New Relic aims to be your dashboard of the future

Promises to keep private and public and cloud software in synch

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I also wanted to ask you about some of the newer competitors in this market. For example, one that started around the same time as you, AppDynamics. They talk about offering a cloud, private cloud and on-premise option while you're cloud pure play. Is that a strength or a weakness for you?

We think that's a clear weakness to them. By trying to be all things to all people they are not being successful with their cloud offering. If a customer has security questions for New Relic, we address that with world-class security for our cloud offering. The on-premise product is by far the vast majority of their bookings and revenues and they're going to address security questions by [saying]: Use our on-premise product.

Then they’ve got scalability problems with their cloud offering because it's really just a different version of their on-premise offering, not designed for the kind of scale that we had to design for because it was our only route to market. We don't think you can be half-committed to cloud and be effective in that environment. I'm amazed at how many traditional companies you would think would be slow adopters for SaaS are now saying SaaS delivery is the most important requirement when they're looking at a product like New Relic. When they make it clear that's a requirement, we have an enormously high win rate against companies like AppDynamics.

You get a fair amount of coverage. When you look at this coverage, what is it that you wish people were writing about that they're not, or something that people misunderstand when they write about the company?

The biggest thing is software analytics is about so much more than APM. APM is the first product and an important product because it puts visibility into the code running on the server and it's a must-have technology. Healthcare.govdidn't have APM and that’s why it was failing. New Relic APM was brought in in late October and, within a week, 225 people were using New Relic and immediately started showing improvement and got better.

That's a great and wonderful success story. But [there's also the] story of us being this first best place to look on the customer experience, on mobile, doing analytics on what customers are doing on software. That's the dashboard of the future that replaces the old dashboard the old IT management companies were building. In the past, you'd buy a company that did network management, a company that does server management, a company that does CMDB and then I'll buy an APM company and then you have to put up with integrating all these on-premise products. In the digital world it's a slightly different set of stuff you need to be looking at and it all should be delivered from one cloud integrated platform.

That's what we've built and that's why we feel like we've got an opportunity that has immense potential. I've always thought that what we're aiming for at New Relic is to create a Salesforce-like company -- but for the software side, not for the people that talk to customers but the people who interact with the customers through software. That's what we're trying to build.

You recently announced a new pricing model for the cloud which I thought was very important for people to understand. Can you walk us through that and how it benefits customers?

We're very excited about it. It's unique. None of the competitors we've talked about have this. It right-sizes our pricing to the size of the cloud instance that our customers might be running on. Historically, New Relic and our peers in the space have largely priced on hosts or something like that where it doesn't take into account the size of the server. If you're running on five enormous boxes, it's the same price as if you're running on five very small EC2 instances. The customer would say: Hey, this feels like I'm moving from 20 large instances to 100 small instances. I don't think I should pay five times for what is effectively the same workload. Our sales team would work with the customer to figure out something fair.

That wasn't made clear on our website and it had to be done in a one-deal-at-a-time way. We felt like we were losing some opportunities with customers who did not even have that conversation with us and there was something lost in that lack of transparency. Now we have explicit pricing by instance type for every one of the major cloud providers that takes that into account. It also takes into account that these workloads are dynamic and what you're working on today may be very different from what you're running on tomorrow or an hour from now. And so that dynamicity is also a reflection of our cloud pricing model. We know this is going to be a very strong competitive advantage because our customers have been asking for it for some time and we're thrilled to be the first to be doing it.

Do you think for someone who is doing business with you today, is it a net positive or does pricing relatively stay the same? How does it work if you're already doing business?

We think it will be easier to deploy more broadly. If you're an existing New Relic customer today, chances are we've already built in something into the pricing that looks like our existing cloud pricing today. I don't think our effective unit price will change that much for customers but it will make it easier for them to think about and plan for putting New Relic everywhere.

Actually, going back to your competitive landscape question, I did want to take on the fact that there are other vendors in this space but we believe our biggest competition is non-consumption. It's the fact that there are servers running software that should be managed that aren't being managed today. That's our competition. We want to be in every application that has business value and we want to price for ubiquity and we think cloud-friendly pricing is a super important step towards that.

And those servers are not being monitored today because of fear of using a new vendor or because it's easier to do it internally or the price is too high to do it externally now? What is the obstacle you have to overcome there?

We've overcome a lot of the obstacles in that. We're on more servers, in our opinion, than any other provider because we're easier to use and because we have a great price point. But I feel we can go further down those dimensions. We've introduced New Relic Essentials at a lower price point to reach more servers. For some customers this application is important but not so critical that they want to step up to New Relic's Pro products. We're going to offer different price points for different levels of application criticality and maybe the maturity of the business.

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