“You have got to have a subscription business model just like Netflix, just like Adobe and just like Microsoft,” says Nutanix CEO Dheeraj Pandey. Customers subscribe and we stream innovation. We’ve been streaming a lot to our customers. We talked about Home Depot recently. They’re seeing a record demand in the pandemic and we really helped them consolidate their infrastructure.”

Dheeraj Pandey, CEO of Nutanix, a leading enterprise cloud technology provider, discusses how a subscription business model is key for survival and growth for technology companies:

Tech Companies Must Have A Subscription Business Model

As a company, we started almost ten years ago in a recession. The first killer workload for hyper-convergence was virtual desktops. People said Windows is dead. We said long live Windows. We went after federal customers and did an amazing job of building a very reliable company. Just taking a step back, we’re in the business of building cloud software. A lot of this comes down to the word software and cloud. We’re really thinking hard about being amorphous, being everywhere, being in the private data centers at the edge, and in the public cloud. 

Cloud is hard and you really need to make it simple, seamless, and secure. But most importantly, you have got to have a subscription business model just like Netflix, just like Adobe and just like Microsoft. Customers subscribe and we stream innovation. We’ve been streaming a lot to our customers. We talked about Home Depot recently. They’re seeing a record demand in the pandemic and we really helped them consolidate their infrastructure.

Cloud Is About Consuming Smaller Things

The best way to measure our performance is a cloud subscription currency. We started talking about it as of last quarter and we grew really well with annual contract value. If you think about it cloud is about consuming smaller things. Hardware was about seven-year entitlement and software is still five to seven years. We’re saying let’s go do three-year terms and one-year terms. You’ve got to start small. 

The recession is also the best time to go back with bite-size of what the customer really wants to buy. Annual contract value is the way of measuring our growth. It is also going to make this whole transition. I talked about Netflix and others and this whole transition unlocks amazing operational efficiencies for the company as well.