The enterprise storage industry is heating up. Today, HPE announced that it has entered into a definitive agreement to acquire Nimble Storage. HPE will pay $12.50 per share, for a nice round purchase price of $1.0 billion. The move makes sense on a number of fronts for HPE. The first and obvious benefit is that it injects new life and technology into the storage portfolio. While HPE already had some nice storage offerings including 3PAR and the StoreVirtual lineup, HPE’s overall revenue took a hit last year, with quarterly revenue down over 10% year over year. Although these results were similar across many of the big storage players, it is time to act.
So what does Nimble Storage provide to HPE?
- A stronger mid-range storage portfolio: This is an obvious answer--Nimble’s predictive flash technology offers a scale-out hybrid/all-flash solution designed for the midrange environments. I assume HPE will position Nimble’s systems slightly below 3PAR, but Nimble’s ability to scale all-flash means the solution can grow to serve significantly sized workloads in terms of both performance and capacity. There will be product overlap, but that is not a bad thing.
- An all-flash/hybrid storage architecture with Nimble’s predictive flash: Do people buy HDDs any more? Well, yes they do, but the reasons to do so are eroding away quickly. Nimble’s predictive flash storage architecture offers HPE more than just a mid-range all-flash/hybrid storage offering. Nimble’s technology has the makings of an architecture that can be extended to deliver a broader portfolio of offerings in the future. In other words, Nimble’s technology has room to grow. One example is Nimble Cloud Volumes, a multi-cloud storage service for running applications in Microsoft Azure and Amazon Web Services (AWS). Ideally, HPE can help Nimble open up new roadmap opportunities.
- A service and support interaction that customers love with InfoSight: To say that customers love InfoSight’s predictive analytics capability may be to undersell it. The technology analyzes your system and can automatically detect issues before they happen. It reduces the number of support calls, and when a call needs to happen you are routed to an engineer trained to handle the complex questions. The open question for HPE is whether they will scale the service as Nimble deployments increase, and whether the InfoSight service will (or can) be extended to other offerings in the storage portfolio.
So that is the good, what is the bad? This is a question around execution. HPE now has a number of storage technology offerings, 3PAR, StoreVirtual, the recently acquired SimpliVity, and now Nimble. If you look at the storage industry as a grid of different offering types--for example, as comprising an enterprise storage system, an all-flash storage system, a hyperconverged offering, etc--you might see HPE as filling in the grid with a strong technology solution for each offering type. The challenge, of course, is that the list of storage offerings is fluid, always changing. As new offering types emerge, ideally you want your existing technology portfolio to evolve to address these new demands rather than being forced to buy yet another player. The level of success HPE achieves with its newly acquired assets will depend not only on how HPE increase its market share in the near term, but also on how well the technology portfolio it has assembled can adapt to the demands for the future. HPE is off to a strong start--now it will be interesting to watch how it plays out.