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Dell-Nutanix deal can be hyper-contagious

Dell and Nutanix took a lot of people by surprise this week when they disclosed an OEM deal that will result in Dell selling Nutanix hyper-converged software on PowerEdge servers. If this plays out like other emerging technologies have, you can expect more established storage vendors to partner with – or acquire – hyper-converged technology that bundles storage, networking, and virtual servers.

There was an erroneous report a few weeks ago that Hewlett-Packard was set to acquire SimpliVity, a rival of Nutanix. That was likely the result of rumblings in the industry about large vendors looking to add this type of technology. It’s no secret that EMC is working on its own hyper-converged system – Project Mystic – and most of the major server hardware vendors will have pre-packaged hyper-converged bundles running VMware’s Virtual SAN (VSAN) software.

‘This speaks volumes about the validation of our technology and our product,” Nutanix VP of marketing Howard Ting said of the Dell

When a hot storage technology starts gaining momentum, the major vendors always look to jump on the bandwagon. They sometimes develop their own, but it is easier to buy it from a startup that has spent years and hundreds of millions of dollars developing it. Big vendors looking to take a shortcut into hyper-convergence have a few options but not too many. Software-only hyper-convergence startup Maxta would make a good target. SimpliVity CEO Doron Kempel says his company is not for sale, but can be an OEM partner despite requiring a PCIe card to carry out its inline deduplication without impacting performance.

“We have the technological capability to do that,” he said of an OEM deal. “We can give a large server vendor functionality of our stack, which includes the software and card.”

Kempel insists that he has never discussed a sale, OEM deal or any other partnership with HP, however.

“I’ve never spoken with HP and never had any M&A discussions,” he said. “We have no commercial relationships with them. We’re not being acquired by anyone, not even for $2 billion.”

Taneja Group consulting analyst Arun Taneja said the Dell-Nutanix deal “puts hyper-convergence in hyper-drive” and predicts more deals. “Hyper-convergence is a totally tomorrow type of product,” he said. “It’s taking all these technologies that at one time were best of breed but now you can integrate them.”

Sanbolic CEO Momchil “Memo” Michailov predicted the Dell-Nutanix deal will spark a feeding frenzy of partnerships involving other types of server-attached storage software as well.

“This is classic Dell: take a high-value product, smash it into the channel and roll out a commodity offering,” Michailov wrote in an e-mail statement. “As an entry-level platform, this might be the right move for Nutanix and lead to a successful IPO down the line. From a broader industry perspective, the move is the first in what I expect to be a line of strategic plays to move billions of dollars in market value from storage back to the server layer. HP, IBM/Lenovo and others won’t be far behind, but the real enterprise market opportunity relies on software-defined storage players that can offer tier-one, scale-out capabilities.”

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