What a lovely upbeat article
Shame HPE will screw it by ripping out skills, cost and effectiveness
Start tarting up those CVs folks
In buying Nimble Storage for $1.2bn, HPE has signaled that it needs a complementary all‑flash array architecture to its 3PAR StoreServ arrays. The company is also getting the storage industry’s leading cloud-based management and predictive analytics capability, InfoSight, and with Nimble planning a hyper-converged offering, …
It is not about who is pioneering some niche technology --- Nimble, Violin Memory, Fusion IO. It is about who can survive and make profits on the technology. Other than that, it is just marketing hype. We have seen a couple of pioneers fall hard from their height because of unsustainable business model.
Given the constant churn of storage sales, marketing, engineering people from storage startups to goliaths I'm not quite sure how skills and effectiveness matter -- clearly this has been figured this out. Buy the storage startup, train the incumbent employees on whatever 1 or 2 small new things there are, drop all the acquired overlap.
Wait, you think anything is *new* in storage? Ah that's the problem then.
I wonder if the real value in buying Nimble isn't the arrays, but InfoSight. Not only does the acquiring company get InfoSight analytics itself, but years worth of metrics collected from those 10,000 customers.
Nimble made a blog post once about all the data they collect and analyze, and I wonder if the analytics and all that data might be the real diamond in the rough? Maybe the arrays and everything else is just icing on the cake.
So all of those Nimble customers who went out of their way to NOT buy from HPE, destroyers of innovation, will now be brought back into the fold. HPE need to work out why customers find their competition so compelling and stop buying storage companies to drag customers back into HPE land. Customers chose not to buy EVA so HP bought 3Par, customers started to leave and they bought Lefthand, customers started to leave and they've bought Nimble.
Get a clue HPE, customers want to buy storage from someone that's not owned by HPE!
Bitter much? Customers who chose Nimble did it because they thought it was the best product - better than EVERYONE else they considered! Or maybe cheaper? Or for whatever reason. But it takes a bitter and twisted HPE-hater to assume that every other vendor's success is down to an 'anything but HPE' strategy from customers. HPE were one of the few vendors that actually grew market share in Q4.
To be fair, over the past several software releases, Nimble has been dropping rapidly in quality. But still, they were probably the best option for SAN storage available.
No one shed a tear when Dell bought EMC since EMC was already yesterdays crap and VMware was already falling apart.
But HPE buying Nimble is a disaster since they probably are already trying to decide how many people to lay off to "reduce redundancies" since there's a storage nerd here and storage nerd there. They'll outsource support to India with a bunch of guys with a support script. As for knowledge for marketing, no one at HPE will sell Nimble since they barely understand 3Par and they kinda just figured that out.
I predict that Nimble will perform about as well under HPE as Aruba did... and frankly Aruba is pretty much dead now.
While I agree with some of your points, I disagree on the support side of things. Nimble's Infosight is an awesome platform, years ahead of what any other storage vendor has got. As others have already suggested, the Infosight support / analytics platform is likely to have been a big incentive for the HPE buyout.
Infosight's continuous polling of array info and cloud analytics has accelerated Nimble's growth and probably reduced their losses over the past 5+ years as it has removed the need for 1st and 2nd line support engineers. This is why when you call up Nimble today you quickly get through to someone who knows what they're talking about.
Who knows, if HPE extended Infosight to support other HPE products (Simplivity, 3PAR, - hell, maybe even their compute products) it might actually IMPROVE their support!
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This is a neat tuck-in acquisition by HPE that gives it industry-leading array monitoring and analytics, an extended flash array offering, and a route into public cloud storage for hybrid IT. Within two years, Nimble could be operating at a billion-dollar run rate and repaying HPE’s purchase price. This is by no means another Autonomy. ®"
So why the sensational subtitle of "Upstart got tired of grinding out sales against deepening yearly losses"????
The tabloid journalism headlines continue!
Anon, as I work for a company that positions and sells multiple solutions from multiple vendors.
Did the 3PAR acquisition ever pay off? HP paid $2.4 Billion for 3PAR.
This seems like a poor acquisition, when a company with the greatness of HPE could likely design and build a better mousetrap for a fraction of $1.2 billion.
Nimble was cool for a while with their hybrid tech. Their monitoring and analytics is nothing unique: others do similar. With the advent of flash, Nimble has no performance or competitive advantages over other traditional SANs. If they launch an HCI offering, they'll be 4+ years late to the market behind Nutanix and VX- rail, vmware VSAN, etc
"Did the 3PAR acquisition ever pay off? HP paid $2.4 Billion for 3PAR."
Yes very much so ask the old guard how 3PAR has paid off, but it just doesn't play where Nimble does. If it's high end performance you seek then 3PAR has that in spades.
As to HCI you might not have heard but HPE have a new play that isn't 100% dependent on a single hypervisor delivering all of the functionality.
So this is an opportunity, you just can't see it yet or purposely don't want to :-)
Nimble isn't spending a lot in R&D right now, so spreading this out of 2x, 3x sales as a result of selling to HPE isn't going to materially lower the cost of doing business.
Hardware component costs aren't going to be significantly lower: SSD is expensive even to HPE, due to supply/demand constraints.
So, HPE sells more, but without raising price, the line of business just loses more money ion each sale.
I don't see how makes sense, economically.
And I don't see what existing Nimble customers get out of this either.
In order to churn a profit Nimble will be trimmed of non-essential head count and replaced with an influx of outsourced contractors and existing HP infrastructure staff ; Remember - the buyer in any "merger" always has better people, better ideas , and knows what to do than the poor grunts in the trenches have been doing for years
What I don't get is why HP would pay $1.2B for a company that is not profitable and whose market cap was $750M. Seems like they overpaid by $450M, unless they just wanted to make a done deal and not have to worry about anyone bidding against them for Nimble. Although, maybe $450M is nothing to HP, not sure. That $450M could pay for a lot of employees and R&D though. Maybe HP just wanted to get their name back in the press.
The other thing I don't get is how HP expects to make Nimble profitable? If Nimble is losing $.30 for every $1.00 they make and has never turned a profit, how does HP buying them for more than they are worth fix that? Just seems like a bad investment on HP's part all around. Overpaid for a product that loses money with every sale. I don't see HP making $1.2B in incremental revenue just by having the Infosight code.
Maybe someone can explain.
doesn't make financial sense. deflection & desperation for a company that is bleeding market share across multiple lines (going by most recent numbers) to remain relevant.
maybe it makes sense to deflect for a while, to allow company to catch breath before next round of layoffs, next market share loss?
Assuming the deal closes Nimble now have a much bigger market open to them to attack and also a much bigger sales force with HPE's channel in play.
Nimble is a margin rich product that competes well in the low end and midrange, so SMB, Public sector smaller service providers etc, where good enough is just that. Meaning HPE don't have to get into the race to the bottom on every deal in that space and even if they do, they still make more than they would on a heavily discounted 3PAR. Personally I think you'll see the two platforms happily running side by side with some overlap, but with appeal to slightly different customer bases.
Oh yes and they also get Infosight and 3PAR arrays have been sending home thousands of data points from thousands of arrays for many years now.
This is explained by market dynamics. Acquisitions always attract a premium where there is a market (i.e. public information about the transaction, even if incomplete).
If HP offered market price, the publicly traded shares in the target would immediately jump to that price or higher, in anticipation of horse trading, competitive bids, and general betting by other actors. They would also attract other genuinely interested parties, who might make a competing offer and complicate and prolong the process. If the buyer offered 10% more than market price, the same would happen. The buyer has to deploy overwhelming force (40% premium here, iirc) to cut out speculators and other bidders and get the deal done quickly. It is worth paying for this.
The other dynamic is that the buyer has to use an investment bank to put the deal together, because there is operational knowledge required that the buyer doesn't have, and financial risk that must be underwritten, if only briefly. The bank is paid commission on the headline transaction price. They will inflate that price to the maximum plausible number, and although they will hesitate to intimidate, manipulate and short shrift their own customer to do it, that hesitation can be measured in milliseconds.
What utter rubbish 3PAR goes midrange and up, in what way does a hybrid or even all flash Nimble array compete with a 3PAR 8450 or even 20K series ?
They're completely different animals servicing different markets with some potential overlap in the middle. Nimble is a great fit for many of those price conscious mid range customers and if anything is going to cannibalize MSA and StoreVirtual, but it just doesn't have the scale or breadth of data services of 3PAR and coincidentally doesn't need them in that market.
I know people in most of the storage vendors. The last 2+ years have seen the harshest competitive market any of them can remember. Flash has solved half the storage problems but the other half takes something clever. Everyone now says they do 'analytics' but this is where Nimble has years of experience more than anyone else. I have no idea if someone else might spoil HPE's party by bidding higher (or even if that's possible) but InfoSight is so far ahead of what everyone else is doing if HPE get it at this price and don't mess it up it looks like being as smart a buy as when Joe Tucci bought VMware or Data Domain. Cloud and software defined everything mean the days of a storage company are pretty much over. Nimble hit 10,000 customers and are being bought. I doubt any other storage company will reach that number. A couple might get bought as HPE's competitors panic (like Dell buying Compellent after they lost out to HPE for 3PAR) and the rest look like heading down the Violin route. The world is different now. It's neither good or bad, it just is.
"Cloud and software defined everything mean the days of a storage company are pretty much over."
Completely agree, and it's why the company I'm currently at will be the last storage company I ever work for. It's just commoditized, and a race to the bottom.
I'm no NetApp fan, but I do think they were the last storage company that went public, stayed independent, and hit a billion in revenue, so I will give them props for that. That's something to think about, given how long ago it was. No other company has done that yet, although Pure is close.
I've been in storage in some form or fashion for about 20 years, but after this gig, no more. Thankfully, I've taken my skills in a direction that's industry agnostic, so once I'm done at my current company, I will never work for another storage company. Unless you're a founder, investor, or exec, there's just no money or future in it for a peon like me.
Disclosure NetApp employee - opinions and recollections are a product of my own grey matter and don't represent any official corporate position of my employer.
"Everyone now says they do 'analytics' but this is where Nimble has years of experience more than anyone else" - No .. not correct
Netapp was doing infrastructure analytics from its Autosupport database for longer than Nimble was ever around, and used that as a competitive selling proposition .. to be fair most of the analytics was more inwardly focused toward product operations for use in designing new products and helping to identify rare product faults across a large install base rather than outwardly focussed to the customers, and having something that was integrated into their administrative workflows, Nimble certainly got that bit right. Indeed if I recall correctly Nimble did some very targeted talent acquisition out of the NetApp performance and analytics teams, so its not surprising they were able to do something cool with a clean sheet of paper to work with.
Hi John, Dimitris from Nimble here (John and I have known each other for a long time BTW).
Actually Nimble's InfoSight and NetApp AutoSupport are only very vaguely similar. Sure, both rely on some data being sent from the system back to the mothership.
This might help everyone understand - if it's any consolation, Nimble in general hasn't done a great job explaining the true differentiation of InfoSight.
Nimble really came from SMB space where they were strong... They could not break into the big Fortunes due to HP, NTAP, EMC et al so this is like the Aruba move. Aruba was stalled due to large enterprises not giving them a chance, With HP, Nimble will get to the table to show what they can do...
If a storage vendor like Nimble can't break into the enterprise, then who can? What does it take?
The goal of every storage vendor is to get into the enterprise. The rest is just table scraps. I'm thinking that NetApp was the last storage vendor we'll ever see remain independent AND break into the enterprise. All the ones since then fail, get bought, or remain a niche player in the SMB space.
Begs the question of why the hell anybody even bothers to start up a new storage vendor. It seems that breaking into the enterprise in a meaningful way is an unattainable goal, so why bother? There's no (real) money in it anymore.
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