HPE’s HCI Just Got Real: It Bought SimpliVity

It seems that HCI is a real product segment, and everyone wants in on the market. Cisco is already in with its Springpath partnership for the HyperFlex products. Nutanix is steadfastly going it alone with its successful IPO and a grand vision of future computing. Last week, HPE announced its acquisition of SimpliVity. Having worked with both HP and SimpliVity over the years, I have a few thoughts.

According to the announcement, the deal was completed for $650 million in cash. SimpliVity is reported to have taken $276 million in funding in four rounds, the last round having occurred in March 2015 at a reported valuation of $1 billion. This isn’t a great exit for the investors, but it isn’t a complete failure, either. Some people will not be getting the money they hoped for. Usually, it is the staff and investors who were in at the beginning who do OK. Later investors and staff may not find the payout to be so big. It is the largest acquisition by HPE since HP was split in two. The last HPE acquisition was SGI for $275 million in August of last year. Both SGI and SimpliVity bring a lot of great intellectual property to HPE.

I like the SimpliVity solution OmniStack. It is a simple platform for running virtual machines, with some great data efficiency features. The development mission was to simplify everything below the hypervisor, consolidating storage and compute while eliminating bolt-on performance and data protection products. Within the scope of that vision, the product works extremely well. The deduplication is very clever, deduplicating metadata as well as data. One of the challenges SimpliVity has had is that Nutanix has been looming over the HCI market. As the second player, SimpliVity has been wary of releasing information that Nutanix could use against it. I hope that HPE’s backing will give it the confidence to open up a lot more. No product is perfect, but smart customers are more likely to trust a product they understand than to trust a black box. For some people, one of the surprises with SimpliVity is that it has moved past single hypervisor support. The vast majority of SimpliVity systems are VMware based, but there is support for both KVM and Hyper-V as hypervisors. I hope the Hyper-V support can be turned into support for the Azure Stack on-premises cloud solution from Microsoft.

I also like HPE products. Down here in New Zealand, the Proliant product line was the server platform of choice for a very long time. HPE has a hyperconverged range in the HC 250 and HC 380. I’m not sure how much market it has gathered with these two in the short time since they were released last year. My suspicion is that the SimpliVity solution will replace the HC 380. SimpliVity normally ships as 2U dual socket servers, just like the DL380 that is used in the HC 380. It remains to be seen whether HP will require its own OneView software for management. Hopefully it will keep SimpliVity’s direct integration into native hypervisor management.

For existing customers, the main change will be having HPE doing support. HPE is a huge partner for all of the hypervisor vendors. That should translate to faster time to resolution for support calls. Of course, SimpliVity already had great customer satisfaction; hopefully, HPE won’t mess that up. I would expect a fairly fast transition to HP DL380 servers, replacing the Dell OEM hardware that currently has the SimpliVity OmniStack Accelerator Card and bezel applied. With the mass of HPE partners, there will be a huge sales force for SimpliVity. In addition, HPE is a preferred supplier for a large number of huge companies, which can now all buy SimpliVity HCI from their preferred supplier.

There is another interesting commercial angle. SimpliVity has partnerships with Cisco, Lenovo, and Huawei. All three are competitors to HPE in the server market. My guess is that Cisco will completely drop SimpliVity and forge ahead with HyperFlex. Hopefully, it will acquire Springpath to clean up that relationship. Lenovo and Huawei are well established, particularly in emerging economies where HPE may not be quite so strong. HPE may well choose to keep both of these partnerships for those markets where Proliants aren’t at the front of buyers’ minds.

What does this acquisition mean for SimpliVity staff? This will be fairly standard for acquisitions. The development team will be pretty safe; they have built a revolutionary storage platform and are needed to keep on developing. Field and sales teams may have a more difficult path. In the established markets, there is already an HPE field team that can handle the product after a period of transition. The people between development and the field are always the challenge in acquisitions: the head office product management, marketing, and training teams. If HPE retains SimpliVity as a unit, then my friends in these teams will be that unit. However, if the whole team is folded into the Proliant business, then there will be more change. Overall, I expect some of the SimpliVity team to make a move to another startup even if HPE wants them to stay. Many are not large corporate people and prefer the simplicity of startup life.

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