Financially troubled Toshiba chose a Japan-backed consortium as the preferred bidder for its memory business, despite Western Digital’s continuing claims that no sale can happen without its SanDisk subsidiaries’ consent.
Toshiba’s board of directors disclosed this week the selection of a consortium that includes Innovation Network Corporation of Japan (INCJ), a government-supported investment fund, Development Bank of Japan (DJB), and Bain Capital Private Equity LP.
Western Digital claimed Korea-based chipmaker SK Hynix is also part of the consortium trying to buy the Toshiba memory business. SK Hynix would provide roughly half the financing to Bain, according to unnamed sources cited in a Reuters report.
Toshiba memory business spin-off
Toshiba split off its profitable chip business on April 1 and pursued a sale to cover huge losses associated with its struggling U.S.-based Westinghouse Electric nuclear power division. The company did not disclose terms of the proposed deal, but analysts estimated the value of the Toshiba memory business at $18 billion to $20 billion, according to published reports.
Bidders for the coveted Toshiba memory business reportedly included U.S.-based chipmaker Broadcom, Taiwan-based electronics maker Foxconn, SK Hynix and Western Digital.
Toshiba claimed the consortium backed by INCJ, DJB and Bain Capital presented the optimal proposal, “not only in terms of valuation,” but also with respect to “certainty of closing, retention of employees, and maintenance of sensitive technology within Japan.”
Toshiba said it would try to strike a mutually satisfactory agreement with the consortium by June 28, the date of its annual shareholder meeting. The company said it hoped to close the transaction by March 2018.
But Western Digital Corp. is fighting to block the deal. WD issued a statement claiming that Toshiba “continues to ignore” the consent rights of SanDisk, its NAND flash memory joint venture partner, and ongoing legal processes. SanDisk is now part of WD.
Last month, WD filed a request for arbitration and injunctive relief with the International Court of Arbitration, a Paris-based institution operated by the International Chamber of Commerce. WD sought to undo Toshiba’s April 1 transfer of their NAND flash memory joint venture interests to the Toshiba Memory subsidiary and prevent any subsequent transfer without SanDisk’s consent.
More recently, on June 15, WD sought preliminary injunctive relief in the Superior Court of California to prevent Toshiba from transferring their three NAND flash joint ventures until the arbitration case is settled. A hearing is set for July 14.
SUNNYVALE, California — NetApp today launched its second SolidFire-based converged product this month, this time in partnership with Cisco.
The FlexPod SF extends the FlexPod converged infrastructure reference architecture lineup that combines NetApp storage with Cisco UCS servers and switching. But instead of using NetApp FAS storage, FlexPod SF runs the SolidFire Element OS on Cisco rack servers for the storage piece of the infrastructure. FlexPod SF also includes Cisco UCS blade servers and Nexis Ethernet switching in the iSCSI scale-out block storage system.
NetApp acquired all-flash vendor SolidFire in February 2016. Earlier this month, it formally launched the NetApp HCI hyper-converged system built on SolidFire flash storage.
FlexPod SF is the first FlexPod product using Cisco hardware for storage. It is also the first time NetApp will sell SolidFire on hardware outside of the Dell-based servers that SolidFire has used since its launch in 2012.
FlexPod SF consists of a NetApp SF9608 storage node built on a Cisco C220 M4 rack server chassis with eight Samsung 960 GB solid-state drives, Cisco UCS B-series M4 blade servers and Nexus 9000 10-Gigabit Ethernet switching for iSCSI connectivity. A cluster requires at least four nodes and scales in one-node increments after that. The original four-node cluster scales to roughly 30 TB of flash storage capacity. The SF9608 nodes will only be sold as part of FlexPod systems.
FlexPod SF will beat NetApp HCI to market. The FlexPod SF systems will be available by the end of this month while NetApp HCI won’t be generally available until after October.
Blurring the lines between converged and hyper-converged
In some ways, the FlexPod SF and NetApp HCI have similar architectures. Both use FlexPod Element software and all-flash storage nodes. Both require four-node minimums. The major difference is all the hardware in FlexPod SF comes from Cisco, while NetApp HCI uses NetApp storage hardware and off-the-shelf servers. Both systems count on SolidFire APIs, multitenancy and quality of service to allow developers and business owners to manage them, often for cloud-native applications.
While NetApp got into the converged infrastructure market early with FlexPod, it is late to hyper-converged. Now it is counting on NetApp HCI to play catch-up in hyper-convergence as it did with All-Flash FAS (AFF) in the all-flash array market. But NetApp HCI probably doesn’t meet a purist’s definition of hyper-convergence because the storage does not run through a hypervisor.
Dave Hitz, NetApp founder and executive vice president, said the distinction between what NetApp calls a hyper-converged infrastructure and a converged infrastructure is artificial.
“What’s the difference? The real question is ‘What problem are you trying to solve?’” he said during a press event at NetApp headquarters to launch FlexPod SF. “In the early days of hyper-converged, it meant every node had storage and compute. The interesting thing about having every node do both is, it lets you have a lower entry point. But as clusters get bigger, the customer says ‘I need more storage but I have enough compute.’ Those items scale very differently, depending on the problem.
“I don’t think market analysts should be telling engineers how to do their jobs. They shouldn’t be saying things like, ‘You need to make sure every node can be both storage and compute.’ They should be saying ‘A good way to make the minimum configuration cheaper is to make every node do storage and compute’. But why are they calling that a different market segment? My personal view is that hyper-converged and converged will merge over time as a single segment.”
Hitz said customers who have standardized on Cisco UCS hardware and management would likely favor FlexPod SF while those who are not big Cisco fans would pick NetApp HCI. Support is another issue that separates the two.
“The legitimate concern with [traditional] FlexPod is it has hardware from Cisco and hardware from NetApp, and who do you call?” for support, Hitz said. “With the SolidFire FlexPod, all the hardware’s from Cisco. Does that make it converged or hyper-converged? I don’t even care. I’m not interested in having that discussion.”
Cisco has its own HCI product, HyperFlex, which means it will compete with NetApp on one converged platform while partnering on another. But NetApp and other storage vendors are trying to solidify their partnerships with Cisco in anticipation of the Dell EMC-Cisco vBlock CI partnership blowing up. EMC and Cisco have sold Vblocks with EMC storage and Cisco servers and switching since 2010 but the Dell merger brought EMC its own server platform to use in CI configurations.
NetApp claims it has sold more than $8 billion worth of FlexPod systems with more than 8,400 customers and more than 4,000 PB of storage capacity.
John Rollason, senior director of products for NetApp’s next-generation data center storage, FlexPod SF could bring NetApp and Cisco towards a true hyper-converged partnership. “It’s a step in that direction,” he said. “This is the first entirely Cisco hardware stack for a converged infrastructure.”
With FlexPod SF and NetApp HCI, NetApp is positioning SolidFire as the flash storage building block for next-generation data centers. NetApp has moved into second behind Dell EMC in all-flash storage according to market research firms, but most of its all-flash sales are AFF arrays. NetApp CEO George Kurian said he would like to double SolidFire sales over the next year.
Pointing out NetApp has added around 400 new SolidFire sales since the acquisition, Kurian said that’s around one per day. “Next year we want to close two SolidiFire customers a day,” he said.
Come July 1, FalconStor Software will have a new leader. And that leader will have fewer followers due to plans for a new round of staff reductions.
Storage industry veteran Todd Oseth will replace Gary Quinn as CEO at the struggling software company. FalconStor disclosed the change Tuesday, calling Quinn’s resignation “voluntary.”
Quinn became FalconStor Software CEO in July 2013 to try and stabilize a company that had been struggling due to pending fraud charges, poor sales and the 2011 suicide of founder and CEO ReiJane Huai. FalconStor revamped its data protection and management products under Quinn but it continues to suffer from losses due to declining revenue.
Oseth left his job as president and CEO of Intermap Technologies, which sells geospatial solutions for geographic information systems professionals. His resume includes vice president of the infrastructure software group at EMC Corp. for two years and chief operating officer at Fibre Channel switch vendor McData Corp. for almost two years. He was also CEO of ColdStor Data.
“FalconStor has been around a long time,” Oseth said of the 20-year-old company. “It has a good name and a good customer base. It’s in a bit of a lull right now, but that is OK.”
Actually, FalconStor Software’s name and customer base have seen better days. Its quarterly revenue has been under $10 million for each of the past eight quarters, falling to a low of $6 million in the first quarter of 2017. Quinn and his predecessor Jim McNiel both talked about how competitors would bring up FalconStor’s past troubles to scare off potential customers. McNiel resigned in 2013 after unsuccessfully trying to sell the company.
Oseth said one reason he decided to take the helm at FalconStor was because it provides “the same products I had at EMC. It’s going back into what I’ve done before. I was the EMC vice president of infrastructure software, which had Invista, EMC PowerPath, Virtual SRM and RepliStor.”
FalconStor’s FreeStor virtualization platform launched in February 2015. The company also signed a licensing and co-development agreement with Cumulus Logic that gave FalconStor Software exclusive use of Cumulus Logic analytics code.
FalconStor trying to find its financial footing
In May, FalconStor reported a cash flow positive first quarter for 2017, but that was due more to spending cuts than sales. The company’s revenues dropped 19% from its previous quarter and the first quarter of 2016. FalconStor did have an uptick in its FreeStor revenue, which came in at $1.6 million compared to $900,000 a year ago.
FalconStor lost $11 million in 2016 and $1.9 million in 2015. It finished the first quarter of 2017 with $3.4 million in cash, down from $21 million from the first quarter of 2015 and $11.4 million in the first quarter of 2016. Nasdaq has sent FalconStor Software a letter threatening to delist it from its stock exchange because it does not meet the minimum $1 share price and $35 million market cap. FalconStor shares opened at 26 cents today.
More spending cuts are coming. In the Securities and Exchange Commission filing about the CEO change, FalconStor disclosed that the board this month approved another workforce reduction plan. FalconStor intends to cut its employee headcount to approximately 90 by the end of 2017. This follows a series of reductions that brought FalconStor from 224 employees last year to 165.
FalconStor estimates the reductions will save the firm approximately $10 million per year. The company’s filing said it would cut direct sales resources and consolidate operations, while making customer support and development priorities when implementing the cuts.
Oseth said the company will assess its financial balance sheet in the near term, and he intends to have a plan in place within the first 90 days.
“There have been a number of reductions at FalconStor and it will be more than sufficient to move forward,” Oseth said.
Oseth said he plans to spend the first three months on the job talking to customers and channel partners to assess what is and is not working at FalconStor. One of the company’s main assets is that FreeStor can help customers migrate to the cloud, and it can do it from any storage device on the market.
“There is going to be a lot of legwork for the first 90 days,” Oseth said. “From a product standpoint, there is a lot of competition out there today.”
FalconStor was once a strong player in the virtual tape library (VTL) market, as EMC, IBM and other major storage vendors re-branded FalconStor software on their backup disk libraries. The rise of data deduplication hurt VTL and FalconStor, but Oseth said there is still life for VTL as a storage source in the cloud.
“People tell me VTL is dead. I’ve been told that for 10 years now,” he said. “It continues to be a big market.”
At its Pure Accelerate 2017 conference this week, Pure Storage gave a new interpretation to the term data warehouse.
A reported 3,000 analysts, customers and resellers gathered in a soon-to-be-demolished San Francisco warehouse situated near the city’s central waterfront. Festooned in Pure Storage orange and black, the horseshoe-shaped facility closed its doors for the last time when the conference ended June 14, capped by a celebratory concert by Snoop Dog.
Last week, work crews started to lay the blasting caps that would raze the World War II-era steel plate shop in moments.
Now Pure is trying to make disk storage as obsolete as the warehouse. One of the messages of the show was that flash is the future, particularly NVM Express (NVMe) flash storage.
“We chose an old warehouse because it’s a little irreverent, just like us. And we also did it to juxtapose old and new storage. We see ourselves as disrupting legacy disk,” Pure CEO Scott Dietzen said during his Pure Accelerate 2017 keynote address.
John Cosgrove, Pure Storage chairman and founder, was more blunt.
“Disk has no future; it’s just a matter of time. We are going to provide flash systems that will compete on cost with tape,” Cosgrove said.
Pure Storage executives fired a steady stream of volleys at legacy vendors, particularly all-flash market leader and chief nemesis Dell EMC. And Dell EMC fired back with a series of blogs during Pure Accelerate 2017 trying to debunk Pure’s claim of highly scalable storage. Dell EMC questioned whether Pure arrays can handle mission-critical workloads and criticized its NVMe strategy.
Pure executives shrugged off the criticism, noting that nine-year-old Pure Storage is on pace to crack $1 billion this year and expects to hit $2 billion by 2018. “We leave it up to customers to decide,” Pure CIO Yousouf Khan said.
There are no more warehouses lined up for Pure Accelerate 2018, which is slated to take place in Las Vegas.
Other tidbits from Pure Accelerate 2017
For all the talk about NVMe flash and NVMe over fabric these days, the transition won’t happen overnight. That’s because installing a new network is costly and messy, and most organizations don’t need the massive bandwidth increase yet. Still, storage networking vendors are ramping up preparations.
Brocade Communications Systems is fielding more and more requests from existing Fibre Channel (FC) users regarding the impact of NVMe flash, said Curt Beckman, a Brocade principal architect for NVMe over Fibre Channel. Brocade is in the process of being acquired by Broadcom.
“Customers are hearing a lot of hype about NVMe. We think there will be an explosion of NVMe storage for volumes on the back end, just like [what occurred] with SAS and SATA. But the 80% of the customers already on FC are going to want to use it as their NVMe fabric,” Beckman said.
The University of California Davis isn’t implementing NVMe now, but storage administrator Danh Duong is marking its progression. Duong’s team supports the UC Davis campus and resells services to other campuses in California’s university system.
“We have some campuses telling us ‘Give us the fastest storage you can. We don’t care if there is a price premium.’ And there would be a price premium,” Duong said.
Simplicity and ease of use are more important than ever. This refrain was echoed by a number of Pure customers. One example is Domino’s Pizza, which streamlined its digital business by replacing legacy storage with Pure Storage FlashStack converged infrastructure, which includes Cisco servers and VMware software. The pizza chain gets approximately 60% of its orders via its mobile app, up from 30% a few years ago, said Kelli Zielinski, manager of storage and compute at the pizza chain. Zielinski turned to a FlashStack converged infrastructure combining Pure arrays with Cisco servers and networking.
“We can’t always predict when the demand to our infrastructure is going to be impacted,” Zielinski said. “Traditional arrays were not keeping up with our peak issues.”
Enterprises expect vendors to deliver more for less. This one is isn’t exactly a revelation, although the advent of the cloud is leading some organizations to abandon the forklift approach. The World Bank Group switched to Pure after receiving a $20 million bill to upgrade its previous vendor’s storage, said Arthur Riel, a director of infrastructure, cloud middleware engineering and finance.
“A big part of my job is to save money,” he said. “It really comes home to you at the World Bank, where you’re not just trying to beef up the bottom line or increase the bonus pool. If I can save a couple million dollars a year in storage, I start asking, ‘How many schools can that build in Country X? How many water filtration systems can it buy in Country Y?'”
Like other vendors, Pure Storage is expanding to the edge. Pure Storage and Google introduced a prototype for Pure Edge, which combines Pure’s NVMe-based FlashBlade appliance with Google cloud storage and database software. The device allows rapid iteration of software for data analytics of sensor-based edge computing devices for use on oil rigs, windmills and other ruggedized environments. Pure did not give a timetable when Pure Edge would be commercially available.
The Rubrik Cloud Data Management platform has been beefed up with upgrades that are in line with the data protection startup’s mission to be a full-scale cloud data management platform.
Rubrik’s Alta software now supports Microsoft Hyper-V and Nutanix AHV hypervisors, to go with previous support for VMware. Rubrik also integrated its software with Oracle Recovery Manager (RMAN) and added support for instant recovery of physical SQL databases.
The Rubrik Cloud Data Management offering combines backup, recovery, replication, Google-like search, analytics, archival and copy data management under a single platform. Rubrik Alta protects workloads natively in Amazon Web Services, Microsoft Azure and private clouds. The company aims to make its software a full-scale cloud data management platform with orchestration and reporting.
Alta provides application-consistent snapshots and restores in the cloud, a single control plane for data protection services for native cloud applications and the ability to replicate data between clouds.
Microsoft Hyper-V support allows the virtual machine deployments to perform flash-optimized, parallel ingest for accelerated snapshots along with incremental forever backup, scale-out deduplication and data compression. Point-in-time recovery, as well as search and restoration of files, is also supported.
“This support for Hyper-V is the same functionality we have with VMware,” Rubrik CTO and cofounder Arvind Nithrakashyap said.
Nine upgrades in less than two years
Version 4.0 of Rubrik Cloud Data Management marks the ninth product upgrade since the Palo Alto, Calif., company started shipping products in 2015.
RMAN support allows Rubrik Alta customers to manage the backups from that application via a policy engine.
“Customers can now orchestrate application data across multi-hypervisors and cloud environments,” wrote Biswaroop Palit, director of product management at Rubrik, in a company blog post.
Rubrik Cloud Data Management software has a CloudOn capability for application mobility across the data center and cloud environments for jobs such as Test/Dev and disaster recovery.
The vendor’s software runs on a backup appliance that uses SuperMicro servers with flash and spinning disk, and has capacities that range from 28 TB to 120 TB. It runs the proprietary, distributed Rubrik Cloud-Scale File system.
The company recently raised $180 million in Series D funding round, bringing its total funding to $292 million. Rubrik CEO Bipul Sinha said the company has a $1.3 billion valuation and he plans to go public in approximately two years.
Dell EMC revenue from storage systems in the first quarter dropped 16% from 2016 according to IDC, a fall Dell EMC executives blame on a change in the vendor’s reporting calendar.
Dell EMC uses the Dell Technologies earnings calendar, which is different than EMC’s old earnings calendar. Dell’s first quarter finishes at the end of April, where EMC’s first quarter used to complete at the end of March. IDC compiles its worldwide storage tracker numbers based on the calendar quarter, with its first quarter ending in March.
So what’s the big deal? IDC is counting the same three quarters’ of sales for all the vendors and comparing results to the first three quarters of 2016. But Dell EMC executives say the first calendar quarter of 2017 had no end-of-quarter push for them. Savvy storage buyers know their vendors always make a special effort to close deals in the last month of a quarter, and Dell EMC’s last big push came in April – too late for IDC’s first quarter. Dell EMC cites that as a one-time excuse, so the vendor will have to come up with something else next quarter if sales continue to lag.
Dell EMC president David Goulden noted at Dell EMC World last month that the calendar change would skew IDC Q1 revenue numbers downward for his company, although it remained in the lead. Goulden repeated that during Dell’s earnings call this week. After IDC’s numbers came out Thursday night, senior vice president of marketing Sam Grocott explained how the changes in the Dell EMC revenue reporting calendar impacted the numbers.
“We don’t have that traditional close-of-quarter month counted in Q1,” Grocott said. “That’s a fundamental issue that we will get caught up on in Q2. We’ll just have the end-of-quarter show up in the first month (April). This was a one-quarter blip and will normalize going forward.”
The IDC report compares Dell EMC revenue from the first quarter of 2017 to the combined revenue from Dell and EMC last year.
Dell’s external networked storage systems revenue of $1.42 billion still nearly doubled second place NetApp‘s revenue, but NetApp shaved nearly 16% of market share off of Dell’s lead from a year ago. Dell EMC’s external storage market share of 27.2% slipped from 31.5% a year ago while NetApp increased from 12% share last year to 14%. Compared to the Dell EMC revenue drop of 16% year-over-year, NetApp’s $732 million increased 13.3% from last year. NetApp CEO George Kurian likes to brag that NetApp replaces an EMC system every day at a customer’s site.
Dell EMC’s networked storage market share was 32.6% in the fourth quarter of last year, more than Hewlett Packard Enterprise (10.2%), IBM (10.1%) and NetApp (10%) combined. Dell EMC stayed above 30% share in all four quarters of 2016.
IDC put the total networked storage market at $5.24 billion for the first quarter of 2017, down 2.8% from the first quarter last year.
HPE was third in the first quarter with $511 million and 9.7% share, followed by Hitachi with $449 million (8.6%) and IBM at $440 million (8.4%). All others combined totaled $1.68 billion – more than Dell EMC – for 32.1%. Only NetApp and IBM (up 2.7%) increased revenue year-over-year among the top five vendors.
Dell EMC’s total enterprise storage revenue – including servers – also slipped although it padded its lead a bit. Dell EMC’s total storage revenue of $1.97 billion was good for 21.5% market share, down from 25% a year ago. Dell’s total storage revenue slipped 14.6%. Second-place HPE fell even more, dipping 18.6% to $1.87 billion and 20.3% of the market.
NetApp, which does not sell servers, placed third in total storage with $732 million and 8% share. Hitachi with $460 million and 5% share and IBM with $455 million and 5% share followed. All others combined for 27% market share.
Overall, the total storage market dropped 0.5% to $9.17 billion. The decline among the leading vendors was even greater, but original design manufacturers (ODMs) that sell directly to hyperscale data centers gained 78.2% to $1.21 billion. That reflects a bigger problem for Dell EMC than its reporting calendar. It shows traditional storage vendors are losing business to hyperscale cloud-type data centers.
Dell EMC was the all-flash leader with 28% share but it’s 66% year-over-year growth in flash lagged the overall market gain.
Grocott said the new reporting calendar likely caused the share loss in flash, too. But Dell EMC does point to midrange storage as a legitimate soft spot in the first quarter.e still have work to do in midrange storage,” Goulden said Wednesday on the earnings call, and expressed hope that new releases of Unity and SC platforms launched during Dell EMC World would shore up that problem area.
Grocott said Dell EMC has made changes and “re-focused” its sales team around its midrange products – which also includes Isilon scale-out NAS – since the merger completed in September of 2016.
Top 5 Vendors Groups, Worldwide External Enterprise Storage Systems Market, First Quarter of 2017 (Revenues are in Millions
|Company||1Q17 Revenue||1Q17 Market Share||1Q16 Revenue||1Q16 Market Share||1Q17/1Q16 Revenue Growth|
|1. Dell Inca||$1,424.6||27.2%||$1,696.7||31.5%||-16.0%|
|3. HPE/New H3C Group b||$511.0||9.7%||$535.7||9.9%||-4.6%|
|Source: IDC Worldwide Quarterly Enterprise Storage Systems Tracker, June 8, 2017|
When technology executives discuss initial public offerings these days, they usually say how the goal has shifted from rapid growth to fiscal responsibility. In other words, investors want to see a path to profitability more than wild revenue increases.
That has particularly been the case in storage. The recent initial public offerings (IPOs) of flash pioneer Pure Storage and hyper-converged vendor Nutanix showed companies that grew revenue significantly often spent so much money doing so that they mounted hundreds of millions of dollars in losses. Because of the recent poor IPO market, investors started preaching that companies needed to pay more attention to the bottom line than top line growth.
Then along comes the Tintri IPO. Tintri filed its S-1 with the SEC last week to become a public company. Its finances look a lot like those of Pure and Nutanix — and Nimble Storage and Violin Storage before them — when they went public. Storage array vendor Tintri has grown its revenue and sales significantly in recent years, only to see its losses accelerate anyway. In Tintri’s case, it has lost $339 million since inception.
That means either investors have decided they don’t mind losses so much after all, or Tintri will have trouble raising the $100 million or so it is looking for from its IPO.
Tintri started shipping its VMstore arrays in 2011, but the bulk of its revenue and losses have come over the past three years. The Tintri IPO filing reports revenue of $50 million for its fiscal year ending Jan. 31, 2015, $86 million for the following year and $125 million last year. That comes to revenue growth of 73% and 45% over the past two years. But annual losses over that period were $70 million, $101 million and $106 million, showing that more revenue only produced greater losses. Tintri raised $260 million in five venture funding rounds to pay off most of the deficit.
As with Pure, Nutanix and other smaller storage companies, Tintri faces the problem of having to pour more money into sales and marketing than it generates from sales to compete with IT giants. Only in the past year has Tintri’s revenue exceed its sales and marking budget, which came to $109 million. But it pumped another $53 million into research and development. That is a small sum compared to Dell EMC, NetApp, Hewlett Packard Enterprise (HPE), Hitachi Data Systems and IBM, but enough to keep Tintri in the red.
Tintri IPO filing details spending increases
The Tintri IPO filing made it clear the vendor remains in growth mode, which means its expenses will rise.
“We anticipate that our operating expenses will increase substantially in the foreseeable future as we continue to hire additional employees, develop our technology and enhance our product and service offerings, expand our sales and marketing teams, make investments in our distribution channels, expand our operations and prepare to become a public reporting company,” Tintri said in its S-1 filing.
Tinitri’s revenue growth has come from its tapping into flash and enterprise cloud storage. It began selling virtual machine-centric storage for VMware customers. That has evolved into a private cloud platform through Tintri’s Connect services that include analytics, automation and self-service. To boost performance, Tintri added an all-flash platform in 2015. With the help of Tintri’s VMstore T5000 all-flash systems, the vendor’s average selling price rose from $111,000 to $160,000 over the past two years.
Tintri’s customer base quadrupled over the past three years to 1,273, while its employee headcount rose from 177 to 527 in that span.
If the Tintri IPO goes forward as planned, it will be in the same situation as Pure and Nutanix, trying to grow its way to profitability. Or it could end up like Nimble Storage, which sold itself to HPE after it became clear it would not reach its break-even goal anytime soon.
Recent Hewlett-Packard Enterprise (HPE) storage acquisitions will play a key role in “reengineering” the company, CEO Meg Whitman said.
During HPE’s earnings call Wednesday night, Whitman called out hyper-converged startup SimpliVity and flash array vendor Nimble Storage among a list of “strategic acquisitions in key growth segments.”
“These were all the right strategic moves for HPE’s long-term success, but they were not done in a vacuum,” she said. “We’ve been reengineering our company while facing challenging market conditions, including stiff competition.”
For now, 3PAR all-flash arrays remain the highlight of HPE storage. Whitman said 3PAR all-flash revenue last quarter increased 33% year over year compared to an overall 14% decline of HPE storage sales. That tells you HPE isn’t doing a lot of business with its other storage products, and needs Nimble and SimpliVity to fill gaps.
Nimble, which sells all-flash and hybrid flash and disk arrays, also brings cloud-based predictive analytics to HPE storage. “We are seeing a rapid shift to all-flash,” Whitman said. “We’re extremely well-positioned here given our 3PAR portfolio and recent Nimble and SimpliVity acquisitions.”
All-flash and hyper-converged systems are high growth areas that still have relatively low adoption with room to grow.
“With Nimble, we now have a complete world-class flash storage portfolio from entry-level to the high end in a market growing around 17% per year,” Whitman said. “Nimble also brings a simple user experience platform based on predictive analytics that we plan to roll out across our storage portfolio.”
CFO Tim Stonesifer said HPE flash revenue is still negatively impacted by NAND shortages but he expects that to “loosen up” in the second half of 2017.
Neither SimpliVity nor Nimble products have driven much revenue yet for HPE. HPE closed its $650 million SimpliVity deal Feb. 17 and its $1.2 billion Nimble purchase closed April 17. A Nimble product was part of an HPE storage launch last week, however. HPE said it would ship Nimble Storage Secondary Flash Array SF-Series as well as a new 3PAR StoreServe all-flash array and MSA entry-level hybrid flash array.
HPE is selling SimpliVity software on ProLiant servers. Whitman said the SimpliVity product line is more integrated than Nimble but she expects the weight of HPE to increase sales of both the new product platforms. Nimble research and development will merge with the 3PAR R&D team.
The 3PAR product line came to Hewlett-Packard in a $2.35 billion 2010 deal.
As for future acquisitions, Whitman didn’t list any specific companies or technologies she would like to add but gave general guidelines for HPE deals.
“We have to buy it right,” she said of HPE’s acquisition strategy. “It has to be complementary technology that can leverage our distribution channels.”
She said HPE’s first option is to innovate organically, and it is also funding startups through its Pathfinder venture investment group. HPE helps fund storage startups Cohesity, Coho Data, Hedvig and Scality.
“I’m not looking for venture returns there,” she said. “I’m looking for companies that further our strategy of powering hybrid IT, powering the intelligent edge and the services that we can weave into our solutions.”
Seagate this week launched its highest capacity 10,000 rpm 2.5-inch, 12-gigabit per second SAS hard disk drive (HDD), which includes a dash of flash. The Enterprise Performance 10K HDD is designed for enterprise workloads such as databases, online transaction processing, virtual desktop infrastructure, and file and print servers.
The new Seagate SAS HDD comes in 2.4 TB, 1.8 TB, 1.2 TB and 600 GB capacity models, and infuses 16 GB of flash cache to speed reads. Barbara Craig, Seagate senior product marketing manager of enterprise HDDs, said the Enterprise Performance 10K HDD also adds firmware-based advanced write caching that can improve random writes by approximately 60% over Seagate’s prior generation.
“It’s kind of a poor man’s SSD,” Craig said.
Craig said the flash cache makes the new Seagate SAS HDD three times faster than previous 10K drives without flash. The advanced write caching technology uses enhanced algorithms and 8 MB of non-volatile cache and media cache, she said.
The Seagate SAS HDD has a five-year warranty, a mean time between failures of 2 million hours, and supports the company’s ninth generation of magnetic recording technology and enterprise firmware.
Can HDDs hold off SSDs in enterprise?
The high-speed SAS HDD market tends to be one where enterprises consider flash solid-state drives (SSDs), but Seagate claims its new HDD would hold appeal for a range of workloads with enterprise users.
“They may be turned off by availability of flash right now. It’s hard to get, and the prices are high,” Craig said. “Maybe some small- to medium-sized businesses or even large data centers, the performance on the 10K drive is close enough, and the cost is that much more impressive for some customers.”
John Rydning, an IDC research vice president for HDDs, said he does not envision enterprise SSDs reaching price-per-GB parity with 10,000 rpm HDDs over the next five years. Rydning predicted sustained demand for 10,000 rpm HDDs for storage workloads where they provide “good enough” performance. He wrote via an email that 10,000 rpm HDDs continue to provide a “good balance of performance and value for several storage workloads.”
The new Seagate SAS HDD ships with a variety of different model numbers. The 2.4 TB HDD is model ST2400MM0129, without encryption. The self-encrypting model that supports the Federal Information Processing Standard is model ST2400MM0149.
The HDDs support Seagate’s FastFormat technology to enable customers to switch between applications with block sizes of 512 bytes and 4 KB.
The new Seagate SAS HDD is currently shipping to major OEMs such as Super Micro and Huawei for qualification, according to Craig. She said channel shipments will begin in the middle of August.
Nutanix’s success selling hyper-converged software depends largely on how well it both competes with and partners with the large server vendors.
Nutanix revenue beat expectations last quarter, after giving a disappointing forecast three months ago. Its revenue of $192 million increased 67% and smashed its guidance of $180 million to $190 million for the quarter. The hyper-convergence vendor still lost $112 million – up from $46.8 million a year ago – despite the increase in sales, but still has $350 million in cash and investments. Nutanix also had a higher forecast than Wall Street expected, guiding for $215 million to $220 million.
On the earnings call, Nutanix CEO Dheeraj Pandey said the vendor picked up 790 new customers in the quarter including 50 new Global 2000 customers. He credited OEM partners Dell EMC and Lenovo for helping it land bigger deals.
Nutanix executives spent much of the Thursday night earnings call discussing its relationship with the large server vendors who it competes and partners with.
Here’s a scorecard of Nutanix server relationships:
Dell EMC. The largest storage and server vendor is determined to be No. 1 in hyper-converged, and is looking to knock Nutanix from that perch with its VMware vSAN hyper-converged software and VxRail HCI appliances. Yet, Dell EMC also re-brands Nutanix software on its PowerEdge servers in a deal that Dell struck before it acquired EMC. Dell EMC XC Series appliances account for approximately 10% to 15% of Nutanix revenue each quarter. Nutanix did not give the exact figure for last quarter, but CFO Dustin Williams said it was below 15%.
“We compete and cooperate with Dell on a deal-by-deal basis,” Pandey said.
Nutanix revenue through Dell declined slightly last quarter from the previous quarter.
Lenovo. Lenovo doesn’t have a home-grow HCI product, and makes several vendors’ software available on its servers. Nutanix is its preferred partner, though, with a similar OEM deal that Nutanix has with Dell EMC. Nutanix executives said Lenovo sales rose last quarter, making up for the Dell declines.
“Lenovo is actually a great sign up for us,” Pandey said.
“Our Lenovo bookings increased sharply,” Williams said.
IBM. Nutanix and IBM last week said IBM would make Nutanix software available on RISC-based Power servers. Nutanix doesn’t have any revenue through IBM yet, but Depay said the deal had great potential.
“I think IBM could be dark horse,” Pandey said. “What’s interesting is, for the first time, a single control plane, a single data plane, a single hypervisor runtime can now span Intel x86 and Power microprocessor’s hardware.”
Cisco. Like Dell EMC, Cisco has its own HCI platform. Unlike Dell EMC, Cisco has no official partnership with Nutanix. But Nutanix and Cisco channel partners bundle Nutanix software on Cisco UCS servers. Depay said he hopes to turn Cisco into a willing partner, even if Cisco has its HyperFlex product.
“It’s perilous to predict what will happen in these situations,” Pandey said. “But one thing I’ve learned about the art of negotiation is that what was non-negotiable yesterday could probably become negotiable tomorrow.
“We’re hoping to have this process play out where Cisco understands what HyperFlex is, and Cisco also understands the value that we can bring to their rackmount servers. So I think there is something between us.”
Hewlett Packard Enterprise. Nutanix software is certified to run on HPE ProLiant servers, and sold on channel bundles similar to Nutanix on UCS. While Cisco has been mostly silent on Nutanix encroachment, HPE makes it clear it does not appreciate Nutanix piggy-backing on ProLiant. HPE marketing VP Paul Miller made that clear in a blog post titled, “Don’t be misled … HPE and Nutanix are not partners.” The blog urged customers to buy its SimpliVity software.
Nutanix executives said little about the HPE relationship on the call, except that it is early and they hope to build a relationship with HPE through successful channel sales.
Pandey made it clear Nutanix wants to provide its software on as many platforms as possible.
“We continue to build with ubiquity by offering customers’ choice of hardware, choice of hypervisor, and choice of public cloud providers for secondary storage, all managed by Prism,” he said. “Building an operating system is a journey and no more than one or two are successful each decade. It requires an immense focus in applications, interoperability, performance, security, automation and reliability and to make it all ubiquitous, that is location agnostic is the biggest engineering challenge.”