Partners 'All-In' On A 2018 Nutanix Software Offensive As Sales Continue To Surge

Nutanix partners are betting big on the hyper-converged pioneer as it shifts to becoming a software-centric company with the goal of expanding its total addressable market (TAM) in 2018.

"It is up to companies like us who are category creators to expand the TAM," said Nutanix CEO Dheeraj Pandey, in an interview with CRN. "This decision to now go all software is the next step in [our] direction around frictionless access … It's about increasing the access to our technology in the most friction-free manner."

Throughout 2018, Nutanix will adopt a software-centric strategy where the San Jose, Calif.-based company will focus intently on selling software. Channel partners are confident in Nutanix's ability to transition and see more revenue opportunities ahead with the strategy.

[Related: Nutanix CEO On Cisco's Hardware Problem, Dell's Dual Hyper-Converged Strategy And Why He Doesn't View HPE-SimpliVity 'As A Competitor']

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"Nutanix is a very hungry company," said Scott Priest, vice president and general manager for Data Center at Zones, an Auburn, Wash.-based Nutanix partner ranked No. 32 on the CRN 2017 Solution Provider 500 list. "For Nutanix coming out and showing their ability to compete at the appliance level, seeing the growth and adoption rate and acceptance of our customers, I don't have any reason to believe that they can't be successful in this software-first approach … I am very bullish on our growth with them."

Priest said Nutanix is Zones' fastest growing vendor within the data center in terms of sales. The vendor's software approach will give the solution provider better flexibility in how hyper-converged solutions are designed for customers.

"Having the software-centric approach allows us that flexibility of going in and having that Nutanix conversation across any platform or installation that a customer may be leaning towards. It's not an 'if this then that' conversation. It's a, 'what about this with that' conversation," said Priest.

Suzanne Gallagher, vice president of marketing at Insight, a Tempe, Ariz.-based Nutanix partner ranked No. 13 on CRN's Solution Provider 500 list, said the software offensive aligns with where the market is heading in a software-defined world.

"That's exactly where the market has been going and they want to be at the tip of the spear. It's great to see them making such strides in that," said Gallagher. "IT wants to be consumed in different ways and different businesses have different models that they need to consume … We're all-in on their approach."

"Nutanix is going to be successful. I'm not worried about them being successful," she added. "We're excited about the growth their having and we're having today."

For fiscal year 2017, which ended July 31, Nutanix sales grew 72 percent year-over-year to $767 million. Billings also increased 55 percent to $991 million in the fiscal year 2017 compared to the previous year.

In November, Nutanix reported first fiscal quarter 2018 sales of $275 million, up 46 percent year over year, while billings also increased by 32 percent.

Nutanix CEO Pandey said the software charge began about 12 to 18 months ago when his company started doing enterprise license agreements with some large customers.

"We said, 'Let's have them completely decouple hardware consumption with software.' They were saying, 'Software appreciates, hardware depreciates. I want to get our business going with you where I can buy all the software and get all the discounting up front, and then I can go buy hardware over time,'" said the CEO. "It was all about access. How do we make access to Nutanix technology frictionless?"

In June, the company rolled out new multi-cloud capabilities to its hyper-converged infrastructure software stack including a single software fabric that works across on-premises appliances, multiple vendors, and hybrid clouds.

Nutanix also unveiled Xi Cloud Services, which extends data center services to the cloud through the company's Prism centralized infrastructure management software.

"Xi is about, 'You can now control Nutanix with cloud services as well. You're not going to take sides between on-premise and off-premise, with owning and renting. So if you want to continue to own Nutanix, you can now download it from a website and install it on a server that we didn't ship to you, kick the tires on it, and then come back if you really want to consume this thing,'" said Pandey.

Priest said Zones saw a growth in service attach rates with Nutanix in 2017.

"We're seeing very strong services attach -- all the way from the assessment services on the front end, to the delivery and the deployment of the installation," said Priest.

To further accelerate its software offensive, Nutanix formed a strategic partnership with Google this year aimed at making it easier for workloads to migrate to Google Cloud.

"We love what they did this year and this move to software-defined," said Gallagher. "We're even more excited to see that growth and innovation continue in 2018."

Nutanix currently has over 3,000 employees and more than 7,800 customers worldwide. As of Dec. 20, the company's market cap stands at $5.68 billion.