HPE Acquires SimpliVity as the Market (Hyper)Converges

acquisition.jpgAs you've probably heard by now, HPE announced this week that it intends to acquire hyperconverged infrastructure vendor SimpliVity. This is a definitively good move for HPE. The deal certainly isn't as big as Dell EMC, but it does have far reaching portfolio implications for HPE and its customers and it puts HPE in a much stronger position to take on Dell EMC. HPE now brings more value to the discussion and this aligns with their higher level strategy of focusing on “stack” value.

For IT professionals this is a certainly a win.  HPE is going to bring this to market with force and that will result in more competition, better support and improved buyer leverage.

Here are some of the basics as provided by HPE:
  • The deal is all cash, $650 million.
  • Since SimpliVity is private, expect the deal to close quickly—some time early in HPE's 2Q FY2017 (runs Feb - April).
  • Allows HPE to better participate in the high margin HCI market, which is growing much faster than other IT infrastructure segments.
  • HPE expects it to be accretive to earnings in the next fiscal year, post close.
  • HPE will leverage SimpliVity to accelerate its hybrid IT business.
  • SimpliVity has a strong install base—6k systems shipped and 1,300 customers—and has done a good job penetrating the data center thanks to its strong enterprise feature set.
  • An HCI appliance will be offered by HPE and branded HPE SimpliVity.
  • Will be sold by both storage overlays and general salesforce, and offered through the HPE channel.
  • They feel integration with OneView will be a huge enabler of their hybrid IT strategy—OneView providing workload automation and orchestration that leverages SimpliVity under the covers to provide data services.

There is one rub for customers and resellers: the impact to SimpliVity's hardware partnerships. Near term, expect no changes. Cisco, Lenovo and others will still be available with OmniStack. Longer term, don’t expect them to maintain these partnerships; it will be counterproductive to their strategy. HPE intends to leverage SimpliVity as a data services layer across their entire portfolio, starting with the HPE SimpliVity appliance. Their engineering focus will be on porting that functionality across other HPE products, and integration with StorVirtual (to cover both block and file in a software-defined manner). Supporting multiple hardware partner integrations would put too many cooks in the kitchen when developing the OmniStack road map. Focusing on the HPE integrations will help HPE deliver on the value of developing and offering a full stack solution - a win/win for customers.

The classic HPE committed channel partner will have a new opportunity here with a streamlined, simple go-to-market motion for the HPE SimpliVity solution. For channel partners and customers looking for hardware choice, they'll have to go elsewhere and look to vendors like Nutanix, Maxta, and Pivot3 to fill the void. This shouldn't be an issue for truly agnostic channel partners. 

Again, near term, this rounds out HPE’s HCI platform and will enable the HC 250 and 380 to get beyond the role of VDI Vending Machines (their description) and into the data center with a much more robust feature set. As HPE builds out more SimpliVity-based solutions leveraging its ProLiant server line it will be in a much stronger position to take on Dell EMC's VxRack and VxRail products.

SimpliVity business was only 40-50% ROBO/VDI use cases; the rest was enterprise. It is one of the few hyperconverged system vendors to penetrate tier-1 enterprise use cases. This should help accelerate data center adoption of HCI and gives SimpliVity technology the engineering and go-to-market investment it needs. The rest is wait and see. SimpliVity is a great fit for pretty much the entire HPE portfolio because it plugs in everywhere as a data services layer. It is an excellent match for HPE's server platform business.

IT organizations are undergoing digital transformation efforts to take advantage of technology to accelerate the business. Simple, agile, and on demand is the mantra of the day for IT—whether they build private clouds, subscribe to cloud services, or create hybrid environments that allow them to run workloads in the most appropriate place depending on performance, regulatory requirements, data sensitivity, or any other of the slew of things IT needs to consider when dealing with applications and data. HPE knows this and is marching down the hybrid IT path. Robust data management, as well as workload automation and orchestration, are the keys to making that happen. SimpliVity can take care of the data management layer, and OneView can help with the rest. It is now up to HPE to execute!


Topics: Converged Infrastructure