their customers.”<br /><br />Netweb is following a slightly different model. While not providing a cloud platform in general, it is seeing great traction in its new business of offering high performance computing for rent which it offers from Parwanoo in Himachal Pradesh. “Pharma companies and oil and gas companies want HPC machines for limited functions for a short-term. There’s so much demand that there’s a waiting period of 15-18 days for people to get a log-in access to our system,” Sanjay said. <br /><br />In storage, it’s identifying high-end functions for big businesses which they would always want to keep in-house. For instance, post-production work by broadcasters and movie studios. Files from a film shot using multiple cameras are all dumped into one machine. Scores of people may want to access same files at the same time for editing. Netweb makes it possible by providing the storage and software infrastructure. “Such work will never shift to the cloud,” Sanjay says confidently.<br /><br />First-mover advantage<br /><br />Nimble Storage <br /><br />Claims to be the first to offer storage on demand<br /><br />How it works How it happened<br /><br />Assume a cloud provider has <br />20 customers<br />Assume 10 of those went away the next month<br />Nimble only charges for actualstorage consumed<br />This allows the client to shift from capex to opex <br /><br />Netweb Technologies<br /><br />Claims to have pioneered supercomputer installations in India<br /><br />How it happened <br /><br />C-DAC called for tenders to upgrade PARAM Yuva <br />Netweb had previously installed a supercomp at Chennai<br />It beat IBM and HP to win the C-DAC tender<br />It designed, installed 400 machines for PARAM Yuva II<br /><br /><em>Radhika KrishnaN, VP for product marketing, nimble storage: If EMC had the luxury of being able to start from scratch, if they could afford not to worry about their VMAX, VNX, ViPR, DataDomain and all of that, then they might be able to do what we have done five years from now.</em><br /><br /><em>Sanjay Lodha, CEO, NETWEB TECHNOLOGIES: We have some very big MNC competitors in the spaces we operate. But we have our own value proposition. It is very difficult for somebody to match our specs and pricing. Where they try to restrict capacity, we provide unlimited user licence.</em><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /></div>
