What's Next For Nutanix, Darling Of The Red-Hot Hyper-Converged Infrastructure Market?

Ever since Nutanix launched its first products in 2011, the San Jose, Calif.-based startup has claimed its hyper-converged infrastructure technology -- some of which was developed by former Google and Facebook engineers -- would reshape the balance of power in the data center.

Now, many Nutanix partners are wondering: Is this the year the startup has its long-awaited IPO? Or will one of the enterprise vendors Nutanix is disrupting step up with an offer the startup can't refuse?

Most of the half-dozen Nutanix partners CRN spoke with this week believe an IPO is the more likely scenario. All agreed that with five rounds and $312 million in venture capital funding under its belt, and a $2 billion valuation, Nutanix's asking price would likely be more than what any of the logical acquirers would be willing to pay.

[Related: Dell Expands Nutanix-Based Hyper-Converged Infrastructure Line]

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In the meantime, Nutanix is focused on continuing the momentum it's gained in the enterprise, Steve Kaplan, vice president of channel and strategic sales at Nutanix, told CRN Tuesday.

Nutanix exited January on a $300 million annual bookings run rate and is seeing a growing number of Fortune 500 customers, according to Kaplan. VCE, the joint venture between VMware, Cisco Systems and EMC -- which is now majority-owned by EMC -- continues to be one of Nutanix's biggest competitive targets.

"We're seeing more and more diehard VCE customers starting to transition to Nutanix," Kaplan said.

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Nutanix used to tout its flagship product, which combines flash and hard drive storage running on commodity servers, as a way to deal with I/O challenges in virtual desktop environments.

Yet VCE customers that have dumped their Vblocks for Nutanix are finding they can run mission-critical Oracle and SAP applications using its technology, according to Kaplan. Basically, Nutanix can do everything Vblocks can do at a much lower price, he said.

"We take it to a whole new level by virtualizing workloads such as big data, private cloud, disaster recovery, among others," Kaplan said.

Nutanix isn't just taking customers from VCE, though. Jim Steinlage, CEO of Choice Solutions, a Nutanix partner in Overland Park, Kan., said his firm recently convinced a customer that was ready to sign a FlexPod deal to go with Nutanix instead.

Nutanix's product takes up much less rack space and is quicker to set up than Vblocks and Flexpods, said Steinlage.

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Steve Dowling, director of converged infrastructure at Sirius Computer Solutions, a San Antonio-based Nutanix partner that has worked with the startup for the past 18 months, told CRN that sales have far exceeded his initial expectations.

Dowling said Nutanix's technology is applicable for far more scenarios than just virtual desktops. "This product is much more sophisticated than a specific use case. It solves more than one problem," he said.

"Nutanix is the next wave of optimized infrastructure and will enable enterprises to compete effectively with Amazon Web Services, Azure, Google, IBM SoftLayer, Rackspace, and others, because they are changing the way you look at and operate infrastructure," said Jeff Guenthner, director of solutions architecture at CMI, a Mill Valley, Calif.-based VMware partner.

The hyper-converged infrastructure market is getting crowded these days, with VMware, EMC, Citrix Systems all in the game to some extent. Cisco Systems is also partnering with Nutanix's chief rival, Simplivity. Kaplan told CRN that all this activity "absolutely validates the model" Nutanix helped pioneer.

So what's next? Kaplan wouldn't comment on Nutanix's IPO plans, but partners told CRN they've heard Nutanix has been approached by several vendors about an acquisition.

So far, they said, Nutanix has shown no interest in being acquired.

"They're not planning on being a stepchild to the big enterprise vendors," said one partner of Nutanix. "They believe their technology is different -- and better -- than what's out there."