The IT Melting Pot!

Well this is an interesting rumor… I’ve just waited until someone “big” would come and eat Nutanix which has set the scene around web-scale solutions!

Interesting article by Jared Rinderer, CFA, senior research analyst, Equity Capital Research Group.

Datacenter Wars: Cisco Prepares to Fire

Chambers’ Last Salvo. Cisco is actively surveying the battle landscape in the hyperconverged datacenter market. Mr. John Chambers, Cisco’s soon-to-be-retired CEO, will fire one last major barrage in the Datacenter Wars saga before retiring to be Cisco’s executive chairman and thus a battlefield overseer. Cisco’s interest in the hyperconverged market is fall out from VMware’s recent pressure on its parent company, EMC, to cease pushing Cisco’s software-defined networking (SDN) solution (Application Centric Infrastructure, ACI) inside of VCE for EMC and VMware-labeled customer accounts, EMC’s February 2015 launch of a midmarket converged system (VSPEX BLUE) that utilizes competitive x86 server (Foxconn) and networking (Brocade) products at the expense of Cisco’s gear, and EMC’s July 2013 acquisition of privately-held ScaleIO, a scale-out server-side storage software provider, for $250 million.

• The Weapon. Analyzing the hyperconverged systems market, Cisco would gain the most strategic value and long-term accretive revenue contribution with the acquisition of privately-held Nutanix, which is the clear market leader thus far. With a private company valuation exceeding $2 billion as of August 2014, Cisco’s purchase will come at a cost, but Mr. Chambers has always shown a willingness to pay to attain strategic datacenter infrastructure assets (enterprise value-to-trailing 12-month revenue multiple of 9.9x or $2.45 billion for Sourcefire in July 2013 and EV/Trevenue multiple of 12.0x or $1.2 billion for Meraki in November 2012). With only $3.2 billion of U.S.-based cash as of January 2015, Cisco will issue debt to complete the Nutanix purchase, which may be announced during Nutanix’s user/partner conference in Miami from June 8-10th.

From Allies to Enemies. VMware and Cisco were key allies enabling x86 server virtualization adoption, with VMware bringing its vSphere virtualization software platform and Cisco providing its UCS x86 servers and Nexus networking gear; however, this strong front began to erode when VMware outbid Cisco in its $1.25 billion acquisition of Nicira in July 2012. Nicira brought a viable software-defined networking platform (NSX) under VMware’s banner and which has now grown to be a formidable competitor in Cisco’s core networking market. Today, VMware and Cisco openly label each other as foes.

• Confederates. By acquiring Nutanix, Cisco gains a conspirator with a mutual adversary, VMware. For more-than a year now, VMware and Nutanix have been in numerous, highly-heated, public skirmishes. VMware is threatened by Nutanix’s one-stop shop for datacenter infrastructure and its potential to disrupt VMware’s objective of the complete automation of the datacenter. Nutanix dislikes VMware’s strategy tax (known as the “vTax”) and vendor lock-in agenda.

The Frontline. The integrated infrastructure software management and compute/server, storage, and networking systems market is bifurcated into two segments, converged and hyperconverged. The converged systems market was first to market and was trumpeted by Red Hat and VMware with various enterprise systems partners, including Cisco, Dell, EMC, Hitachi Data Systems, HP, IBM, NetApp, and Nimble Storage, for high-performance, large-scale datacenter workloads. Finding great interest and revenue generation…

Contiune reading here!

//Richard