Nutanix getting traction with server-storage hybrids

Nutanix = Volume Intel HW reseller

This looks like it was written when Nutanix did their recent press release on a new customer and also reads like vendor marketing. Anyone home at El Reg? I know the writers at The Reg are better than this.

Nutanix likes to compare themselves to Palo Alto Networks (PANW). Nutanix recruited several people including a VP from PANW. They look at Palo Alto's run rate and say wow, were tracking ahead of those guys and Palo Alto is valued at x billions...OK, but Palo Alto is selling a firewall appliance ( SW bolted to HW), and Nutanix is a volume HW reseller for x86 servers, that also has storage/compute clustering.

Key differences:

-- Nutanix has minimal IP compared to Palo Alto in the deliverable as a % of the sale. I bet overwhelming majority of the Nutanix revenue cost goes to the HW (Supermicro/Intel/Fusion io). Take the 1 customer that has over 50% of Nutanix rev, break this deal out and I would put my money, that they passed through very cheap intel.

--Palo Alto was not trying to sell servers, they have an appliance. Nutanix is flat out selling cheap, clustered intel servers to inflate business.

--Palo Alto has proprietary security platform. My understanding--Nutanix are reusing ZFS open source platform with value add from Nutanix. Seems like a bunch of companies are doing similar. Sort of like a new version of Red Hat business. But why just resell the license,, bolt the opensource to HW and take more rev but unfortunately more loss .

--Palo Alto Networks has a cool name. Nutanix sounds like someone wants to say Nutbag or Titanix a la Steve Mcnealy’s take on Itanium’s Itanic moniker,,and he was right.

The business looks like a pass-through reseller for Supermicro and Intel. Like a reseller selling at 0% markeup to show rev for an EMC, NetApp buyout.

Why are they duct taping the components to the server of the month deal at SuperMicro? I say duct taping and not bolting because how much HW engineering is happening here? Now you’re locked into commodity components, but on a different level with entry level compute and storage (and possibly a different server model each time you add to the cluster). And your traditional SW vendors will take even more on your socket licensing. How is this better than a traditional SAN vendor? Your tied to HW that is not designed or engineered to Dell or Cisco standards (including global support). Unless I am missing something, Nutanix is not designing HW (Someone please correct me if I am wrong). Aren’t they reselling ZFS(with Nutanix secret sauce), SuperMicro or cheap server of the week (with Shiny Nutanix Bezel) and latest greatest PCI cards (Fusion IO/Intel)? Nutanix appears to be a glorified HW reseller, even if they have a good software product. Is the SW that good? Sell SW then..

BTW, the tactic of selling pass-through HW as a software company causes all sorts of revenue recognition issues in the public company world (at a respectable, audited company, like EMC that does acquisitions).

Probably why EMC looked at these guys and crickets. I also believe they [Nutanix] know they need to get bought, because this game doesn't work with an IPO audit. When HP acquired Autonomy, the Software was being sold with HW to inflate rev for an acquisition. Looks like Nutanix took a page out of the Autonomy playbook.

Question is will they get bought, will the revenue run rate continue, are they profitable? Run Rate probably will continue and build, but at what loss? The VC team has a good model here, until it gets out on the street what the model is. If these guys are profitable, none of this matters and Nutanix is a running a great business. But I suspect they are selling cheap x86 servers at a loss, which is very easy.

I guess this boils down to the big question--are they profitable? company has been in business about 4 years with a product on the market about 2 years with $70+m in VC. This is like an SAT question that someone came up with at the VC. How many years can we build revenue at negative margin before we sell for maximum return?