Happy Friday, Data Sheet readers. Hewlett-Packard is the latest high-tech giant to endorse software-defined networking. Intuit is signing cloud subscribers for its business tax software at a furious pace. Plus, what’s inside your company’s digital filing cabinets? DataGravity co-founder and CEO Paula Long thinks indexing and audit trails should be built into storage hardware—without making things too complicated.
Forward this newsletter to technophiles, and tell them to sign up! Miss one? Here’s an archive of past editions.
Have a super weekend. I’ll be back next Monday with an update from Cloudera CEO Tom Reilly, with whom I chatted last night.
TRENDING
HP goes open source with latest network switches. Like Cisco, the company faces fierce competition from lower-cost competitors using commodity hardware and software-defined networking to reduce corporate data center costs. A key partner in HP's endeavor: Cumulus Networks, also a partner to Dell for a similar solution. Last year, HP’s proprietary products generated $2.6 billion. But Facebook’s evangelism of open source networking gear is making businesses rethink their own approach.
Cisco CEO John Chambers says “mais oui” with $100 million commitment to French startups. It's getting some encouragement from the prime minister.
Yahoo’s fervent pitch to mobile developers: a rich cut on ads running inside their apps. “This is about taking some of what we’ve learned and making it more broadly available,” the Internet search giant’s CEO Marissa Mayer told journalists Thursday.
T-Mobile surprised analysts with a 19.4% quarterly revenue increase. Don’t expect the same this quarter: the wireless carrier is sparing no expense to lure new subscribers.
Does Google have a prayer in the mobile wallet business? It plans a reboot of its strategy, potentially by May. Complicating matters: the biggest maker of Android smartphones, Samsung, just acquired its own mobile payments company.
What was Lenovo thinking? It’s scrambling to remove a spyware application from certain laptops after security gurus suggested it could leave them vulnerable to attack. It’s downplaying the incident, which should concern corporate buyers.
Adobe, Salesforce lead $32 million round for Livefyre. The social marketing company specializes in software for managing comments on blogs and websites. It has more than 1,000 customers including Bank of America, FedEx, and Zendesk. (Disclosure: Fortune is also an account.)
Apple’s rumored electric vehicle could be on the assembly line—if not the road—by 2020. This latest speculation is brought to you by Bloomberg.
Abysmal checkup. Pretty much every healthcare insurance provider fails on basic email security. But Aetna gets a clean bill of health.
Yet another (former) Qualcomm exec admits guilt in insider trading probe.
INTUIT REPORTS DRAMATIC GROWTH IN CLOUD SUBSCRIPTIONS
While Intuit’s second-quarter results contained few financial surprises, the tax software company reported dramatic growth in QuickBooks Online customers.
During the quarter, it added more than 100,000 new subscriptions. That brings its total to 841,000 subscribers worldwide. Growth within the U.S. was 50% (compared with 43% in the first quarter); international adoption exploded by 170%.
What’s more, almost 80% of the customers signed in the second quarter were either new to Intuit or to the tax software category as a whole, said Intuit CEO Brad Smith. If the company maintains the current pace of growth, QuickBooks Online could reach 975,000 to 1 million subscribers by the end of this fiscal year. For perspective, approximately 4 million customers use Intuit’s desktop QuickBooks application. Sales for that version slipped 10% in the quarter.
“By and large, our cloud momentum is building,” Smith said in a conversation shortly after the company’s earnings call Thursday night. Some of the fastest growing regions for cloud adoption during the first half: Canada, the United Kingdom, Australia, and India.
Intuit’s long-term goal calls for 2 million QuickBooks Online subscribers by the end of its 2017 fiscal year.
Like many legacy business software companies, Intuit is undergoing a painful business model transition as it introduces cloud-hosted versions of its software applications.
By the end of its 2017 fiscal year, it wants 73% of its revenue from recurring subscriptions. Aside from introducing new cloud services for tax, payroll and other accounting-related processes, that has prompted changes to how Intuit recognizes revenue for its desktop software: instead of counting each license upfront, it now spreads that revenue over three years, Smith said.
This is the big transition year. Translation: Intuit anticipates single-digit growth over fiscal 2015 rather than the double-digital expansion it has typically reported. For the second quarter ended Jan. 31, revenue grew by just 3% to $808 million. Its GAAP operating loss almost doubled to $98 million.
Intuit’s full-year guidance remains essentially unchanged: it anticipates revenue of $4.3 billion to $4.4 billion, off anywhere from 3% to 5%.
DATAGRAVITY’S QUEST FOR ENLIGHTMENT
When it comes to data management, many startups accentuate the negative, warning of the scary things that can happen to businesses that don’t control access.
DataGravity’s pitch is more nuanced. Yes, its technology protects companies against potentially embarrassing or costly information exposure. But it also helps identify files buried within digital file cabinets that maybe should be shared more readily—automatically indexing, securing and managing files as they are saved based on potential compliance concerns. Most businesses, especially smaller ones, don’t typically have the time or resources to do this manually.
“It's really about harvesting the information in your humanly generated data, making sure you're leveraging the positives and protecting yourself against the negatives,” said the New Hampshire startup’s co-founder and CEO, Paula Long.
DataGravity calls this strategy “data-aware” storage; it has raised $92 million in venture funding from Accel Partners, Andreessen Horowitz, Charles River Ventures, and General Catalyst Partners to tell its story. Long and her co-founder John Joseph should have little difficulty finding an audience: their previous startup, EqualLogic, sold to Dell for $1.4 billion.
Fortune spoke with Long about what sets DataGravity apart and what’s driving early adoption of its Discovery product line, which shipped commercially in October 2014. Following are interview excerpts, edited for clarity and length.
Define ‘data-aware’ storage.
Storage technology really is, for lack of a better word, just a bunch of bookcases to store information. I used to say containers, but now I use bookcases or milk crates or file cabinets’ with no organization except for minimal alphabetical organization.
What happens today is all your data is stored there, but you don't know anything about it. You don't what's helpful, and you don't know what's scary. Storage is a big, black box. Data-aware storage is about taking that file cabinet full of stuff and then finding the good stuff and leveraging it to make the company more successful; or finding the scary stuff and containing it.
Why aren’t businesses doing this already?
Midsize companies are just starting to figure out how to do this because a lot of data privacy and data governance issues are being raised. They know they're exposed, and so they're trying to figure out, "How are we gonna keep track of our data?" And then they see cases where people have left companies, taking along massive data dumps. How do you know if somebody's just read everything and written it to a thumbnail drive or uploaded it to Dropbox or something on their way out the door? Right now, it’s hard to tell.
You mentioned this is for humanly generated data. What does that mean?
We actually handle 400 different types of unstructured data—it's your Office files or your Macintosh files or your Excel files or your [computer-aided design] files. We can look at the metadata within your videos and images, but we're not actually looking inside your videos and images or texts, right now. We could do that in the future. Our technology can tell who's reading and writing any particular file.
Your first products shipped in October 2014. Where are you finding early success?
In legal, in accounting, in small financials, in state and county governments—because they really do have to keep track and make sure their content is secure. We also are finding some success in engineering companies and retail.
What’s top of mind for 2015?
This may sound obvious, but I really believe you should know what's in your data, and you shouldn't have to pay extra to know. It is the storage array's responsibility to tell you. It's absurd that a business should have create all this elaborate infrastructure just to figure this out.
Why aren't you just a software company?
There's this concept of primary storage, and where you're reading and writing your data. What companies do today is try to index that primary storage while they are using it, which can bring performance to its knees. At the same time, they might be trying to figure out what data has changing and why someone is using it. After that index, however, you lose the trail. Sometimes, you can’t return to certain files because they were overwritten. They no longer exist.
We deliberately decided not to put the burden on the primary storage; we wanted to be able to index [data] without impacting day-to-day work. That’s why our technology needs to include both hardware and software.
What advice would you give to other business technology entrepreneurs, particularly as pressure rises to produce billion-dollar valuations?
My advice is to be 100% focused on happy customers. Don't get caught up in, "I made this much," or "My valuation is this," or "My valuation is that." Frankly, that's all very meaningless. The meaningful metric is happy customers. And then the next meaningful metric is happy customers who continue to buy and want to actually refer you to other soon-to-be-happy customers.
None of these customers want you to go out of business, so they want you to make them happy at a reasonable profit without gouging them. That’s why we’re not charging a premium for all the additional features we've added [to our storage products]. We believe that if you bought the house, you ought to be able to go inside and find out what the rooms look like. Philosophically, the same should be true of data storage technology.
MY FORTUNE.COM BOOKMARKS
Why powerful people are rarely punished appropriately by Jeffrey Pfeffer
5 ways to get more from your PR efforts by Verne Harnish
In business, why kindness actually pays off by Amy Wilkinson
Why Wal-Mart’s minimum wage hike makes business sense by Chris Matthews
Healthcare startups are booming. Here’s what it takes to succeed by Laura Lorenzetti
ONE MORE THING
Zombie app-ocalypse. Most mobile applications are doomed to obscurity.
MARK YOUR CALENDAR
Gartner CIO Leadership Forum: Digital business strategy. (March 1 – 3; Phoenix)
DocuSign Momentum. E-signatures and digital transactions. (March 10 – 12; San Francisco)
Microsoft Convergence: Dynamics solutions. (March 16 – 19; Atlanta)
IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston)
Cisco Leadership Council: CIO-CEO thought leadership. (March 18 - 20; Kiawah Island, South Carolina)
Technomy Bio: The big picture on transformation. (March 25; Mountain View, California)
Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 – April 1; Las Vegas)
Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)
RSA Conference: The world talks security. (April 20 – 24; San Francisco)
Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 - 28; Orlando, Fla.)
MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)
NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)
EMC World: Data strategy. (May 4 - 7; Las Vegas)
Sapphire Now: The SAP universe. (May 5 – 7; Orlando, Florida)
Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)
Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 - 20; Boston)
HP Discover: Trends and technologies. (June 2 - 4; Las Vegas)
Brainstorm Tech: Fortune’s invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 - 15; Aspen, Colorado)
VMworld: The virtualization ecosystem. (Aug. 30 – Sept. 3, 2015; San Francisco)
Dreamforce: The Salesforce community. (Sept. 15 - 18; San Francisco)
Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 - 8; Orlando, Florida)
Oracle OpenWorld: Customer and partner conference. (Oct. 25 - 29; San Francisco)