back to article No-mere-hype hyper-converged systems clock hyper-growth

Analyst firm IDC's Worldwide Quarterly Converged Systems Tracker shows overall converged systems revenue for 2017's first quarter increased year over year but only because of bonkers growth in hyper-converged systems. The Tracker divides the converged systems market into four segments, and combines two of them in its published …

  1. Anonymous Coward
    Anonymous Coward

    Flexpod has been strong for a while now. At least two quarters of growth?

    With that said, looks like Cisco didn't just grow in converged. According to CRN they are killing it in hyper converged, too. No1 in shipped units through the channel, after only a year. That's quite impressive to be honest, why is HyperFlex so popular? I mean Nutanix has been around forever and they lose top spot in less than a year. So what's going on here?

    I am not sure how those shipped numbers translate into revenues, perhaps you can shine some light on that?

    1. Anonymous Coward
      Anonymous Coward

      Competitor, so anon.

      They've been giving it away. Literally. Prices for HyperFlex systems lower than the cost of just the hardware if you aren't buying HyperFlex.

      1. Anonymous Coward
        Anonymous Coward

        Keep telling yourself that. All this shows is how little you understand how business really works (that and the inability to turn a profit).

        There is no way a publicly traded corporation, subject to SOX and GAAP, can give away products on a scale of a competitor's entire business. How is that even supposed to work? Are you aware that no matter what a sales guy wants, controllers will prohibit deals with negative margins. Are you completely new to the industry, or any kind of business for that matter? Most likely you've never worked for a large company but only for start ups where giving away demo gear for free is just standard operating procedure.

        You either work for Nutanix or for SolidFire. Those guys have been really pathetic lately on social media.

        1. Lost_Signal

          Lies, damn lies and bundling...

          Full disclosure current VMware employee, but my posts are my own and this is my 2 cents on what happens...

          So when I worked in the channel for a partner we could sometimes get our storage partners to go negative on a deal if there was a business case made that there would be expansion in the next 6 months that would bring the deal positive (Sell array below cost, and then 87% discount vaporizes on expansion, or support renewal in year 4 spikes).

          My understanding of Hyperflex is unique in that you can't renew the hardware support without paying Opex pricing for the software (also the software MUST be licensed to run a bit like Meraki in that you can't keep running it without paying a renewal). In this case for customers who's TCO calculating skills involve looking at PURELY capex will be able to buy it below the cost of the hardware up front and make it up (The razor blade model) on renewals. On top of this there is so much profit in a Nexus 7K refresh that if you bundle it with a FI/5K/7K refresh you can sell a 50K Hyperflex bundle for 40K because it's bundled in with a 400K Routing and Switching refresh that's still full of profit and massage the numbers so that they get less discount if they don't buy the hyper flex with it. I'll also note that storage array vendors have been doing this for YEARS. Array renewal time? If you go with a competitor you'll miss out on 80% off on the backup software, or dedupe target renewal savings that we can't give you. Hell even Microsoft and oracle get in on the fun of making your ELA more expensive to renew if you don't agree to book some Azure credits so they can show cloud growth.

          I've spoken with a few Cisco partners, SE's and customers and in my (anecdotal experience) it sounds like aggressive bundling, or account seeding accounted for every booked deal I'd spoken with.

          I'm not going to argue that bundling is bad for the customer (More discounts, fewer vendors to talk to), but when the costs get hidden and fudged together like this eventually there is a reckoning If they realize for the TOTAL value they are getting it's not what they could do if they spilt it up and went best of breed or wholesale went to another shop. Either way, the biggest losers in these deals long term are always the small and up and coming guys who don't have anything else to bundle (Say your only storage, and don't have a VDI platform or a hypervisor) and don't have enough differentiation to show why a premium should be paid for "unbundling".

          1. Anonymous Coward
            Anonymous Coward

            Re: Lies, damn lies and bundling...

            Thanks for taking the time to elaborate. There are a few misconceptions in there and I would like to correct them

            * Storage vendors might be able to finance a deal with a possible follow up deal and it might have been possible to do this under old accounting rules but Cisco does not do that. I can't speak for what happened perhaps ten years ago but there is no such thing as a negative margin deal. Doesn't matter if it is a single SKU or the entire deal, the controllers will nix it during discount approval.

            * The HX Data Platform is a software subscription per controller and per year. You stop subscribing you stop using. During the subscription you are entitled to support and upgrades. This is not some crazy stuff, this is how software is sold nowadays. If the customer is no longer satisfied they stop subscribing and use the HX nodes (which are full blown UCS servers and not some weird appliances) with some other SDS, like VSAN, Pivot3, or MS Storage Spaces Direct for instance. This gives the customer flexibility to choose the optimal platform for their use case and it keeps Cisco on their toes to deliver features and support that make it worthwhile to keep subscribing. There is no real stickiness in the SDS layer, the customer can migrate quite quickly into another cluster, right?

            * Thank you for identifying as Vmware employee. However, I have to call you out on omitting your employer from the examples of companies that throw in free stuff or change their compensation model to speed up or enable market adoption of certain product ranges. VSAN was given away for the first several hundred customers. It was four years or so ago when VMW finally had VSAN dedicated overlay sales reps. NSX was given away like skittles because no-one wanted to pay and use it, the first thousand installs were either snuck onto the BOM as seeds or given away. And let's not even go down the route of VMW reps no longer getting commission for naked vSphere sales. In order to get paid they had to sell the VSOM bundle so they discounted it so hard it ended up being the same price like VSP EPL.

            I have no qualms with you guys, but please, VMW has been the -worst- offender in seeding products, you can't possibly call the kettle black. With that said, using your market position and revenue streams to enable market adoption of a product is just normal. Apparently it's only bad when the other guys are doing it.

            * As to HX being sold or seeded, it's selling very well. Perhaps not as well as VxRail (which IMHO has fatal design flaws, not in the product but VCE's engineering structure) but already as good as Nutanix, and that's after one year on the market. People are slowly starting to understand the fact that HX is not a separate product or appliance but merely an option to UCS. It will take a while for the implications to fully transpire but the picture is MUCH bigger than just software defined storage.

    2. Anonymous Coward
      Anonymous Coward

      I have heard first hand from customers Cisco is giving away Hyperflex with certain UCS purchases/bundles - basically making it cheaper to buy UCS with Hyperflex than UCS alone.

      1. Anonymous Coward
        Anonymous Coward

        Same thing that Cisco did with UCS early on and look where they are now.

        I am an industry insider so obviously anon. What you call giving away is called "seeding" and is limited to small clusters with one year of software entitlement. It gives customers the opportunity to fully test the solution for one year.

        Here's what you should be worried about. HyperFlex so far has shown 3-5x the performance of Nutanix and 10x of VSAN. Some clusters are wat faster than Pure Storage arrays. All this at a fraction of the cost.

        How are you going to sell Nutanix into an account if the customer can just keep his HyperFlex cluster running for $10k a year while being five times as performant than anything you can ship?

        1. Anonymous Coward
          Anonymous Coward

          If you remember this is also what they did with Whiptail and look where that is now: dead/defunct/cancelled/terminated...returned for a refund if you were unfortunate enough to have actually have spent money on and deployed it.

          This is also what they did with Simplivity and look where that is now. If you actually bought Simplivity on UCS you are essentially f'd while both Cisco and HPE try to sell you 2 more competing solutions.

          HyperFlex is Cisco's current HCI flavor-of-the-day and could just as easily be off the menu tomorrow.

          Yes I work for a competitor, but regardless....bottom line is the Cisco model of "meet in the channel" + "seed" otherwise known as: "give stuff away for free/let my customer guinea pig it and let's see if it shit actually works" is not really the level of risk that CIO's or enterprise IT folks are after or willing to bet their jobs on. And if they are, then they usually aren't around for very long...

          1. Anonymous Coward
            Anonymous Coward

            You'll eat crow before the end of the year. While you are still looking at point products, Cisco is launching a infrastructure platform that makes you look like Flintstones.

            Whiptail and Simplivity are all you got? You must be The BaconKing dude that works for SolidFire.

      2. Anonymous Coward
        Anonymous Coward

        "basically making it cheaper to buy UCS with Hyperflex than UCS alone"

        This is a patently false statement that shows you understand nothing about margins and accounting.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon