The closing of Dell EMC Sept. 7 will result in a company combining Dell servers, EMC storage and VMware virtualization. That should make it a natural powerhouse in hyper-convergence infrastructure (HCI), which combines servers, storage and virtualization in a box.
EMC’s main HCI product, the VCE VxRail, incorporates VMware’s Virtual SAN (VSAN) hyper-converged software and will soon use Dell servers. Jeremy Burton, chief marketing officer of Dell EMC, said VxRail has surpassed VCE’s internal sales forecasts since its February release and now is gunning for Nutanix.
It will be difficult passing Nutanix this year. Nutanix reported $114.7 million in sales for the first quarter of this year – the last quarter it disclosed in its filings to become a public company – and has consistently grown sales each quarter by close to 20%. But Burton said it’s just a matter of time until Dell EMC becomes the HCI leader.
“Our strategy is to be the market leader in hyper-converged,” Burton said during an interview at VMworld this week. “We consider Nutanix No. 1 today. Our goal is to get to No. 1 by the end of the year. We think it’s doable, although it would be a stretch. If it’s not by the end of this year, the worst case is the middle of next year. If we haven’t achieved our goal by then, we’re doing something wrong.”
Burton said after the Dell deal closes, EMC will replace the Quanta servers it currently uses for VxRail with Dell servers.
“Building a hyper-converged infrastructure is a natural leverage point between Dell and EMC,” Burton said. “It’s a server-centric architecture. Dell has a great compute platform, we’ve got the VMware software stack, and chunks of EMC software. It’s a nice collection of the assets of the various companies that we can put out the door as a single product offering.”
Besides the technology, Burton said another huge advantage over Nutanix is the Dell EMC sales and distribution model. Dell EMC already has the type of massive distribution machine that will cost Nutanix more than $200 million this year to build out – resulting in heavy losses despite its market leading position. Burton compared VxRail to XtremIo, which shot past smaller competitors’ all-flash arrays to generated $1 billion in revenue in two years on the market.
“With VxRail, if we get the product right and we get the messaging right, there’s no reason we shouldn’t be the market leader,” he said.
The twist is that Dell is also part of Nutanix’s distribution network. A Nutanix OEM partner since 2014, Dell sells Nutanix HCI software on Dell servers branded as the Dell XC Series. Dell renewed that agreement in June through 2021, meaning Dell Technologies will both partner and compete with Nutanix.
“The delicate balance here is there are a lot of customers who have bought the Dell XC Series and they want to buy more,” Burton said. “I think what the Dell team is trying to do is protect customer relationships. You never want a customer to be caught in the middle of a vendor battle. At least in this interim period, they’re going to carry Nutanix and we have VxRail and the customer is going to decide. We’re very careful not to get the customer in the firing line.”
Remember that strategy. You’ll see Dell EMC take a similar tact with Dell’s Compellent and EqualLogic storage arrays, which both compete with traditional EMC products.