HPE and SimpliVity may be at church door
Could they marry? Should they marry? Will they marry? Are they marrying?
Meg Whitman’s big storage play could soon be realised with sources claiming Hewlett Packard Enterprise is to bid between $3.8bn to $3.9bn for Simplivity.
SimpliVity is the number two startup in the hyper-converged infrastructure appliance (HCIA) market which, in turn, is the strongest growth market in storage. Dell-EMC is the overall leader of the pack with its in-house VSAN/VxRail/VxRack systems and OEM'd Nutanix-based XC.
HPE has the in-house CS 200 series products.
The Simplivity kit uses FPGA acceleration and thus tactic matches HPE's use of ASIC acceleration in the 3PAR StorServe arrays. Should the deal go ahead then we might see HPE double up the 3PAR ASIC's functionality to provide SimpliVity acceleration as well. There is the obvious synergy of having SimpliVity products switch to using ProLiant servers. The existing CS 200 series kit could be quietly migrated to SimpliVity.
We have heard a general view that HPE tried to buy EMC in 2014/2015 with HPE chief executive Meg Whitman visiting the head offices in Hopkinton several times. However, a price could not be agreed and HPE was slow in deciding - a fact that gave Dell a stronger opportunity for its own, ultimately successful bid. This was followed by HPE splitting into the HP PC/printers operation and HPE. Then HP started clearing house with Enterprise Services and SW asset deals.
A near $4bn SimpliVity buy would be a sign of renewed HPE board and executive confidence after the disastrous Autonomy buy, and signal the company is again using its money to build rather than pay for severance package - tens of thousands of staff have lost their job in the last four years as the company cut its cloth to offset leaner demand.
Elsewhere in HCIA, Cisco is a potentially strong player with its HyperFlex system using OEM'd Springpath software, while NetApp has a system under development but is generally late to the HCIA party. If HPE buys SimpliVity then NetApp may revisit its buy-or-build HCIA decision and gain entrance faster.
Lenovo has various meet-in-the-channel arrangements plus a deal with Maxta for China. There has to be a possibility that Lenovo will now look for a closer relationship with an HCIA software vendor.
HDS and Huawei have in-house products and are lesser players in the market. IBM, having sold off its X86 servers has no realistic HCIA play.
Some of the HCIA startup remainers are;
- Scale Computing
As long as the HCIA tide rises their revenues should rise but they are now facing stronger competition overall and are exposed to a market downturn.
The most recent company-level information we received about SimpliVity was that it was looking for another funding round last month and preparing for an IPO. It would likely prosper inside HPE as it would have its selling efforts amplified by HPE's huge channel.
For Nutanix, its OEM deal with Dell is crucial in helping to fight off competition from rampant Dell-EMC VxRail/Rack/etc gear, on the one hand, and Cisco and HPE on the other.
Dell EMC converged systems president Chad Sakac can rightly say you don't punch your [XC/Nutanix-buying] customers in the face, but that doesn't mean you can't slobber all over them with VxRail/VxRack kisses trying to change their XC preference to a Vx-something one.
Nutanix cannot rest easy with its Dell XC OEM deal, and is continuing to aggressively develop its product. It is extending its one-click data centre automation capabilities to include network visualisation, security and orchestration, and expand its set of APIs.
HPE and SimpliVity did not comment at the time of writing. ®