Businessmodel of Pure Storage

Customer Segments

Pure Storage develops and sells a range of enterprise data flash storage solutions designed to assist commercial entities in their data management processes. The Company primarily serves medium and large businesses, identifying the following sectors as its principal target markets:

• Government, including state, local and federal government bodies and agencies, and public organisations;
• Education, including schools, higher education institutions, education technology companies, and educational brokerages; and
• Healthcare, including healthcare providers, hospitals and clinics, and medical device and equipment manufacturers. While these industries are the Company’s principal markets, Pure Storage also serves customers across the software and technology, energy, financial services, manufacturing, media, retail, and telecommunications sectors. The Company includes a number of high-profile companies and organisations among its customers, including Securities America, The University of Portland, Investec Asset Management, Spectocor, The Nielsen Company, SoftBank, and the City of Davenport.

Pure Storage’s principal market is its native US, which accounts for the majority of its business. The Company, however, serves an international client base, including customers across Europe, Asia Pacific, the Middle East, and Africa.

Value Propositions

Pure Storage provides value to its customers in the following ways:

• Its reliable and efficient solutions, with the Company providing flash storage solutions that store data more efficiently and reliably than alternative data storage methods, utilising proprietary technology and intellectual properties;
• Its accessible and easy-to-use offerings, with the Company operating multiple channels and providing always-on, self-managing, scalable, cloud-based solutions that can be set up quickly and easily, without the need for any technical expertise;
• Its specialist technical personnel, with the Company employing teams of highly-trained specialist technical and engineering staff across its enterprise, led by a team of experienced industry executives;
• Its reputation and industry standing, with the Company established as well-regarded data storage solutions provider, counting a number of high profile companies and organisations both among its customers and among its partners, which include household names such as Microsoft and Cisco; and
• Its international and industry reach, with the Company providing data storage solutions to a broad spectrum of commercial and institutional clients across multiple business sectors, and in jurisdictions across North America, Europe, Africa, the Middle East, and Asia Pacific. ### Channels

Pure Storage operates a website at www.purestorage.com, through which it provides information on its solutions, services, and industry focus. Pure Storage does not operate an online sales channel. The Company’s website, however, does provide an avenue through which customers are able to request an evaluation of their data storage needs and schedule a demonstration of the Pure Storage solutions. Once solutions have been provided, they are accessible as a cloud-based platform.

Pure Storage operates its own in-house sales force, which is organised by geographic region, through which it sells solutions and services directly to customers. These sales personnel operate out of the Company’s more than 30 offices spread across the Americas, Europe, and Asia Pacific, including in Sao Paulo, Taiwan, Sydney, Tokyo, Munich, London, and Milan.

While Pure Storage’s sales force is responsible for large-account management, global account coordination, and overall market development, the Company also employs a network of channel partners – including reseller and authorised service providers – to provide assistance in selling and marketing Pure Storage products and solutions.

Customer Relationships

Pure Storage does not sell its products on a self-service basis. It does, however, enable customers to request demonstrations and evaluations through the Company’s website. Any subsequent sales, however, are made via the Company’s in-house sales personnel, who are able to provide tailored services, consulting closely with customers to ascertain their individual needs and circumstances and provide solutions appropriate to their size and industry. The Company seeks to establish lasting ties with its customers and secure recurring business.

On its website, Pure Storage provides a range of online support resources to its customers, including data sheets and user guides. Customers can additionally obtain personalised responses to queries and complaints through the Company’s online support ticketing system, as well as over the phone. The Pure Storage website also hosts community forums and discussion boards, where customers can interact with one another and collaborate on problems.

Customers are also able to interact directly with Pure Storage through its various social media accounts, including with Facebook, Twitter, LinkedIn, Google+, YouTube, and GitHub.

Key Activities

Pure Storage provides an enterprise data storage platform, which principally comprises three integrated components, the Purity Operating Environment, comprising its flash-optimised software; FlashArray, comprising its modular and scalable all-flash array hardware; and Pure1, comprising its cloud-based management and support systems.

Pure Storage serves a range medium to large commercial and institutional clients spanning diverse range of business sectors, including cloud-based software and service providers, consumer web, energy, financial services, manufacturing, media, retail and telecommunications.

Its three principal markets, however, are education, government, and healthcare, which account for the majority of the Company’s business. Pure Storage’s flash storage solutions can be utilised in relation to database applications, private and public cloud infrastructure, virtual server infrastructure, and virtual desktop infrastructure.

Key Partners

Pure Storage works in conjunction with a wide range of companies and organisations in the development and delivery of its solutions. These partners can be categorised broadly as:

• Marketing and Channel Partners, comprising a range of value added resellers, independent software vendors, and authorised service partners that assist in extending the sales and marketing reach of the Company’s in-house sales and marketing teams;
• Technology and Software Partners, comprising a range of leading technology companies, software developers, application partners, infrastructure partners, and systems integration companies that assist in developing, delivering, and implementing Pure Storage’s portfolio of storage solutions; and
• Supplier and Vendor Partners, comprising suppliers of equipment, technologies, and services that support the operations of the Company’s operations enterprise-wide, as well as companies to which non-technical functions can be outsourced. Pure Storage includes a number of high-profile technology companies among its partners, such as Microsoft, Cisco, Oracle, Citrix, VMWare, SAS, SAP, and Symantec. The Company has also launched recent partnerships with Highstreet IT Solutions and Commtech Innovation Solutions.

Key Resources

Pure Storage’s key resources are its technologies and intellectual properties, its proprietary solutions and products, its IT and communications infrastructure, its sales and marketing channels, its partnerships, and its personnel – notably its technical staff.

Pure Storage’s intellectual properties are key to its ongoing activities, notably its core technologies. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Pure Storage’s name, including applications entitled ‘Logical sector mapping in a flash storage array’, ‘Scheduling of reconstructive I/O read operations in a storage environment’ and ‘Fractal layout of data blocks across multiple devices’.

Pure Storage leases a number of properties across the US, Europe, Asia, Australia, South America and Africa, including its corporate headquarters in Mountain View, California.

Cost Structure

Pure Storage incurs costs in relation to the development of its technologies and solutions, the maintenance of its IT and communications infrastructure, the operation of its sales and marketing channels, the management of its partnerships, and the retention of its personnel.

For the year ended 31st January 2016 Pure Storage recorded total operating costs in the amount of $482.62 million. This included research and development costs totalling $166.6 million, sales and marketing costs amounting to $240.57 million, and general and administrative costs totalling $75.40 million. These costs include the payment of salaries and benefits to its international workforce of 1,300 employees.

Revenue Streams

Pure Storage generates revenue through the development and sale of enterprise-level data storage solutions to customers across multiple industries, notably healthcare, education, and government. The Company also derives revenue from the provision of maintenance and support services under specific maintenance and support agreements, which involve customer support, hardware maintenance and software upgrades for a typical period of one to three years.

For the year ending 31st January 2016, Pure Storage recorded an annual revenue of $440.33 million, up considerably on the $174.45 million recorded by the Company the previous year. Product revenue accounted for $375.73 million for the year, while maintenance and support revenue accounted for $64.60 million.