The Art of Business at Its Finest

Along with HPE’s acquisition of Nimble Storage (see my article News from the Storage World), earlier this year HPE also acquired the second-place hyperconverged infrastructure startup company SimpliVity. I think HPE comes out way on top in these acquisitions, as HPE gives the appearance of setting the stage for vendors to dominate the hyperconverged market where the Art of Business will play out.

HPE has now acquired its own proprietary software stack. According to Antonio Neri, EVP and general manager of HPE’s Enterprise Group, the company will “bring together its best-in-class infrastructure, automation and cloud management software with SimpliVity’s industry-leading software-defined data management platform, to deliver the industry’s only ‘built-for-enterprise’ hyperconverged offering.”

It would appear that HPE’s intent is to start offering SimpliVity’s OmniStack software as a qualified and supported solution on the HPE DL380 Server series first, and then expand that offering in the second half of this year to, finally, a range of integrated hyperconverged systems based on the HPE ProLiant series of servers. This could mean that the current HPE HC 250 and HC 380 could possibly be phased out. If so, it could imply that this will be the last we see of SimpliVity’s OmniCube hardware.

I think HPE got the better end of the deal with the acquisition of SimpliVity. I did not think SimpliVity was looking to be acquired, and I really thought the company would have been more interested in an additional funding round or quite possibly an IPO exit. Either way, the $650 million that HPE spent in the acquisition was considerably less than the $3.8 billion price tag HPE was rumored to be considering as a bid for SimpliVity. As an interesting side note, wasn’t the amount EMC paid for VMware in 2003 around $650 million dollars also?

Now it has been announced that HPE was discontinuing SimpliVity sales on non-HPE hardware. This should not have surprised anyone, but it does bring about some interesting opportunities. It appears that SimpliVity’s current customers might be in need of new hardware in the near future, and some customers might not be in a position to switch current hardware vendors for any one of many reasons, political or otherwise.

Nutanix is looking at this as an opportunity that it is ready and able to take advantage of. Nutanix is offering all SimpliVity Cisco UCS customers a two-for-one special license deal if they switch from SimpliVity to Nutanix. Migration plans for Dell and Lenovo hardware SimpliVity customers are currently in development. A more aggressive financial incentive for the larger accounts will also be considered.

Nutanix’s reporting of revenue started in 2015 with reported revenue of $323 million. The company reported earnings of $604 million in 2016, posting a very impressive 87% revenue growth year over year, and estimated 2017 earnings at $855 million—a 42% estimated increase over 2016. Could the SimpliVity acquisition really end up helping Nutanix expand its footprint and customer base as well as exceed earning expectations?

Nutanix believes that its full-stack approach is the path forward for the company as it looks to present a viable alternative to the VMware stack used by other hyperconverged infrastructure appliance vendors. Nutanix is looking to extend its software-defined networking capabilities to include network segmentation as well as to strengthen its security offerings.

Nutanix also has its sights set on capabilities a little further up the stack, providing an offering for app orchestration and hybrid cloud management. Nutanix sees this as a greenfield area of the hybrid cloud that is ripe for the picking. On the hardware front, Nutanix is looking to bring an all-flash hardware to market very soon with NVMe SSD usage, and it is exploring 3D XPoint possibilities for the near future.

Finally, Nutanix is also working on a Rubrik’s software integration to extend a machine learning–based style of automation into the platform. Put all this together, and we have Nutanix’s desire to pull in as many upset SimpliVity customers as it can, as well as possibly looking to have a viable VMware alternative. So, it appears that the HPE acquisition has set off a string of events illustrating the art of business at its finest.

Share this Article:

The following two tabs change content below.
Steve Beaver
Stephen Beaver is the co-author of VMware ESX Essentials in the Virtual Data Center and Scripting VMware Power Tools: Automating Virtual Infrastructure Administration as well as being contributing author of Mastering VMware vSphere 4 and How to Cheat at Configuring VMware ESX Server. Stephen is an IT Veteran with over 15 years experience in the industry. Stephen is a moderator on the VMware Communities Forum and was elected vExpert for 2009 and 2010. Stephen can also be seen regularly presenting on different topics at national and international virtualization conferences.
Steve Beaver

Latest posts by Steve Beaver (see all)

Related Posts:

Leave a Reply

Be the First to Comment!

wpDiscuz