Nutanix Inc. co-founder and Chief Executive Dheeraj Pandey attempts to explain hyperconvergence at the company's San Jose headquarters.
Hyperconvergence may never be a household word, but in Silicon Valley, last year’s booming initial public offering of Nutanix Inc. has pushed more big tech companies to jump into the young technology in hopes that it is the next big thing.
Simply put — or as simple as the complex technology can be — hyperconvergence combines storage and computing functions in disparate systems through software on a single device, similar to the software-based virtualization movement sparked by VMware Inc. VMW, +0.89% a decade ago. Just as VMware’s software allows a single computer to host multiple virtual machines running different operating systems, hyperconvergence makes it easier to store and manage data spread across private servers and the public cloud from a single appliance, critical for companies that use a “hybrid” approach to the cloud.
“Everyone and their brother are either thinking about a hyperconverged system or building new ones,” said Richard Fichera, a Forrester Research analyst. “It’s a hot active area right now because it has a high value to its users.”
Just as VMware’s 2007 IPO and subsequent success pushed legacy enterprise-tech companies to jump into that field, last year’s Nutanix NTNX, +1.91% IPO put the spotlight on its pioneering concept of hyperconvergence and has attracted the attention of those same companies, which want a piece of a sector expected to grow into a $6 billion industry in the next few years.
“It is an extremely exciting space,” said Stefanie Chiras, vice president of power systems at IBM Corp. IBM, -0.18% “We are watching the space extremely closely…The growth rates are incredible.”
In January, Hewlett Packard Enterprise Co. HPE, +1.44% purchased a young company in the field called SimpliVity for $650 million. Storage appliance maker NetApp Inc. NTAP, -0.61% told investors in February it is working on a next-generation hyperconvergence product based on technology from SolidFire, a company it acquired in 2015 for $870 million. Cisco Systems Inc. CSCO, -0.36%which unveiled its own hyperconverged infrastructure in March 2016, said one year later that 1,100 customers had embraced its HyperFlex offerings in their first nine months on the market.
Nutanix, though, is the poster child for this new computing trend, having coined the term “hyperconvergence.” The eight-year-old San Jose, Calif., company was one of just a handful of tech IPOs in 2016, capturing investors’ attention with stunning revenue growth rates, a large and growing customer base and its vision to become a platform company.
Nutanix software is simply trying to make computing mirror life, the company’s co-founder and chief executive told MarketWatch in an interview at the company’s headquarters.
“A life analogy is housing or lodging,” Nutanix CEO Dheeraj Pandey said. “When I go travel for two nights, I rent a hotel. When I go away for a month, I will rent corporate housing. But if I move for three years, I will own a home.”
With hyperconvergence, companies don’t have to choose between those types of scenarios in computing power, which can be bought through on-premises servers or rented through public-cloud offerings, he said.
“There will be all sorts of different lifespans of owning and renting [computing power]. At the end of day, we are not as wedded to the idea of renting, as we are to converging the two. We have always been about converging.”
How 4D mapping could change the way we live and work
Mapping-software company HERE is owned by the biggest German automotive companies - BMW, Audi and Mercedes owner Daimler. HERE CEO Edzard Overbeek spoke to MarketWatch about the evolution of maps from two to three and, eventually, four dimensions.
Pandey noted that when the company was founded in 2009, the cloud had not really taken off yet, but that made his company’s technology popular with companies that were just starting to move to cloud computing.
“We had to start it ‘on-prem,’” he said, referring to computing systems or data centers on a customer’s premises, instead of in the cloud. “The large enterprises want the first step toward cloud…its actually a five-year journey.”
He noted that in public cloud systems, VMware’s software, which partitions parts of a server to run different operating systems, is not even visible to the user.
“Why shouldn’t it be the same experience in private cloud?” he asked.
So Nutanix built an enterprise cloud operating system that Pandey says can meld two data centers, one that is owned and one that is rented.
“You can drag and drop from one to the other,” he said. “That is where the world is really headed.”
Nutanix has recently suffered its first major struggles as a public company, tumbling 30% in the past three months thanks to a disappointing forecast that may be partly attributable to rising memory prices and the end of a post-IPO lockup, but is still trading about 20% higher than its $16 IPO price, with a market cap of about $2.7 billion.
US:NTNX
$20$30$40$50$10
For the large tech companies that are not offering public cloud services like Amazon.com Inc.’s AMZN, -0.38% Amazon Web Services and Microsoft Corp.’sMSFT, -0.08% Azure, hyperconvergence represents an opportunity to address the so-called hybrid cloud market. While cloud computing has become popular, many experts consider a hybrid approach will prevail in the end, as companies look to keep their most important or sensitive data on servers they own and maintain.
“Hybrid cloud — that is, cloud-style systems or infrastructures that run in private data centers but interact with public clouds like AWS and Azure — has become the methodology of choice for most enterprise customers,” said Charles King, an analyst with Pund-IT, in an email.
Many large tech providers were far too late to challenge for the cloud-computing market, since building up a public cloud service is a huge infrastructure expense and Amazon got quite a head start.HPE and Cisco, for example, have both recently abandoned their public cloud efforts as they eye a hybrid approach.
Don’t miss: Dot-com bubble 2.0: The cloud buildup
Even companies that have succeeded in offering public cloud services see value in hyperconvergence. Sid Roy, group program manager for Microsoft’s Windows Server group, said many customers looking to upgrade hardware find the cost to upgrade their storage systems is daunting, and look for a different approach.
“Enterprise service providers are very conscious about cost, where storage can be up to 60% of the data center costs,” Roy said. “If you are not ready to go to the cloud but you are thinking of lowering your storage costs, hyperconverged is a good way to go. …Hyperconverged is a key part of our private cloud strategy.”
The growth rate for the hyperconvergence market is potentially huge, with a 60.5% compounded annual growth rate projected for the next several years, according to market research firm Gartner Inc.
“We would call hyperconvergence the fastest-growing segment of the integrated systems market,” said George Weiss, a Gartner analyst. “We are forecasting it to be a $6 billion market by 2020,” compared with $1.2 billion in 2016.
As should be expected in the tech world, there are a raft of startups seeking to challenge Nutanix or potentially get gobbled up by the tech giants looking to jump into the sector. Cloudistics, an on-premises cloud infrastructure software developer founded in 2013, has raised about $16 million in venture funding; Atlantis Computing, founded in 2006, has raised $32.2 million from investors; and Pivot3, founded in 2002 by veterans of VMware and Compaq, has raised $253 million in venture funding, with its own software storage technology in a configurable, converged appliance.
With companies large and small nipping at its heels, Nutanix isn’t standing still, as it looks to eventually become a bigger platform, with networking and security next on its list to conquer.
“Hybrid becomes the new battleground,” Pandey said. “The aspiration is a platform for the whole infrastructure. There is no misconception that it will happen overnight. Think of AWS, they started in the 2006 time frame, it has taken them 10 years to get here.”
A lot could happen in the next 10 years to disrupt a profitable path for hyperconvergence, but if large enterprises do opt for hybrid-cloud systems as many expect, the hype for the technology could be justified.
Nutanix shares have lost 34% in the year so far, while the S&P 500 SPX, -0.08% has gained 5%.
Acknowledgement:https://goo.gl/eNwbsRBy Therese Poletti
Source:https://goo.gl/4BFhSz
No comments:
Post a Comment