Nutanix’s success selling hyper-converged software depends largely on how well it both competes with and partners with the large server vendors.
Nutanix revenue beat expectations last quarter, after giving a disappointing forecast three months ago. Its revenue of $192 million increased 67% and smashed its guidance of $180 million to $190 million for the quarter. The hyper-convergence vendor still lost $112 million – up from $46.8 million a year ago – despite the increase in sales, but still has $350 million in cash and investments. Nutanix also had a higher forecast than Wall Street expected, guiding for $215 million to $220 million.
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On the earnings call, Nutanix CEO Dheeraj Pandey said the vendor picked up 790 new customers in the quarter including 50 new Global 2000 customers. He credited OEM partners Dell EMC and Lenovo for helping it land bigger deals.
Nutanix executives spent much of the Thursday night earnings call discussing its relationship with the large server vendors who it competes and partners with.
Here’s a scorecard of Nutanix server relationships:
Dell EMC. The largest storage and server vendor is determined to be No. 1 in hyper-converged, and is looking to knock Nutanix from that perch with its VMware vSAN hyper-converged software and VxRail HCI appliances. Yet, Dell EMC also re-brands Nutanix software on its PowerEdge servers in a deal that Dell struck before it acquired EMC. Dell EMC XC Series appliances account for approximately 10% to 15% of Nutanix revenue each quarter. Nutanix did not give the exact figure for last quarter, but CFO Dustin Williams said it was below 15%.
“We compete and cooperate with Dell on a deal-by-deal basis,” Pandey said.
Nutanix revenue through Dell declined slightly last quarter from the previous quarter.
Lenovo. Lenovo doesn’t have a home-grow HCI product, and makes several vendors’ software available on its servers. Nutanix is its preferred partner, though, with a similar OEM deal that Nutanix has with Dell EMC. Nutanix executives said Lenovo sales rose last quarter, making up for the Dell declines.
“Lenovo is actually a great sign up for us,” Pandey said.
“Our Lenovo bookings increased sharply,” Williams said.
IBM. Nutanix and IBM last week said IBM would make Nutanix software available on RISC-based Power servers. Nutanix doesn’t have any revenue through IBM yet, but Depay said the deal had great potential.
“I think IBM could be dark horse,” Pandey said. “What’s interesting is, for the first time, a single control plane, a single data plane, a single hypervisor runtime can now span Intel x86 and Power microprocessor’s hardware.”
Cisco. Like Dell EMC, Cisco has its own HCI platform. Unlike Dell EMC, Cisco has no official partnership with Nutanix. But Nutanix and Cisco channel partners bundle Nutanix software on Cisco UCS servers. Depay said he hopes to turn Cisco into a willing partner, even if Cisco has its HyperFlex product.
“It’s perilous to predict what will happen in these situations,” Pandey said. “But one thing I’ve learned about the art of negotiation is that what was non-negotiable yesterday could probably become negotiable tomorrow.
“We’re hoping to have this process play out where Cisco understands what HyperFlex is, and Cisco also understands the value that we can bring to their rackmount servers. So I think there is something between us.”
Hewlett Packard Enterprise. Nutanix software is certified to run on HPE ProLiant servers, and sold on channel bundles similar to Nutanix on UCS. While Cisco has been mostly silent on Nutanix encroachment, HPE makes it clear it does not appreciate Nutanix piggy-backing on ProLiant. HPE marketing VP Paul Miller made that clear in a blog post titled, “Don’t be misled … HPE and Nutanix are not partners.” The blog urged customers to buy its SimpliVity software.
Nutanix executives said little about the HPE relationship on the call, except that it is early and they hope to build a relationship with HPE through successful channel sales.
Pandey made it clear Nutanix wants to provide its software on as many platforms as possible.
“We continue to build with ubiquity by offering customers’ choice of hardware, choice of hypervisor, and choice of public cloud providers for secondary storage, all managed by Prism,” he said. “Building an operating system is a journey and no more than one or two are successful each decade. It requires an immense focus in applications, interoperability, performance, security, automation and reliability and to make it all ubiquitous, that is location agnostic is the biggest engineering challenge.”