Ladies and gentlemen, thank you for standing by, and welcome to the Nutanix Tech Talk, a deep dive on Nutanix Clusters. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Tonya Chin. Thank you. Please go ahead.
Thank you very much. Welcome to the Nutanix Clusters Tech Talk. This call is also being broadcast live over the web and can be accessed in the investor relations section of the Nutanix website. I'm joined today by Monica Kumar, Nutanix's Senior Vice President of Marketing, and Madhukar Kumar, Nutanix's Vice President of Product Marketing, who will be joining us for Q&A after the session. We'd like to remind you that during today's call, management will be making forward-looking statements within the meaning of the safe harbor provision of federal securities laws regarding the company's business plans and objectives, expectations regarding products, services, product features, and technology that are under development, competitive and industry dynamics, potential market opportunities, and other business-related information.
These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, which could cause actual results to differ materially and adversely from those anticipated by these statements. These forward-looking statements apply as of today, and we should not rely on them as representing our views in the future. We undertake no obligation to update or revise these statements after this call. For a more detailed description of these risks and uncertainties, please refer to our annual report on 10-K for fiscal year ending 31 July 2020, filed with the SEC on 23 September 2020. Copies of our SEC filings can be obtained from the SEC or by visiting our IR website at ir.nutanix.com. Finally, a supplemental slide deck can be found in the events section of our IR website, and these will be the slides that we're referring to during our presentation.
As a reminder, no financials or projections will be discussed on today's call, and we thank you for your cooperation in advance. With that, I'll turn the call over to Monica. Monica?
Thank you, Tonya. Hello, everyone. I'm really glad to be here, and thank you for joining us and your time. I'm going to start with slide three. Obviously, the global pandemic has accelerated the digital transformation timeline for many organizations. Plans that were laid out over months and years are now shrinking to weeks and months in order for these organizations to survive and also thrive. If you remember, Satya Nadella of Microsoft famously said, I think two quarters ago, that they are seeing two years' worth of digital transformation now taking place in just two months. While companies are obviously focusing on cost reduction, they also have to innovate at the same time. They have to do things differently. We all have to do things differently to reach our customers and our partners and employees.
From things like remote teamwork and learning to customer service to critical cloud infrastructure services, we are now working alongside customers every day to help them stay open for business in this world of remote everything. Five years ago, if you talk to a CIO, they most likely believed that the most important skill set they had to possess was technology know-how. Today, if you talk to a CIO, and there have been many surveys done, they believe it is contributing to corporate strategy. In fact, 80% of CIOs believe their role has increased in importance over the last five years. When you think about digital transformation, there are three key pillars that matter the most, and those are being driven by IT today. The first one is revenue growth. The second one is customer experience, and the third one is employee experience.
Now, let's look at slide number four. Every single industry has been impacted this year. Clearly, the future of certain industries has changed forever. How many of you have kids that are going through hybrid learning? Who has had appointments with their doctors over Zoom? What about your work? How many of you have had to quickly look for that stop video button when a child comes running in or a dog decides to show up unannounced in the middle of a meeting? I even participated in actually a Zoom wedding two weeks ago. Clearly, whether it's future of work, our personal life, education, healthcare, one thing that most experts agree on is that the future is not all at the end of a spectrum. Rather, it's a hybrid of everything. To do that, obviously, it's clear that technology is enabling that.
If you go to slide number five, technology that's enabling this hybrid everything world, it's clear that only cloud solutions can enable that constant innovation as every industry is navigating these changes and evolution. In fact, cloud is no longer a nice-to-have. It's a must-have. It's an imperative required for business success. We believe what customers need is a path and a platform for hybrid and multi-cloud computing. I'm going to spend the rest of the time talking about that and specifically clusters.
If you look at this slide, and I've listed four steps here, from infrastructure modernization to building private clouds with automation and delivering IT as a service to bursting into public clouds with speed and agility and building hybrid clouds, and then ultimately having this nirvana of using the right cloud for the right workload, which can all be operated as a seamless cloud from a single management plane.
This is the most common path we have seen our customers embark on, kind of like in these four phases of steps: modernizing infrastructure, automating everything, and building private clouds to deliver IT as a service, bringing in public cloud to take advantage of agility for certain workloads, and ultimately unifying private cloud with multiple public clouds in a way that the companies don't have to reskill or rewrite applications or refactor them, and they can truly function across multiple clouds for business application needs. That's kind of a common path we see our customers taking. Let's now talk about the platform on slide six. What is the platform for hybrid and multi-cloud computing? What does it look like?
Obviously, I'm going to talk about this from a Nutanix perspective, but for a second, if you were to not think of Nutanix, what does an organization need to build this cloud platform? In our opinion, the foundation of this cloud platform should be hyper-converged infrastructure software, which is the prime ingredient, of course, of Nutanix's portfolio, which we pioneered over a decade ago, and we continue to innovate and lead in this space. In fact, in the latest market share reports published by Gartner, Nutanix is a clear leader, is the number one global market share leader for many, many consecutive quarters, recently with a 52.8% market share. For over a decade, we've made infrastructure easy to deploy and manage, delivering efficiency and speed. We've enabled our customers to add scale without downtime so that they can grow and innovate quickly.
We have enabled replication of data easily and recovery from failures without disruption to business and enabling business continuity. That is where we started. If you look at what we have done over the last three or four years, our cloud portfolio has grown significantly. Not only do we offer and innovate on the digital SDI services, we now offer multiple data center services from storage like files and object storage to DR services and backup services. We also now offer DevOps services. You can build cloud-native applications using Nutanix, using containers. You can deploy them on Nutanix. You can automate your application deployment using our DevOps services. You can even automate database deployment. We offer database as a service. You can obviously automate, to a large extent, your infrastructure operations. That is what we are calling our DevOps services sort of bucket.
You see on the right-hand side on this chart, we continue to offer and advance our desktop services portfolio with VDI and desktop as a service, enabling customers to run end-user computing on Nutanix platform. These are the four major buckets or categories where we offer the product. If you look at how we offer it now, not only can all of this run on-premises inside a data center, but also in the public cloud. Our customers can build and run virtually any application on this stack at this point. The way I like to describe this is that the whole is bigger than the sum of the parts. Today, Nutanix offers one platform application in any cloud. The core of this cloud platform is the SDI software, which will evolve to become the industry's first hybrid cloud infrastructure solution.
If you think about it, the SDI that we pioneer in hyper-converged infrastructure is now evolving into becoming the hybrid cloud infrastructure solutions that many of our customers are now building their hybrid cloud strategy on. If you go to slide seven, obviously, the market opportunity is huge. I won't belabor this point because I'm sure you've seen all kinds of numbers from different analyst points. There's a huge demand when it comes to both private and public clouds even separately. Just for hybrid cloud, IDC estimates a market of $96 billion in the foreseeable future. This is a big space, and we are excited to play a part in this with our latest and greatest solutions. Now, let's go to slide eight.
I wanted to share with you some more data points about hybrid cloud and why that's really an important operating model for organizations and how it's becoming that. According to a 2019 Enterprise Cloud Index survey that we did, which is based on almost 2,600 IT decision-makers, 85% of enterprises continue to rank hybrid cloud as the ideal IT operating model. We are going to be publishing the 2020 Enterprise Cloud Index shortly, and you will have access to the latest information from that as well. Let's look at what Gartner is saying. According to Gartner, by 2021, over 75% of mid-size and large organizations will have adopted a multi-cloud or hybrid IT strategy. Last but not least, on this slide, what I'm showing you is a chart which is a result of surveys we did with our own customer base in July of this year.
These are our large enterprise customers. We found the following results. Only about one-third of the respondents indicated a focus on a single public cloud, which means a lot of customers are already using multiple public clouds for different workloads. There was little to no adoption of hybrid services yet, like Outposts, Google Anthos, and Azure Arc. That was, again, one interesting data point we gathered. I'm going to go into why this has become important as we're certainly talking about clusters, why this data point is significant. The last one was multiple toolsets for management and orchestration are currently in use by our customers. If you go to the next slide, nine, I just want to talk about sort of the challenges that customers are facing today and then pivot into our solution.
There is a general consensus that both private and public clouds have the advantages, but for IT, for some things, IT is usually at odds with each of these choices. For some things, a public cloud is good, and some things are private, and usually there are different reasons to choose. For example, public clouds were built with the assumption that servers are disposable and will fail at some point. Private clouds are typically built around cost, control, and compliance, and resilience against failure. However, the new reality is that organizations are dealing with not just private clouds, but both private and public clouds at the same time. Clearly, they are gravitating towards hybrid cloud operating models to get the best of both worlds. Let's go to slide 10. Great. We have established the point that cloud is really the enabler of innovation.
Hybrid cloud is the operating model. Why is hybrid cloud so hard? Why is it not that customers are already ecstatic with the current solutions on the market? Let me tell you why it's hard and what we are hearing from our customers. Our customers tell us that there are several reasons for it being hard today. For one, there are multiple tools for multiple clouds, which causes a lack of consistency in deploying, running, and managing applications across clouds. Lots of complexity because of all these different tools for different clouds. Oftentimes, this causes cost inefficiency. Finally, organizations have to face reskilling their workforce when it comes to managing multiple public clouds. Whereas when you create something that works in one cloud, you cannot move that as-is to another cloud.
Basically, you are now custom creating and building and managing a one-to-one based on which public cloud you're using. You cannot reuse what you build for one cloud on another cloud. According to Gartner, what they've found is that integration work will account for more than 50% of the time and cost of building a digital platform. That's why IT is spending a lot of time today and resources in building and managing these platforms that are custom-built, handmade, as opposed to actually using them. If you just build and manage, when will you have the time to use what you built the platform for? We believe that looking under the hood is a vital step for organizations in delivering the digital transformation. They have to find a way to build these hybrid integration platforms that can power their digital transformation journeys. Let's go to slide 11.
What exactly is needed then? Today's hybrid cloud solutions are hard because they are handmade. They do not work across multiple clouds. They are inefficient. They still require a lot of DIY from IT. There are a number of existing solutions out there, but again, our customers tell us that they really want to connect from their private cloud, not just to one public cloud, but now a strong need for connecting to multiple public clouds. What we call this is a true hybrid and multi-cloud ecosystem, which requires a few things to work. Number one, the ability to connect to multiple clouds. Number two, a single management plane that can manage all the workloads across these multiple clouds, including your data center. Number three, it is the ability to create and manage workloads and apps that are portable and movable around the cloud. That is really important.
Finally, which is, again, last but not least, built-in cost intelligence to make sure there are no cost overruns or inefficiencies while our customers work with different clouds. If you go to slide 12, what I said in 11, I'm just going to sum it up. Our customers want to have the optionality, the freedom of choice and mobility, so they can choose the right cloud for the right workload and move workloads anytime they want to without rewriting applications or going through costly managed services engagements. Let's go to slide 13. This is where Nutanix Clusters is our answer to the market for this true hybrid and multi-cloud solution. Let me just spend a few minutes talking about what Clusters is and what it enables. Nutanix Clusters enables enterprises to run the same exact Nutanix SDI AOS cluster that they have on-premises now.
They can run the same exact clusters now in Amazon Web Services, Bare Metal, and Azure coming soon. Our Amazon Web Services solution is already generally available since mid-August, and Azure is in limited preview at this point. These Nutanix clusters will run on bare metal instances, and we manage via Prism, which is, again, our management console across private and public clouds, providing nearly identical functionality to on-premises AOS environments. Customers will be able to leverage the existing AWS accounts, the credits, virtual VPCs, VPNs, and direct connect configurations, all of it without making any changes to it. As a result, customers get a full enterprise cloud experience without having to deploy or manage data center infrastructure, and they get the elasticity for on-demand bursting, mobility of apps so that they can write one and run anywhere, and then the optionality of license and operating model.
The beauty of Nutanix Clusters is it allows customers to move data, I mean, applications, data, and license across clouds. It's really important to understand that customers can bring their own license that they have been using on-premises and move them on AWS bare metal and at some point soon in the future on Azure. Clusters is not just another hybrid solution that connects one private cloud to one public cloud. That's the big difference. Clusters gives our customers the optionality and mobility so they can move any workload anytime they want to to multiple public clouds. Let's go to slide 14. This hopefully is evident by now that Clusters is based on the foundation, our core SDI software. We've been doing this work like over a decade now. This is not something new we just picked up.
This has been in the works for a long time. Because of our superior architecture on-premises, it was really easy for us to make the same exact hybrid cloud infrastructure available now in the public cloud. It is based on the same core SDI software. Now we have evolved it to be, as I said earlier, industry's first hybrid cloud infrastructure. The beauty of this is that our customers can now run the entire Nutanix portfolio of solutions that I talked about, which we call the 4D. The first is your digital SDI, which is a hybrid cloud infrastructure, and our customers can now do data center services, DevOps services, desktop services. All of these can now be run in public cloud. They can run databases, cloud-native apps, consolidate storage, create DR zones, and do a lot more by adopting this hybrid cloud infrastructure from Nutanix.
Going to slide 15. Again, just to show you in a graphical format, if you can see inside the Azure and AWS cloud, you see the entire 4D stack running. With Clusters, we've brought all the features, attributes, and goodness that IT teams are used to in a private cloud to at least these two public clouds. We are working on more in the future as well. For now, it's GA in AWS. It's in limited preview with Azure. We have a solution that we've been working with Google on through something we call a test drive, which is today running on nested virtualization. Google just came out with their bare metal service, so we are now looking at supporting Nutanix Clusters also on Google bare metal and what that would mean.
If you go to slide 16, I briefly want to walk through the key use cases and target workloads here. If you think about the use cases for hybrid cloud, lift and shift is a big one, where customers have been sort of holding back and not moving some of the business-critical applications to cloud because it just seems onerous in terms of the complexity of the move. In many cases, they would have to rewrite the application, or it would be too complex to manage. It would be in a silo. With Nutanix Clusters, as I said, if they're moving it exactly on the same, which is now clusters in the cloud, they don't have to rewrite anything. We make lift and shift of even business-critical applications really easy for customers because there's no code change. It's the exact same environment and skill set.
On-demand elasticity is another use case. It bursts capacity. As an example, when we first started working from home during the COVID outbreak earlier this year, many organizations were left grappling with how do they spin up now thousands of employees to work remotely. A lot of organizations wanted to burst capacity with their VDI solutions, for example, or desktop as a service. That is where public cloud came in very handy for many organizations. That is another big use case that we enable, burst capacity, elasticity on demand for DR, for any other workload. Business continuity, of course, is a very important one. Lots of organizations are looking at creating their DR site back into public cloud. They may continue to operate on-premises, but in case of a disaster, they want to failover to an instance of the public cloud.
The fourth option is to use cloud-native services, which means there could be many ways to do this. It could mean building net-new applications on the cloud using all cloud-native services. It could mean extending your current application that you may have lifted and shifted to a public cloud now by using cloud-native services and extending the capabilities of those current applications. These are some of the key use cases we enable with Clusters. On the right-hand side of this chart, you see two workloads mentioned. Obviously, we enable many more workloads. You can run now databases or high I/O-intensive applications. You can also run VDI virtual desktop infrastructure in the cloud. You can run analytics applications. As I said, you can build cloud-native apps and deploy them.
There's a long list of other apps, enterprise applications that you can now run with Nutanix Clusters in a public cloud in a hybrid cloud model. I'm going to give you on slides 17 and 18 two very specific examples of customers and what they're doing with Nutanix Clusters today. On slide 17, the first one is Penn National Insurance. It's a big auto, home, and business insurance provider. Operates in 10 or so states in the US on the East Coast. They currently have 11 Nutanix nodes, with some of them being used for DR. Their biggest challenge was expanding their DR capacity because they were increasing their VDI workloads on-premises. Obviously, with remote work kicking in, a lot of customers had to expand their VDI environment, but they wanted to make sure they have the DR and failover environments for their virtual desktop infrastructure.
They were already using AWS and wanted to expand into AWS for new DR capacity instead of adding it in the data center. They were concerned that if they did DR on AWS, is it going to be expensive than DR on-prem? Our team showed them how easily, first of all, they could connect their existing Nutanix on-prem nodes with AWS accounts. That was a breeze. They also, since they brought up the AWS cost optimization concerns, we were able to immediately show them the integration between Clusters and a Nutanix tool called Beam. Beam can easily identify, manage, and optimize the cloud spend for customers and gives visibility into cloud spend. In literally an hour's worth of proof of concept calls, we were able to get them to set up both the Clusters and Beam for cost visibility.
The next day, they had already started to act on Beam's cost-saving recommendations. That was the beauty of this conversation, combining it with not just setting up a hybrid cloud, but also looking at the cost optimization of the hybrid cloud. At this point, they are using both Clusters and Beam, and we're able to solidify the hybrid cloud solution, ensuring the peace of mind to expand easily into AWS when they needed it. In addition, they're also using Flow for microsegmentation, Prism Pro for automating infrastructure operations, database as a service. They're most recently looking at expanding to ERP portal, which we recently announced, to manage the databases both on-prem and on AWS.
The point of this case study that I want to really make sure you hit home is that the hybrid cloud conversations that we're having are opening doors for our public cloud cost optimization capabilities and for also other products in our portfolio. The cloud optimization tools that we have as part of Clusters is really helping customers solidify the cost intelligence benefits for the hybrid cloud. Let's go to the next case study, which is Australian Bureau of Statistics, which they do a census survey every five years, which covers close to 10 million households and approximately 24 million people. Now, the next census is coming up in 2021. As you can imagine, this is a very seasonal nature. The census is seasonal in nature, and every two years, it demands large IT capacity, which was not ideal to keep on-prem without it being used for many years.
They really wanted to use public cloud for burst stability and keep critical workloads on-prem. They chose Nutanix Clusters to build their hybrid cloud. As a result, they have now established hybrid connectivity between on-prem and AWS, and they're also looking at Azure, by the way. They're able to burst their VDI workload into AWS without adding any data center footprint. They chose Nutanix for, of course, simplicity, for on-demand burst capacity without data center expansion, for the ability to manage all of the private and public cloud computing infrastructure from a single plane. Last but not least, a very important point was to maximize their investment by migrating existing licenses to hybrid cloud. They were able to repurpose the existing on-prem licenses and use it in the cloud. Let's go to sum this up now on slide 19.
You would ask, "Okay, that's all great, but how is Nutanix different? What are you all doing that's different than the current solutions out there?" In addition to the fact that we can connect multiple private clouds with multiple public clouds, here are a few things that I want to highlight. Number one, with Clusters, our customers can reuse their existing AWS accounts. There is no need to get a new account or, worse, go through reconsidering a new account to match your policies and identity management. Basically, you don't have to spin up a customized AWS account in order to use Nutanix Clusters. We seamlessly integrate with customers' existing AWS accounts. Number two, currently, Clusters is offered as a self-service environment. It's entirely up to our customers to control how and when they want to go into the cloud.
They can deploy a Cluster on public cloud literally in two steps in less than one hour, and they can move their apps and data and license. Tomorrow, if they decide they don't want to keep it there, they can bring it back. They have that freedom of choice with Nutanix Clusters. With some of the other offerings out there, it's a very constricted, restricted offering where it's fully managed services, and there's a one-way street. You can't really bring things back. Also, you cannot reuse the existing AWS account. Number three, unlike some of our competitors, Clusters does not require any overlay network to connect to AWS. This is really important because not only does this introduce complexity, but it can introduce latency in how the application performance works.
In our case, customers can set up a new or they can reuse their existing VPCs with the private cloud with simple clicks. Basically, Nutanix Clusters can run inside customers' AWS VPC. No reason to add any other overlay network to connect to AWS. The number four reason here is, with Clusters, our customers can reuse existing on-prem licenses on cloud. That's a really big deal. That's true portability, in my opinion. I think most often, we focus on apps and data portability and mobility. We forget about the license portability, but especially in today's environment, so many of our customers are thinking about converting CapEx to OpEx. Nutanix actually gives them a really great way to do that, just to have them reuse their licenses in the cloud.
Finally, we have a feature called Hibernate, which is built into our solution that enables our customers to pause their workloads and only pay for storage when they're using it. This feature called Hibernate is very important. It's a new feature that we've built into our Nutanix Clusters stack. It really gives customers a great way to pay for only what they use and also control their costs. In addition, this solution is also integrated, as I mentioned, with Beam, right, which is a cost governance tool that allows customers to really manage costs across all clouds. These are the five key ways we are different in how we have enabled customers to really use hybrid and multi-cloud solutions. Now, what I want to do, I wish I could have shown you a real demo, but we have some screenshots. Let's go to slide 21.
I think it's 21 to 24. I want to walk you through. If you were today doing a test drive or we were giving you a quick demo, this is what you would go through. First, we would show you how easy it is to create a Cluster in the cloud. Customer goes into the UI of Nutanix Clusters. They add their existing cloud account. Most of the customers we're talking to already have AWS accounts, right? All they have to do is, through the UI, they log into AWS. They add their existing cloud account so Prism can access it. They can access it through Prism. They choose the kind of bare metal they want to run Clusters on and the existing VPCs they want to connect to. Within 45 minutes or less, the Cluster is up and running.
Basically, our customers have created a hybrid cloud in less than one hour. That's how easy it is, literally, to do that. Two simple steps. Next, on slide 22, as soon as Clusters is set up, customers can use Prism, the Nutanix admin, which is the UI to manage virtual machines, containers, storage, network security, and all of the infrastructure operations. All of the Nutanix public and private cloud clusters. It's really that simple. You get a single management plane, and they can start moving apps and data using VMs and containers across their hybrid cloud. This is what it would look like. This is, again, what we would show in a demo with interface of Prism and how they can see the Clusters. They can decide if they're going to move a Cluster now into AWS. They can do this from Prism. Slide 23.
You can see, again, we are showing you here how the UI looks like in terms of cost governance. Clusters has built-in integration with Beam. This is a cost governance tool that immediately gives our customers visibility to all cost metrics across all clouds and offers recommendations on what to do in order to reduce costs right away. The fourth quick screenshot here is the Hibernate feature I was talking about. That's what this looks like. It allows our customers to put Clusters to sleep without losing any data. So they're not paying for expensive compute and networking costs when the workloads are not running. When they want to restart, they come and restart, and it starts right from where they left off.
If we were to do a demo, this would probably take five minutes, and we would show you exactly these four slides I just went through from 21 to 24 to show you how easy it is to set up in under an hour, how easy it is to move the apps and data to virtual machines and containers, and how easy it is to actually get cost visibility and then Hibernate to pause Clusters and only use when you need it. Let me summarize on slide 25 now. I know I went through a lot, and I probably spoke quite fast, but I'm hoping I made all my points come across. In summary, hybrid cloud solutions, we believe, need to evolve to support multi-cloud. Having a hybrid cloud that's a one-to-one mapping from one private cloud to one public cloud is really almost like a vendor.
It's lock-in. It's lock-in for customers. It's hand-constructed. It doesn't allow for the freedom of choice and optionality to customers, right? Existing solutions that do not address customer challenges around cost inefficiency, lack of choice, mobility, and portability of apps, data, and license. We believe that Nutanix Clusters is the first of its kind that bridges private and public clouds in a simple, seamless way that has cost intelligence built-in and enables true portability of workloads across multiple private and public clouds. The last point I really want to hit even harder on is we were the pioneers in the CI category a decade ago, and now we are creating this new category called hybrid cloud infrastructure, which is really a seamless transition from hyper-converged infrastructure on-premises to building this backbone for hybrid cloud for customers.
On 26, if you want to get your hands on this, it's really easy. If you want to test drive Nutanix Clusters, you can go today to nutanix.com/cluster/testdrive/clusters and basically get a self-guided walk-me experience of the entire way of building a hybrid cloud, connecting to AWS, being able to manage it with a single plane, see how easy it is to move apps and data, and see the cost visibility that you can get and governance and intelligence that you can get built in. This is a completely free experience. It's zero touch. All you need is a browser. No hardware, no software, no cost to any of our prospects and users who want to try this out. In addition, we also offer a 30-day free trial of Nutanix Clusters. That's available on AWS bare betal.
To date, we've seen almost 1,500 test drives taken for Clusters and 200 trials signed up. We've already seen great momentum of people wanting to try the technology and getting their hands on it. As I mentioned earlier, the test drives that we've built in the last year all run on GCP, today using nested virtualization. Now that they have a bare metal offering, we're looking at their bare metal offering to see how we can also support that as well. Those were my prepared remarks. I'm happy to take any questions. Madhukar is going to join me as well so we can answer questions together. Of course, Tanya is here too. Thank you for your time.
Thank you, Monica. Oh, I was just going to turn it over to the operator so we could get to Q&A.
Thank you. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. Your first question comes from Aaron Rakers with Wells Fargo. Your line is open.
Yeah. Thanks for doing the presentation. Thank you for taking the question. I guess the first question I just want to ask is, can you just walk us back through how this is priced, the subscription model? What's the typical terms that you're seeing customers kind of think about for Clusters deployments? As it relates to AWS, I believe in August when you introduced or announced it, I think there were 20 regions available. Just give us an update of where that stands as far as expansion with AWS and when do we expect Microsoft to go GA. Thank you.
Sure. Let me start with the pricing model. Madhukar, feel free to chime in. There are three ways for our customers to subscribe to Nutanix Clusters. One, as I said, which we are really proud of, is this completely bringing your own license. Customers can choose to bring their subscription term licenses from on-prem into the cloud. That is one way. They can also select a pay-as-you-go pricing model, right? Only pay for what you use, which mirrors the public cloud consumption model. The third model is the cloud commit model, where if they know what their consumption would be, they can commit for a certain term, a year, for example, a year's worth of term. There would be volume discounting based on that.
Those are the three sort of models: term-based license, pay-as-you-go, which is an hourly pay-as-you-go, and cloud commit, which is a one-year term with some volume discounting baked into it. Your second question, sorry, was about availability.
Yeah. AWS and Azure.
Exactly. AWS and GA, I don't know about the rest. You know about the we already have available in 20 regions around the world. I don't know if.
Yeah.
The expansion plans. I don't know if you want to add to that.
Sure. In terms of regions availability, we support anywhere that AWS supports bare metal. If you think about it, really, when our customers go in and create a cluster, they're choosing a bare metal. Wherever bare metal is supported by AWS, we support that as well. The third question, I think, was related to GA with Azure. We have been actively working very closely with the Microsoft team and the Azure team. We are currently in a selected technical preview, and we are very close to public availability of preview as well. Right after that, we will be going to GA. I cannot give you an exact date, but we're looking to do it very shortly.
Okay. Thank you.
Yeah. I just add to that that because we know how important Azure is to our customers. This is something we are working on actively.
Our next question comes from Alex Kurtz with KeyBanc Capital Markets. Your line is open.
Yeah. Thanks for taking the question. I just wanted to follow up on what Aaron, the line of question Aaron just had. When the sales organization is going in to talk to customers about a new subscription for on-prem, whether it's a one, two, or a three-year deal, how is Clusters being included in that discussion? Is it kind of coming in afterwards, after they've decided to deploy on-prem and want to have this ability to flex to the cloud? Or is there some bonus or accelerator to include this in the mix as the reps go to market this year? Just trying to understand kind of the sales force motion with this product and how it relates to your existing on-prem selling motion.
Sure. I mean, as we all know, the cloud has now become part of every conversation. I mean, when I say cloud, I mean public cloud, hybrid cloud. They are no longer conversations only spanning on-prem data centers. I mean, there are very few of those, if any. The fact that we now have a real offering in the market, which is publicly available, gives our sales reps a great conversation starter and also helps customers think a long-term plan in where their workloads may reside. The beauty of Nutanix is they do not need to know today what workload is going to run where, right? They can decide as they deploy those workloads and decide on the fly, "Hey, I want to run this in AWS today." They do not even have to come back to us.
The way our sales team is really using Clusters for any new conversation, it's a deployment mechanism, right? Cloud is an operating model. Now, from the get-go, our sellers are able to position like, "Hey, just like you could run Nutanix on HPE, Dell, Lenovo, other servers, you can now run Nutanix on AWS and soon on Azure and on and on." It is becoming part of the conversation. It actually opens up many more doors for us than it ever did before because many customers are looking, as we said, to support hybrid and multi-cloud models.
Monica, just as a quick follow-up, is there a scenario where a subscription renewal is coming up and the customer has made an investment in Nutanix before and there's some way to transfer the value of their existing on-premise micro-device into this product somehow where they can kind of be able to capture some of the value they've made already in the platform and kind of move the license over to the cloud? I guess the cloud mobility between on-prem and off-prem, can you help describe that a little bit more?
Yeah. So what I'm saying is, look, life of device to term-based license consumption, that's already happening, right? We are actively working with our customers to explain and make them understand why the term base is better for them. That's happening naturally. Let's talk about a customer who already has a term-based license on-prem with us. What I'm saying is they don't need to do anything to come to us to move it over to cloud. They can use it without even letting us know. See, that's one of the beauties of Clusters, it's all the customer's choice. They can take their value of Nutanix on-prem today and turn it into value in the cloud. It's all on the customer. We give them 100% choice to do that. I'm hoping that's clear.
Okay.
There's no additional, yeah, thing they need to do with us for that.
Okay.
Your next question comes from R.K. Jones with Goldman Sachs. Your line is open.
Thank you for taking my question. That was a very insightful presentation, Monica. Thank you for that. You have the ability to connect to multiple clouds with a single management plane and also have portable apps. My question is around what comes next. I know you talked about being in trials with Azure and going to Google as well. From a technology point of view, what's the next big milestone that you should be looking forward to in hybrid conversion?
Obviously, expanding the support for different public clouds is important. As we talked about AWS and Azure, Google, we are also in discussions with Oracle. We're going to see a lot more of public clouds running the ability to run Nutanix stack. Obviously, that's one. I think secondly, it's really also focusing on the cloud-native technology, right? Many of our customers are obviously now sort of bridging between virtual machines and containers. And not containers, not just for deploying infrastructure, but also for developing applications built in the cloud and then deploying them in containers. You're going to see a lot more of discussions coming out of Nutanix around platform services, sort of going up the stack now, up the stack from infrastructure in the cloud. I talked about ERP very briefly, database as a service.
That's a big, huge challenge for customers who are using heterogeneous databases. Today, on-prem and in the cloud, they have so many different complex environments to deal with. What you're going to see with ERP, we actually have a beautiful tool that can provision multiple databases with single click, single management, again, back them up, provision, clone, patch, everything. You're going to see us move more and more up the stack, as I'm saying, to more of the platform services. That is going to be the next step for Nutanix, to start creating a fuller portfolio of services that we offer for customers.
That's very helpful. If I could follow up to that, I'd like to slide very short the differentiators you had with your competition about things like existing AWS account or self-service environment. Not having an overlay network. I wonder if you could double-click on those things to help us better understand why those things are important for customers and how much of a difference that could make.
Yeah. Since I already went through that, let me have Madhukar take another crack at it. Madhukar, you want to take that one?
Yeah, absolutely. I think it comes down to a lot of reusability, right? If you have an existing AWS account, typically over a period of time, you put a lot of configurations and you set up things based on the policies of the organization. You set up identity access management and all of that. If now you are forced with the choice of either reusing what you already have or starting from scratch just because you want to do hybrid, it has a huge effect. It has a huge effect both in terms of personnel overhead, skill set, as well as also cost because now you have to go and redo all of that. That's just one example. The second, just to double-click on what I really want to make sure everybody understands, is the hibernate feature.
If you think about public clouds today, the programming paradigm is very different than what it is for on-premises. For example, on-premises, you don't build out an application thinking, "What will be my cost if it's running at night?" If you're running something in public cloud, whether it's being utilized or not, you are paying for that application both for network as well as for compute. It is really important for IT organizations to have visibility into what is your cost and to have more control over how you can put that to sleep. Literally, the hibernate is like that laptop sleep button where you go in and you realize that you are not using your application at night or certain times of the day. You can hit the button and it hibernates and it saves all the state of the information.
You are not paying for it. You are only paying for storage, which is cheap. When you want to rekindle it, you just hit the unpause button and you are up, and that, I think, is the second huge differentiator. The third thing is if today you want to create something between or a bridge between your on-prem as well as public, if you add an overlay network, which is what a lot of our competitors do, it adds overhead again to personnel cost, but also overhead to network because now there is something in between your network as well as Amazon's or AWS VPC. What our engineering team was able to do is to create the direct integration. You do not even need professional services. All you do is by yourself, go in, add your AWS account, and it shows you all your virtual private clouds in AWS.
Pick one that you want it to be part of and you're off and running. That's also huge, again, not just because it's convenient. It is huge in terms of cost benefits as well. Finally, I think one other thing I would call out is portability that Monica touched upon earlier. That portability is not just across that you write once and you run it everywhere, but it's also across your licenses. If you have a Nutanix license on-prem, you move it around and move it to cloud today. Later on, when we have additional clouds, you can move the same license across different clouds, and you're not having to go in and talk to sales or pay more money for that. I think these are four or five things that truly differentiate what we have done.
Very helpful. Thanks, guys.
Your next question comes from Nehal Chokshi with Northland Capital Markets. Your line is open.
Thank you. Great presentation, Monica. You mentioned some test drive metrics. Could you just repeat what those were again?
Yeah. What I said was we have seen great momentum already of our Clusters offering. We've had approximately 1,500 people take the test drive for Nutanix Clusters specifically and approximately 200 pre-trial sign-ups already that we are seeing. This is only the beginning, like I said. It's still early as Clusters and AWS just GA, but we are pleased with the momentum we are seeing thus far.
Okay. All right. These people who are taking the test drives, are these typically new customers or are they existing customers?
They're a mix. Obviously, a lot of our existing customers are very interested because of the bring-your-own-license capability that we offer to customers without them having to pay an extra sort of penalty for moving their Nutanix license to the cloud. We've seen a lot of current customers very interested. The survey I showed you all, I don't know if you remember, it was one of the earlier slides, was our customer-based survey. We had, I think, close to 100 top customers respond. These are big enterprises. As you can see, they're already using a lot of different public clouds, and they would like to use Nutanix on the hyperscalers as well.
Okay. Great. So why can't other guys like VMware, Red Hat, publish or Bare Metal APIs to enable the portability that Nutanix has with Clusters?
I can't answer for them why they can't. I can just tell you the way, for example, VMware has a structure, by the way. That's a fully managed service. What they're offering is kind of like a black box to customers, right? They have handcrafted everything, and the customer has to subscribe to a different AWS sort of zone. It's outside of customer's VPC. It's really not connected to anything the customer is doing. It's a handcrafted one-to-one mapping, like one private cloud to one public cloud mapping. As an example, if, let's say, a customer has subscribed to the VMware service on AWS, they can't really move to whatever they decide to move to Azure now, even favorite VMware. That's going to be a complex migration. There is no, because of the way it's been customized and how they've developed it.
Now, why did they do it this way? I don't know. I guess we should ask them. I think services are included. It's a fully managed environment. It's a different cost structure. It's not conducive to, as I was talking about earlier, the portability of the apps and licenses and the freedom of choice and optionality to customers where they can move any workload to any cloud when they choose to, where they can get visibility into cost and say, "I need to shut this down. I need to bring this back on here. We can move this workload there." You just can't do it the way that solution has been put together.
Right. Maybe another way to ask the question is that why is Nutanix able to leverage a bare metal API? Does it have anything to do with using the HCI OS as a substrate for enabling the hybrid cloud? And/or does it have anything to do with Nutanix's HCI OS being more of a born-out-of-a-scale-out architecture versus most of the other vendors' HCI offerings being born-out-of-a-scale-up architecture?
Let me have Madhakar address it in a moment, but I'll tell you this. I think this also goes back to our design principles from day one. It's always been about freedom of choice. If you look at how Nutanix is supported, even from the very beginning, multiple hypervisors, servers, multiple clouds now. We are all about the availability of solutions to customers and really making it as easy as possible to meet the customers with their app and have them protect their investment. That's always been the design principle of our technology solutions. Madhakar, do you want to add anything specific to the architectural point of view?
Yeah. I think exactly what you said with a little bit more context in the sense if you think about how you create an application or you manage an application, it consists of three or four basic ingredients, so to speak. You need a virtual machine, you need a container, you need network, and you need storage. Over a period of years, we have really honed in into how to make that very simplistic and make the underlying layers completely invisible for our customers. If you want to create an application or manage an application, whether it is virtual machines or your containers, the HCI platform does it beautifully where if you want to now run it on a Dell server or an HPE server, it is agnostic to the application or to the environment that we have created.
For us, the public cloud is now exactly the same thing. If you think about it, you were running your entire Nutanix platform with virtual machines, containers, stuff on two different kinds of hardware. Now you have a third and a fourth kind, which happens to be bare metal AWS and Azure. This is why it's the unique way of how we do things and the architecture that makes anything that you do completely portable because the underlying layers become invisible and agnostic.
Okay. I just have one more question. What are your customers that have implemented Clusters, you're testing it, telling me as far as what is the TCO relative to other hybrid cloud solutions that they've looked at?
I think, I'll start, Madhakar, and add to it. I mean, look, it's a little too early for customers to tell us about what TCO they are seeing. Each situation is unique. I think it depends. We have several customers using it for burstability, like burst capacity. And DR was one example I gave you. DR is another use case. Sometimes those incidents have to take place for them to actually realize the TCO of it, right? I mean, DR event when it happens. In general, the fact that they can actually take existing licenses and move over as opposed to having to buy new every single time right off the bat is a great thing for them. The simplicity of management. Some of these things, when you start looking at TCO, it's more than just an acquisition cost, right?
It's about management cost. It's about reuse of existing investments. In general, I mean, our customers are happy with what they have today. I think it's simply too early to talk about specific TCO examples coming back, right? We just NGA what, mid-August. I'm hoping in the near future, we'll have some more specific examples of TCO as well.
Sorry. Just one other quick question. Where does the data go when a customer puts Clusters into hibernate mode?
Sorry, what was the question?
Could you repeat the question?
Where does the data go when a customer puts Clusters into hibernate mode?
The storage is still there, right? So when you put the Clusters into hibernate mode, right, you've stopped using the compute and the network resources, correct? But you're still paying for storage. That's where your data is.
Gotcha. Gotcha. Okay.
Yeah.
Okay. We just have time for a couple more questions. We are going to move on. Sorry. Thank you so much, Nehal, for all the good questions.
Thank you.
Your next question comes from Nick Heisler with Susquehanna International Group. Your line is open.
Hi. Thank you for taking my question. I'm on for Mehdi Hosseini. One topic I wanted to maybe touch upon when we talk about hybrid cloud, one of the applications that we've heard a lot about is kind of edge compute and use cases of bringing the cloud to the edge. I wanted to go back to slide 11 and talking about the management plane and kind of the role of having this overview over the hybrid cloud. I was just wondering, when you think about HCI and bare metal, should we be thinking about those other hybrid cloud applications to also be looking to incorporate HCI? Or will the version of hybrid cloud at the edge look different than, let's say, between on-prem and in the cloud?
I mean, look, ultimately, this is about connecting multiple places where computing is done, right? On-prem data centers, remote offices, branch office, public cloud extensions that customers have done it. Definitely, I know we didn't use the word edge here, but it's absolutely a use case that Nutanix has enabled for many years. If you look on slide, I think six, we talk about remote office robo, remote office branch office. That's kind of like what we called it before edge became a very popular word. Remote office branch office is kind of like an edge computing use case, right? I mean, with edge, you can expand it to transportation ships and banking offices, etc. We believe the whole notion of the edge to core to cloud, it's all part of what we explained at slide 11.
You could absolutely have your remote offices and edge environments be connected to your on-prem data centers and/or your public cloud environments using the same Nutanix technology, same HCI, hybrid cloud infrastructure. I mean, there's just different application requirements there.
Yeah. Maybe kind of rephrase the question, and that'll be all. When I think about the various workloads that hybrid cloud enables, does HCI specifically work for certain types of workloads, or is it the simplicity that really makes it about that?
HCI initially started out as an optimized infrastructure for end-user computing workloads, which was all about adding scale in bypass chunks, the ability to quickly scale up and have really simple management. Very soon after, HCI became more popular for database and business critical applications over time because of its resiliency, again, the scale-out architecture, the fact that you can have one-click provisioning of software without downtime, the fact that you can easily scale over, the fact that security is built into the platform. Today, what we see HCI very popular for is, of course, VDI, databases, enterprise applications, but also almost about, and I think I'm going to say the wrong number. I won't say a number. A large percentage of our users are also running what we call remote office branch office workloads on HCI.
It's a very popular use case because, again, what happens in a remote office branch office is you need a scaled-down version of your data center into that branch office, which connects back to your data center. The form factor for Nutanix solutions is very uniquely applicable to those as well. What I was trying to say is that now if you think of the new edge environment, your older concept of remote office branch offices are also edge. Those are absolutely very valid use cases that can work on Nutanix. I don't know, Madhakar, if you want to add to it. Sorry, I'm kind of saying the same thing again.
Yeah. A lot of different dimension to it. For us, if you think about that edge, it depends on the number of different devices. Madhukar is 100% right for robo, but also there are devices that are miniaturized and sitting completely outside of a data center. For us, HCI is the infrastructure that allows you to create workloads. These IoT devices become an endpoint where you can run it, or you can even call it a runtime where you run it. Earlier, a couple of months ago, when we announced Clusters, we also announced a solution that enables you, which is for us, it's Karbon Platform Services, to take your application, a microservices-based application, and you can choose to run it to a different endpoint each time. This endpoint could be a public cloud. It could be, of course, a Nutanix endpoint as well.
You could also choose to run it on an IoT device as well. To bring it back to the question you asked, I think for us, the IoT edge is one of the endpoints where you run it. The HCI is the substrate that allows you to go create this application agnostic to the underlying layers from that perspective.
Thank you, Madhakar.
Great. Thank you. Thank you.
Operator, I just have one final question that was emailed into us. Monica and Madhakar from our friends at Cowen, they were wondering, does Clusters enable wider use of network microsegmentation for customers looking to improve security?
Yeah. Madhakar, you want to take that one?
Yeah. Microsegmentation is, so here's how I would put this. Clusters enable us to run the entire Nutanix stack on different public clouds, and it becomes agnostic to what bare metal that you're running in. Any product that is currently part of Nutanix that includes microsegmentation will also work identically on any of the other platforms that we choose to run. Now, having said that, there is obviously a lot going on with our product development piece as well. If you've heard our announcement, we're adding additional features like the ability to create virtual networks and so on. As we do it, I think the key takeaway there is it's added back to our platform, and that platform is now available to be running on multiple different public clouds.
Great. Thank you so much, Madhakar. I am going to turn it back to the operator. Thank you, everyone, for joining. We look forward to these each quarter. If you have any ideas for content on what we spend our time for tech talks, we are always open to hearing from you. I will turn it back to the operator.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.