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Nutanix’s Dheeraj Pandey To Michael Dell: HCI Market Share Isn’t Accurate

'Comparing our market share to any hardware company's share is comparing apples to oranges,' says Nutanix CEO Dheeraj Pandey in a statement to CRN.

Nutanix CEO Dheeraj Pandey said that Dell Technologies CEO Michael Dell boasting about hyperconverged infrastructure market share doesn’t represent an accurate view of the HCI market.

“Comparing our market share to any hardware company's share is comparing apples to oranges,” said Pandey in a statement to CRN. “The bottom line is that market-share calculations primarily driven by hardware just aren't relevant to Nutanix's business. Our software model gives customers complete choice, including the freedom to run our software on Dell hardware.”

Dell Technologies did not respond to a request for comment by press time.

However, in a recent interview with CRN, Dell said his company is in a “super strong” hyperconverged market position following the release of research firm IDC’s worldwide hyperconverged market-share data for the third quarter of 2019.

[Related: Nutanix CEO On ‘Executing’ Better Vs. VMware And HPE’s Importance]

“So we’re No. 1 and we’re more than twice the size of No. 2 [Nutanix]. We have our sights set on being three times, four times, five times, six times bigger than No. 2,” Dell said. “IDC measures the calendar quarter; our financial quarter is one month different than that. Our VxRail orders in the third quarter were up 82 percent year over year, even stronger than the IDC numbers reflect.”

Dell Technologies captured 35.1 percent of global HCI system market share in the third quarter of 2019, up from 29.3 percent share year over year, according to IDC. Nutanix placed second in worldwide HCI system share, capturing 13 percent of the global market, down from 16.6 percent share year over year.

Nutanix has made a strategic decision over the past two years to completely remove HCI hardware sales from the company in order to fully transition into a software and subscription company.

“We’ve moved away from selling hardware to selling software-only and today, we’re in the midst of further shifting our business to subscription, a model that's powerful for all of our customers and partners,” said Pandey.

To ensure that customers and organizations have more accurate view of the HCI market, Nutanix said it has been working with IDC to paint a more “accurate view” of market share, according to Tonya Chin, vice president, corporate communications and investor relations, at Nutanix.

“We worked with IDC to create and be included in a new software-only perspective (versus just a ‘software-centric’ one that still included hardware). It was a long process, but a necessary one— and we’re thankful to IDC for recognizing the need for an update,” said Chin in a recent blog post. “This shift to a software-only view represents a major milestone for us, but with our move to subscription now, it’s not the last time we’ll have to confront market-share complexities.”

Although IDC has yet to implement an HCI software-only market-share perspective, it does report market data in terms of the owner of the software providing the core hyperconverged capabilities. VMware, which is part of Dell Technologies, captured 38 percent share of worldwide HCI software in third-quarter 2019, up from 34.8 percent share year over year. Nutanix came in second place at 27.2 percent share, down from 33.7 percent share year over year, according to IDC.

Chin said IDC’s software market share in terms of the owner of the software providing the core hyperconverged capabilities includes forms of hardware sales. IDC did not respond to a request for comment by press time.

“For example, the hardware values that the IDC report associated with Nutanix software varies significantly by hardware provider. For every $1 of HCI software sold by Nutanix, IDC’s market-share methodology layered on between $1.30 to $4.50 of hardware, with an average in the low $2s. This is due to the significant discrepancy of the values of HCI hardware that these vendors report to IDC,” she said. “While the market value of servers across vendors was similar in the marketplace, IDC reported approximately one-third the value for SuperMicro-branded hardware as compared with many other brands. This significantly and negatively impacted Nutanix’s market share.”

Dell and Nutanix both partner and compete in the fast-growing hyperconverged infrastructure market. Total HCI sales hit $2.02 billion in the third quarter of 2019, up 19 percent year over year, according to IDC.

Dell and Nutanix offerings were included in CRN’s 10 Hottest Hyperconverged Systems of 2019, while both companies were also named global leaders in Gartner’s new Magic Quadrant for Hyperconverged Infrastructure.

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