Sources: Hewlett-Packard In Talks To Acquire Hyper-Converged Infrastructure Startup SimpliVity

Hewlett-Packard is in talks to acquire SimpliVity, a Westborough, Mass.-based startup in the "hyper-converged" infrastructure market, multiple sources with knowledge of the matter told CRN on Monday.

The status of the talks isn't clear, nor is it known how much HP would be paying for SimpliVity, whose flagship OmniCube product combines compute, storage backup and deduplication, networking, WAN optimization, and other enterprise technologies running on x86 server hardware.

SimpliVity has raised $101.5 million since its founding in 2009, with a $58 million Series C round last November. Investors include Kleiner Perkins Caufield & Byers, Swisscom Ventures, Accel Partners, Meritech Capital Partners, Charles River Ventures, and DFJ Growth, according to CrunchBase.

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An HP spokesperson declined comment, citing company policy of not responding to "rumors or speculation." HP is holding its annual Discover customer conference in Las Vegas this week.

A SimpliVity spokesperson also declined comment.

HP acquiring SimpliVity would be consistent with what CEO Meg Whitman often describes as a "new style of IT" which is being driven by the trends of social, mobile, cloud and big data. SimpliVity would also be Whitman's first major acquisition since taking over as HP CEO in September 2011.

HP already sells converged infrastructure from a portfolio that includes 3PAR storage, HP blade servers, networking gear and OpenView management software. HP's ConvergedSystems compete with VCE Vblocks and Cisco-NetApp FlexPods in the high end enterprise market.

What HP doesn’t have, and what SimpliVity would bring, is the ’building block’ approach of hyper-converged infrastructure, in which compute, storage and server virtualization all run on x86 hardware, with proprietary software running on top.

EMC is planning to release a hyper-converged appliance running VMware software by the end of the year, and Cisco has the wherewithal to develop one, too.

HP partners told CRN they believe the Palo Alto, Calif.-based vendor's backup and recovery product portfolio would get a major boost from the addition of SimpliVity, whose roots are in the storage industry.

"Some of the things SimpliVity is doing around compression and deduplication are very special," Jed Ayres, chief marketing officer at MCPc, a Cleveland-based HP partner, told CRN. "If HP can build that into some of the things they’re doing with 3PAR, that could give them a significant advantage."

SimpliVity -- and its main rival, Nutanix, which has raised more than $172 million in VC funding -- claim that hyper-converged is a less expensive approach to data center infrastructure than products like Vblocks and FlexPods. Nutanix recently launched a marketing campaign at attract Vblock customers.

In an interview last week, Mitch Breen, vice president of global sales at SimpliVity, said the startup is also positioned as an alternative to VCE Vblocks.

SimpliVity OmniCubes are "a much easier building block for customers to consume than Vblocks" because they run on commodity hardware and customers simply add more servers as they grow, Breen said.

"If customers are really interested in a massive return on investment, and reducing [capital expenditure] and [operational expenditure], then yes, we absolutely are an alternative to the legacy stack," Breen told CRN.

SimpliVity sells entirely through channel partners and currently has around 200 partners worldwide, many of which are interested in building their own managed services, Breen said.

"With our technology, they can sell services to their customers and build their own Amazon-like cloud," said Breen.

Breen joined SimpliVity in January and previously spent 20 years at EMC, where he was credited with building the storage giant's channel program. George Hope, former head of global channels at EMC's Isilon division, also joined SimpliVity in January as head of global alliances.

SimpliVity has close ties with VMware, whose relationship with HP rival Cisco Systems is growing increasingly acrimonious. Sources said bringing SimpliVity into the fold could help HP compete more effectively against Cisco.