Deconstructing The Datacenter (& Cashing In On A $100B TAM)

According to IDC, spending on converged infrastructure (CI) will hit $17.8 billion in 2016, up from $4.6 billion in 2012. While that is a sizeable chunk of change for a class of systems that deliver a combination of server, shared storage and network devices in a preintegrated stack (Gartner), it’s still just a blip on the more than $80 billion spent annually on server, storage and network datacenter hardware. Interest in CI suggests that mix of those numbers will change substantially, with 30% of the participants of a recent Zenoss study having already adopted CI, with another 51% actively considering it.

Although somewhat dated, Gartner data gives VCE, the Cisco-dominated triumvirate that includes EMC and VMware, the lion’s share of the CI market, followed by NetApp and Hitachi Data Systems. In February Cisco and EMC announced that they had surpassed the $1 billion annual run rate, and had shipped their 1,000th Vblock converged infrastructure system. Other big names involved include HP, IBM, Dell and Oracle.

At the other end of the CI spectrum is Nutanix, a small but growing provider of integrated datacenter infrastructure solutions with an annualized run rate of over $80 million. Headquartered in San Jose, the privately held company claims it is doing for the datacenter what the smart phone did for mobile industry. Just as the iPhone packaged communication, applications and entertainment into one easy to use handset, Nutanix has pulled off a similar feat for the datacenter by seamlessly combining compute and storage into a single, highly scalable box, stated CEO and founder Dheeraj Pandey.

The company uses the hypervisor as a substrate where everything now runs as a service. The storage controllers are virtualized onto the hypervisor next to the workloads and data, which eliminates the traffic from server to shared storage device. The Nutanix Virtual Computing Platform consolidates the compute and storage tiers onto a 2U appliance that accommodates four X86 servers, server-attached PCIe Flash and SATA drives.

The design behind the Nutanix approach is proven, said VP of Marketing Howard Ting. “All of these guys who run massive datacenters have been doing this for some time. What Nutanix has done is taken that and built a product for the masses. The masses can now get the efficiencies of Google.” All told, he sees the total addressable market as $100 billion annually.

Ting said the key trends driving this market include scalability, with enterprises wanting to be able to consume infrastructure almost like a utility. The great thing about cloud and SaaS is it’s a very elastic model for consuming IT services, and you get to pay as you go.

“The same thing applies on prem. You want to be able to rightsize that environment… to start small and scale as you grow.” This allows enterprises to consume infrastructure in more manageable bit sizes, he said.

The other major trend is software-defined. “I think we’re moving to a world where all the proprietary hardware in the datacenter is going away.” It won’t happen overnight, but that’s why the company believes you don’t need anything other than x86 servers.

The third major trend is dual virtualization platforms. Two years ago, it was all about VMware, but today you need to support VMware-plus (i.e. Microsoft, Oracle and open source), said Ting. “More and more enterprises will run mixed environments.

The fourth trend is the move towards hybrid cloud, which he believes will be a big challenge from a management perspective, while the fifth trend is flash, particularly server flash.

Convergence is a great idea on paper, especially if you’re looking to speed up IT deployment while also reducing implementation costs, stated 451 Research analyst Simon Robinson in a recent report on Nutanix. ‘But the devil is in the details – IT is already highly fragmented into silos, while purchasing cycles for the various constituent components also need to be in sync – and it’s often easier said than done. But more than this, IT buyers often need to be convinced that this is about more than ‘one throat to choke’ and that there are real technical benefits from a converged approach, especially in reducing long-term operational expenditures.’

With quarterly sales in the $20 million range, and 200 customers, including a dozen in the Global 2000,

Nutanix has come out of the traps with real momentum, said Robinson. ‘Gaining such progress in such little time is unusual, especially for what remains a fairly complex sale, and suggests its claims have real merit.’

Interest in convergence is undoubtedly building, especially for the new projects and initiatives around big data and virtualization, he said. However, the big question is whether Nutanix can maintain its initial momentum as the competitors – especially the IT giants – up their own respective games.



Author: Steve Wexler

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