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HPE-Nutanix deal expands roster of hyper-converged options

The Hewlett Packard Enterprise-Nutanix partnership sprang up on two fronts, bringing more layers of coopetition to the world of HCI. But where does this leave HPE SimpliVity?

Hyper-converged rivals Nutanix and Hewlett Packard Enterprise have forged a dual-pronged partnership to merge their technologies in pay-as-you-go and bundled appliance options.

The HPE-Nutanix strategy marks a thaw in their relationship and adds an HCI route to market for both vendors. HPE will sell Nutanix Enterprise Cloud OS software and its built-in AHV hypervisor as part of the HPE GreenLake consumption-based IT model. Also, HCI pioneer Nutanix will sell its software packaged on HPE ProLiant and Apollo servers.

Customers who choose the GreenLake model can run Nutanix HCI software in their data center or in a colocation facility. HPE manages the servers and software, meters usage and bills customers monthly based on compute resources consumed when running applications.

For customers who want packaged appliances, Nutanix will sell systems built on HPE servers as another option alongside current Nutanix NX appliances based on Supermicro servers. Greg Smith, Nutanix vice president of product marketing, said Nutanix will provide more details about the new product name and specs closer to the third quarter of 2019.

HPE already sells HCI appliances, using technology gained through a $650 million acquisition of early Nutanix HCI rival SimpliVity in 2017. HPE's main HCI products are HPE SimpliVity 380 based on ProLiant servers and HPE SimpliVity 2600 based on Apollo servers.

Nutanix bills itself as a software company, and looks to partner with as many server vendors as possible. It has partnerships with Dell, Lenovo, IBM and others, but HPE has only treated Nutanix as a competitor until now.

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'Feud is over'

When Nutanix said it would court HPE channel partners in May 2017, HPE issued a statement saying, "There is no relationship between HPE and Nutanix. Customers looking for a supported hyper-converged solution on our DL380 are better served using our HPE SimpliVity product."

The new HPE-Nutanix deal signals a change of heart for HPE, which had only 5.4% of the HCI market for the fourth quarter of 2018, according to IDC numbers released in early April.

"I think the feud is finally over," said Ashish Nadkarni, vice president of IDC research's infrastructure systems, platforms and technologies group. "If you can't beat them, join them."

IDC put HPE HCI revenue at $105 million for the fourth quarter of 2018. Its 70% revenue growth from the previous year outpaced the total market growth of 57%, but HPE remains a distant third behind Dell/VMware and Nutanix. IDC said nearly 70% of HCI revenue is driven by software from VMware (38%) and Nutanix (30%).

HPE remains committed to its SimpliVity HCI family but wants to offer HCI choice, said Pradeep Kumar, senior vice president of HPE's Pointnext services group.

HPE also sells VMware Ready Nodes that include HPE hardware with VMware vSAN HCI software.

"We will continue to sell SimpliVity," Kumar said. "Nutanix gives customers another choice."

SimpliVity customers have to buy VMware licenses, while Nutanix users can use its built-in AHV hypervisor in place of VMware.

"Customers like a choice versus VMware," Kumar said. "It was getting extremely expensive and they want an alternative for virtualization. We want to be in both camps."

More HCI coopetition

The HPE-Nutanix partnership gives Nutanix a similar coopetition relationship with HPE that it has with HPE's server rivals Dell and Lenovo. Both of those vendors rebrand Nutanix software on their servers, while also selling competing products. However, those product sales go through Dell and Lenovo, while the Nutanix sales team will push the HPE-based HCI appliances.

Nutanix started off selling only its own branded systems, based on Supermicro servers. It still sells that platform under the Nutanix NX brand. Nutanix signed an OEM deal with Dell in 2014, resulting in Dell XC models bundling Nutanix software on Dell PowerEdge servers. That OEM deal survived Dell's acquisition of EMC, although EMC owned most of VMware and its vSAN software that competes with Nutanix.

Dell EMC's main HCI product now is the VxRail based on vSAN and PowerEdge, but it continues to sell Dell EMC XC systems with Nutanix software.

Lenovo ThinkAgile HX HCI systems integrate Nutanix software, but Lenovo also sells ThinkAgile HCI systems with software from VMware, Microsoft, Cloudistics and other partners. IBM, which doesn't sell x86 servers, does bundle Nutanix software on Power server-based HCI models.

One difference in the HPE-Nutanix deal is that Nutanix will sell the hardware appliances under its brand. HPE's Kumar said that was done at least in part to avoid confusion with the HPE SimpliVity appliances sold by HPE.

The HPE partnership leaves Cisco as the last major server vendor that does not have a formal partnership with Nutanix.

"We want to let the two sales forces have clear swim lanes," he said. "We wanted to keep the as-a-service consumption model under GreenLake and our sales people would sell that, and if someone wants to buy a Capex model, that would be sold by Nutanix."

The HPE partnership leaves Cisco as the last major server vendor that does not have a formal partnership with Nutanix, although common channel partners do offer Cisco UCS servers with Nutanix software.

"If customers have a preference for a particular server or hardware manufacturer, we work hard to make sure our software is supported on these models," Nutanix's Smith said.

The HPE deal follows Nutanix's low sales forecast for this quarter, issued during its March earnings call.

"This gives Nutanix another channel to sell their product," IDC's Nadkarni said. "This is Nutanix's way of saying, 'We are getting back into the game.'"

After giving weak guidance in March, Nutanix CEO Dheeraj Pandey said the vendor is focused on expanding its sales pipeline. He also said he expected more server vendors to partner with Nutanix.

"I think there's only two players [for hyper-converged software]," Pandey said. "A lot of server vendors are thinking about how to align with Nutanix or VMware."

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