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Major storage and server vendors are angling for position in hyper-converged systems. But as has been the case for a while, the jockeying really is for who finishes in third place.
The battle for first and second is a tilt between Dell EMC subsidiary VMware and hyper-converged infrastructure (HCI) market pioneer Nutanix. Wells Fargo Securities, citing market estimates by analyst firm IDC, said in a research note those two vendors sold 70% of all HCI systems during the September quarter, or $1.5 billion.
The combined clout of Dell EMC and VMware give it control of nearly 60% of the market. Nutanix claimed a 35% share, with other vendors in scrimmage for the leavings.
Industrywide, IDC said overall HCI revenues surged 15% from the prior quarter, up 67% year over year to a record $1.7 billion.
The combination of VMware Virtual SAN (vSAN) software-defined storage and vSAN Ready Nodes led the way at $591 million, which equates to 35% share of the HCI market. The VMware HCI figures include software-only licenses for vSphere ($89 million). VMware reported for the October quarter that VSAN bookings grew 50% year over year.
Customer can get VSAN as a software-only license, or buy it packaged on x86 Ready Node servers from certified hardware partners.
Dell Inc. this month won approval from VMware shareholders to go public by buying up a tracking stock tied to the valuation of the virtualization giant. The financial maneuver is expected to enable Dell to start trading its common shares Dec. 28. and to keep VMware as a separate publicly traded company.
The Nutanix software-defined model, one year later
According to the IDC forecast, Dell EMC saw HCI revenue increase to $373 million, good for 22% market share. Coupled with VMware, that gives Dell Technologies control of nearly 60% of the market.
Dell EMC’s growth is tied to rising arc its VxRail flagship, which fueled a 109% increase in revenue to $184 million. Rack-scale VxRack HCI accounted for $80 million, representing year-over-year growth of 129%.
Dell also gained $124 million from sales of its XC Series, which bundles the Nutanix software stack on 14th generation PowerEdge servers. The Dell OEM deal provide 9% of Nutanix revenues during its recent quarter.
Nutanix created the HCI market by integrating compute, networking, storage and hypervisor software on a single hardware appliance. Nutanix rode the business model to an initial public offering in 2016, but last year ditched hardware to phase in a software-only licensing model, similar to the approach of VMware.
Aside from Dell, Nutanix has server deals with Cisco, Fujitsu, IBM, HPE and Lenovo. During the vendor’s last earnings report, Nutanix executives said subscriptions accounted for 51% of revenue
IDC said customers bought an estimated $585 million worth of Nutanix HCI gear, jumping 65% year over year. Direct sales of Nutanix NX Series accounted for $281 million in revenue. If you remove sales through third parties and OEMs, Nutanix’s share remained flat at around 35%.
Hewlett Packard Enterprise came in a distant third at $112 million, an improvement from $54 million from a year ago. The lion’s share of HPE’s HCI revenue stem from the SimpliVity product it acquired being in the market a full year.
Cisco HyperFlex sales of $78 million give the network and server vendor implied market share of 4.7%, down roughly half a point. Wells Fargo analysts characterized Cisco’s traction in HCI as “underwhelming.”
Netapp and Cisco have partnered on FlexPod CI for years, which uses Cisco servers and networking attached to NetApp FAS storage. NetApp is a latecomer to hyper-convergence. The NetApp HCI has been shipping about a year, based on SolidFire all-flash arrays it acquired in 2015. NetApp HCI revenue went from zero to $21 million last quarter.
Not mentioned are IBM and Hitachi Vantara. IBM uses its VersaStack converged infrastructure reference design to compete in the HCI market. Hitachi in September refreshed its Hitachi Unified Compute HC system, featuring an upgrade to NVMe flash.
The remaining $509 million in market revenue is credited to an assortment of unidentified vendors. The list likely includes niche vendors such as Datrium, Pivot3 and Scale Computing.