Who's king of the hyperconverged castle? Dell or Nutanix? It's not as clear-cut as it seems When IDC published its third 2017 quarter converged and hyperconverged infrastructure (HCI) numbers, Dell was in the lead. It had a 30.6 per cent revenue share, at $306.8m. Nutanix was second at $207.4m. But IDC's public release didn't reveal how many XC systems Dell had shipped, and as these are OEM'd from Nutanix then the …
Given that the majority of companies I have worked with have started their generalized virtualization journey in the old days with VMware on vanilla x86-64 servers, I would suspect the majority simply moved on to VMware's vSAN for their "hyperconverged" platform, mainly because it meant they re-used their old vSphere skills. So I suspect the figures for the HCI market are really the tip of the iceberg, with the DIY efforts using COTS servers and storage being the much larger part hidden beneath the waves.
Jonathan,
That's what I've seen. VMware admins taking over the storage management with vSAN, and ReadyNodes are the majority of the HCI market. IDC and Gartner seem to have woken up to this.
It reminds me a bit of the "All Flash Array Quadrant" that excluded HDS and 3PAR because they didn't have an F on the SKU and pretended that Pure was crushing everyone in flash shipments.
I would also question Cisco's numbers as I've yet to meet someone who paid for their HCI platform. It was always a revenue bundle deal with a UCS refresh so I think this is a bit like their FCoE revenues that were hilariously over-reported because every nexus port was a FCoE license sale!
probably the same reason why Cisco was never able to grow its server business: there were only so many network refreshes they could bundle UCS into and by the time they figured this out, the industry had caught up and surpassed UCS selling points (or negated them by running VCenter etc.)
Never able to grow their server market? Hrmmmmm....I htink that they are now in a statistical tie with HPE in blades. The slowing part of the market yes, but a far cry from never.
Also, Cisco passing HPE wouldn't surprise me....HPE is royally screwing things up with their Simplivity toy right now.
Cisco's main growth opportunity outside their own attach UCS to switch refresh sales strategy, was the VCE consortium, where EMC drove the main incremental sales efforts. Alas no one anticipated Dell swallowing EMC. Dell were never going to push UCS blades in vBlocks for very long, when they have their own offering to integrate.
Cisco are out in the cold. But, the VBlock sales have also diminished for Dell CPSD (VCE), cannibalised by cheaper and more commoditised HCI units.
HCI units will follow same path as x86 servers, a volume cheap product with declining street prices, as vendors compete for market share, and with decling margins that go with this. Nutanix et al should be concerned to build as much market share whilst margins hold up. Or until they also get swallowed by one of the giants. Any bets Who and When?
There is zero doubt that Nutanix's numbers are as real as they get when you add Nutanix + OEM as there is little room to distort those numbers.
Meanwhile, Dell/VMware/EMC and Cisco can legally distort their numbers through bundling. That is not to say that there are not many happy VxRail, VSAN, and HyperFlex customers. There are obviously many normal deals that have commenced without distortion. However, I have it on good authority (i.e. firsthand experience) that bundling techniques distort these numbers dramatically in favor of Dell/VMware/EMC and Cisco. Examples, VSAN can be included for free in a VMWARE ELA. Not illegal, but certainly a distortion. Cisco can lump in HyperFlex at no charge in a large UCS or Routing/Switch deal. Dell can add in VxRail into a VMAX or Xtremio or server deal. And there are numerous permutations to these offers.
In all of these cases, they can be shown to the customer at zero cost or massive discounts through the partner ecosystem; and then legally re-bucketed into whatever bins they want for accounting purposes. They can claim the customers signed off on the purchase order(which they did), and therefore, they paid X dollars for VSAN, HypeFlex, or VxRail. But the customers, in many cases, the end customers simply said yes to the incentive and not to the actual price put down in the books for the said bundled product.
This is the power of being a portfolio company and is a right earned by Dell/VMware/EMC and Cisco. But keep in mind, Nutanix looks this good without any of those distortions as they have no means to include their software in any deals by themselves without actual dollars.
Apparently the divide between techies without a business understanding (or quote reading skills) and those that do have a business understanding still exists. Because 4 people (who gave thumbs up to the previous comment) think that Nutanix can distort DRAM at .01 when the rest of the quote shows what they are paying for the block/servers as a lump sum.
The quotes show a total cost for the block/server portion of the solution that is typically in the 10's of thousands. Then each of the individual components that make up the server such as memory, HDD, SSD, etc. are listed as .01. There is nothing for Nutanix to hide or distort because they can't. The entire amount of the hardware is there as are the software and services costs. If a solution is $200K, then all the $200K is represented in the solution.
Meanwhile, I have seen entire VxRail, HyperFlex and VSAN licenses bundled in at no charge to larger solutions. And yes, it happens all the time - I've seen all three multiple times this year alone. If larger solution is $1M, then all three companies (Dell/EMC, VMWARE, and Cisco) can run building techniques where VxRail, VSAN, or HyperFlex are placed into the larger deal and positioned as free or with massive discounts. Then when those PO's are processed back to Cisco and/or Dell/EMC/VMare, the $1M can be re-binned into whatever internal categories they want. Think about it. A customer could refresh a VMAX, Data Domain, and some RecoverPoint licenses, then add in a pair of "free VXrails" as a promotion to the customer. The customer thinks they are getting them for free....they sign off to the partner. Then, the product teams and finance re-bin the $1M into various categories. Using the same example, $600K for the VMAX, $50K for Recoverpoint, $150K for Data Domain, and then *$200K* into the VxRail bucket. The customer got them for free and Dell/EMC/VMware got to count $200K of that revenue as a VxRail sale. Happens all the time....I've resold all 4 solutions, Nutanix, VSAN, HyperFlex, and VXrail. I know what I am talking about. Clearly Nutanix has a lot better mind share than VSAN, VxRail, and HyperFlex.
Hmm... so Nutanix can price a solution with a single price against a deal (and $0 against individual line items) and it's fine. But when Dell EMC or Cisco does the same, it's fudging the numbers somehow, purely because they may actually include other products in the same deal?
And RE: VxRail/vSAN/HF licensing... you do realise that they're not optional licenses right? The products don't function without them. In other words, they're "free" in the same way that AHV is "free".
Looks like the divide between marketing and cognitive dissonance is still...nonexistent.
PS: Nothing against Nutanix, but don't make it seem like they are somehow cleaner than anyone else.
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The late, great Lord Mancroft, once defined PR as "The art of arranging the truth, so that people like you". That is in essence what is happing here.
As an (ex) Dell EMC salesperson, the ability of Dell/Cisco etc to bundle portfolio deals across category, then wrap these (or parts of these) in 'eat all you can' complex enterprise license with HW deals, is legendary.
So, as stated above, Dell can and do give away stuff, BUT, they can only recognise legal reported revenues on sum total of customer invoice. ie the parts that are then allocated internally to products lines, cannot exceed total. There are strict reporting and audit rules on this.
However, reporting to market share analysts is slightly different. Straightforward HW/SW deals (and that is all Nutanix can do) are clean cut. Whether one vendor reports out separately their closely coupled SW, as separate-to-HW revenues is another dodge that the "We are a SW" company" giants have deployed for years, to make them look good against SW-only corps.
When you have multi-categories and do large enterprise deals, it is practically difficult for outsiders to pick apart. As long as they don't over-report, the vendors are free to feed back to the unit-based market share junkies, their own rearrangements of the truth.
In this faux world of IDC and Gartner et al, the vendors can cite a number of mutli-million deals, any of which may contain HCI components at zero customer cost, as an HCI-centric deal at the total overall value of that deal.
Put more simply, Dell ECM book a $50m global multicategory deal with SHCB bank, including universal forward licensing, that contains I unit of HCI licensing, and that can be a great big all-HCI deal, when reported to unit analysts. It could be a great mainframe deal also, or a great dedupe deal, or a great cloud deal (hello Oracle) if one byte hits a Cloud.
What they never report is how the sales force get their fill. The internal fights for category-to-sales quota share of these deals are never reported, but show the real truth behind the market share BS.
Nutanix don't have enough scale, categories with which to cross-subsidise, neither do they have sufficient global account experience or penetrations, to get up to these tricks. Yet...
Excellent points, AC.
I used to work for EMC back in the day and we always maximised software revenues on a deal at the expense of discounted hardware lines of business in every sale.
I guess that EMC wished to be thought of as a software company, or maybe - conspiracy theory hat on -
the senior execs were compensated on software growth numbers?
<<the senior execs were compensated on software growth numbers?>> YEP ..when the analysts though SW was profit/growth engine.
But its not illegal and no conspiracy, its just what Wall Street thinks it needs to hear.
...and they were also peaked on HW virtualisation, then OS virtualisation...when the analysts were lathered about that being profit/growth engine.
then bonuses came on Cloud revenues (whatever you take that to mean, Larry) when the analysts were frothing about Cloud as the $$s engine.
then Big Data, analytics, IoT etc, when the analysts were....there's a picture.
and so it goes. Slot in HCI wherever suits ;-)
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