& cplSiteName &

HPE Buys SimpliVity for $650M in Hyperconverged Cloud Play

Mitch Wagner
1/17/2017
50%
50%

HPE is buying SimpliVity, a pioneer in so-called "hyperconverged" cloud servers, for $650 million, to help increase HPE's muscle in the hybrid cloud infrastructure market.

"This transaction expands HPE's software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers," said Meg Whitman, president and CEO of Hewlett Packard Enterprise, in a statement. The companies expect the deal to close in the second quarter of HPE's fiscal 2017, which ends in April.

Hyperconverged infrastructure combines compute, storage and networking into preconfigured systems that are managed by software. Conventional data center infrastructure separates compute and storage; combining the two is designed to simplify management.

Hyperconverged infrastructure gives companies "the cloud experience -- faster speed, better economics and ease of use -- without sacrificing control and security," HPE's Antonio Neri, executive VP and general manager of the HPE enterprise group, said in a statement.

SimpliVity, headquartered in Westborough, Mass., was founded in 2009. Its technology provides data protection and resiliency for improved backup and restoration, improved storage utilization and virtual machine efficiency to control cost and performance, always-on compression and deduplication to improve capacity savings by 90% on storage and backup and VM-centric policy-based management to simplify operations and enable data mobility for improved developer and end-user productivity, HPE says.

Nutanix, which competes with SimpliVity in the hyperconverged market and was founded the same year, had an IPO in September. (See Nutanix IPO Blesses Hyperconverged Data Centers and Nutanix Takes Hyper-Convergence Downscale.)

Heavy Reading Analyst James Crawshaw was skeptical of the acquisition.

The purchase price, $650 million, is well below the $3.8 billion to $3.9 billion purchase price rumored in November, Crawshaw said. It's also lower than the implied value of $1 billion in SimpliVity's 2015 funding round.

SimpliVity laid off staff, with $95 million revenue in its 2016 fiscal year, Crawshaw noted.

Nutanix shares were up 1% in after-hours trading, to $30.35. "This suggests investors are not overly worried that SimpliVity will be a greater threat under HPE's umbrella," Crawshaw said.

HPE stock was flat after hours, at $22.69, after dropping 1% during the day.

HPE already has hyperconverged products -- the HC 380 and HC 250, and HPE plans to continue offering those, while also making no immediate change to SimpliVity's product roadmap. It will continue to support that company's customers an partners, HPE says.

Within 60 days of closing the transaction, HPE will offer SimpliVity Omni Stack software qualified for ProLiant DL380 servers, and roll out additional technology on ProLiant in the second half of 2017, HPE says.

HPE declined to comment on what will happen to SimpliVity's CEO, leadership team and staff. They're beginning planning on that, a company spokesman said.


Want to know more about the cloud? Visit Light Reading Enterprise Cloud.


HPE estimates the hyperconverged market to be about $2.4 billion, growing at 25% compound annual growth rate (CAGR) and reaching nearly $6 billion by 2020, Neri says. (See HPE's Whitman Sees 'Inexorable March' to Public Cloud.)

Cisco introduced its own hyperconverged server in March. (See Cisco Storms the Hyperconverged Data Center.)

HPE is a leader in the cloud infrastructure market, with $1.25 billion revenue and 14.9% market share in the third quarter of 2016. Revenue was essentially flat year-over-year, and the company lost about a point of market share. Dell has a slight lead on HPE, with $1.3 billion revenue and 15.5% market share in the third quarter 2016, down in both revenue and market share year-over-year. Cisco Systems Inc. (Nasdaq: CSCO), meanwhile, is gaining both market share and revenue. (See Cisco Gains, Dell & HPE Lose on Cloud Infrastructure - Analyst.)

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud


CALLING ALL CLOUD, NFV AND SDN COMPANIES:
Make sure your company and services are listed free of charge at Virtuapedia, the comprehensive set of searchable databases covering the companies, products, industry organizations and people that are directly involved in defining and shaping the virtualization industry.


(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Featured Video
From The Founder
Light Reading founder Steve Saunders talks with VMware's Shekar Ayyar, who explains why cloud architectures are becoming more distributed, what that means for workloads, and why telcos can still be significant cloud services players.
Flash Poll
Upcoming Live Events
June 26, 2018, Nice, France
September 12, 2018, Los Angeles, CA
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 17, 2018, Chicago, Illinois
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
What VeloCloud Cost VMware
Phil Harvey, US News Editor, 5/21/2018
TM Forum Sea-Change Overcomes That Sinking Feeling
Iain Morris, News Editor, 5/17/2018
Has AT&T Inked a Deal With Google for TV?
Mari Silbey, Senior Editor, Cable/Video, 5/18/2018
Verizon CEO Says LA Is Second 5G City
Dan Jones, Mobile Editor, 5/16/2018
Animals with Phones
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed