Cisco tipped to buy 'dominant' STORAGE BADBOY Nutanix Jared Rinderer, a senior research analyst at Equity Capital Research Group, has claimed Cisco is about to buy converged infrastructure enfant terrible Nutanix. Rinderer reckons Nutanix is the dominant player in the industry, so is therefore the most likely acquisition for Cisco as it looks to make sure the EMC Federation doesn …
...however they don't offer a hyper-converged box (like Nutanix, HP CS200, Dell PowerEdge C etc).
The main focus of the UCS system is the blades, but that presents a problem in that the blades don't have much storage potential - knackering the chance of putting any significant storage into the blades. UCS rack servers could be used (much like the existing Dell-Nutanix products) but they then lose the advantages of the Nutanix-style form factor.
The Supermicro hardware is most likely in the short term - and given Nutanix's pricing there shouldn't be too much of a struggle in terms of maintaining margins while using someone else hardware. That said I have no doubt that Cisco could quite easily develop their own hardware platform for it in the long term.
Couple of thoughts...
- SimpliVity is no substitute for Nutanix. Cisco's been hooked up w/SimpliVity for some time now and would know it if they were. And, SimpliVity's critical dependency on it's proprietary FPGA implementation is it's Achilles Heel. Somebody at SimpliVity didn't get the memo -- "Software Defined Storage" means no proprietary hardware dependencies.
- Cisco is an early-stage investor in Atlantis and Stratoscale (probably others too). Cisco is doing all of this because they need to exert control over the hyperconvergence trend (meaning, they need to retard adoption). What happens to Cisco's very profitable LAN/SAN convergence strategy when SANs get hyperconverged into the virtualization tier? Goes up in a puff of hyper-smoke, no?
My guess is that this meticulously UN-sourced 'informed speculation' is a Cisco strategy ploy to freeze the market -- essentially it's a head-fake. Strategically, this looks exactly like what Cisco did with iSCSI via NuSpeed in the early 2000s. Cisco never had any intention of letting iSCSI become a data-center convergence standard -- but Cisco bought NuSpeed to freeze data-center adoption of iSCSI and take momentum away from the startups. This gave Cisco time to execute it's real play -- which was Andiamo and FCoE. The difference then was that Cisco could afford to buy NuSpeed ($400mil was pocket change for Chambers then). Today, actually buying Nutanix would cost real money, so in this case a speculative analysts leak is the next best (and less costly) thing.
Cisco will do everything they can to slow or 'contain' hyperconvergence...including buying companies in order to kill them. Like NuSpeed.
Nutanix is filing for IPO? No better time to get a bidding war started, to stimulate an alternative. Equallogic got bought by Dell under these circumstances, just before the planned IPO.
At these numbers, it's a 10x price / trailing revenue, a pretty high premium. Nutanix has strong execution, but a pretty weak file system team. As an alternative, Cisco could spend $11B and buy NetApp on the cheap, with $1B earnings and $6B in annual datacenter footprint; Cisco has a lot more leverageable assets than just their cash. NetApp may be over the hill, but aren't they worth 4x Nutanix, and couldn't you build some kind of hyper converged thing out of ONTAP?
Whether Cisco could do it or not is a separate question, but it's a practical certainty that NetApp needs to pay a visit to the strategy boutique and figure out what is going to keep them relevant for the next 10 years. It's been awhile since I heard any excitement over a new deployment of theirs. For that matter, I haven't seen many new deployments of significance in awhile....*
Karl P
*Obviously I occupy but a small space on this planet, so my viewpoint is necessarily constrained....
Can you imagine NetApp going HC .. after spending a decade cooking up Clustered Ontap (or whatever it's called these days)? Affordable, flash enabled x86 web scale would undermine everything that they hope to achieve with CDOT. They're still in the zone which says that they can win with what they have.
They could have made a proper play with software defined storage and they've had the assets for some time (Ontap Edge anyone) but they've simply not wanted to go there, probably because of the potential impact to their traditional business. And if I were Cisco - I'd be looking to the future rather than throwing my cash at a company that appear to be in reverse - or at least wait to see if they can turn things around.
The simple formula to determine if a transaction will occur:
You take the pre-deal sum of the equity positions of the people needed to sign on the dotted line to make a deal happen and you subtract it from the post-deal value.
If that number is equal to or greater the sum of (mortgage + retirement + kid's education(s) + weddings) then the deal goes through regardless of "what makes sense".
There are going to be a lot of "Two rocks decide to go for a swim..." deals in the next few years that will make a small group of people massively wealthy and leave 100s of thousands of people wondering who moved their cheese.
Why would Cisco bet against it's SDN strategy ( ACI ) being a hardware/software approach. This would send a message to the market that Vmware NSX is the way to go. Commodity boxes are good enough and the rest can be done in software.
From what I can see in the different approaches I would suggest Simplivity looks more alike a Cisco strategy HW+SW.
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