Partners: Where's Cisco's Hyper-Converged Play?

The recent rumor that Cisco was trying to buy hyper-converged startup Nutanix had some Cisco partners' mouths watering. But after Nutanix CEO Dheeraj Pandey squashed the speculation a few days later, Cisco partners were left wondering how the networking giant will make its move into the hyper-converged market -- either through an acquisition or technology developed organically -- and more important, when?

"I do believe that Cisco is going to evolve its UCS platform into a hyper-converged solution. I do believe they need to do that and they will. Now the question is, how will they get there?" said Steve Rogers, director of data center, cloud, Internet of Things and enterprise networking for Nexus -- a Dimension Data company, ranked No. 55 on the CRN 2014 Solution Provider 500 list and Cisco Gold partner. "They almost have all the pieces of the puzzle to develop and launch their own hyper-converged [system], they just have to build that last component that stitches it all together."

Hyper-converged infrastructure technology combines server, storage, networking and virtualization technology in a software-defined stack running on a single commodity server rather than being deployed as separate hardware components.

[Related: Nutanix: 'No Truth' To Cisco Acquisition Rumor; 'Committed' To Dell]

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Rogers said Cisco has the raw materials to build a hyper-converged solution, and believes the San Jose, Calif.-based networking giant is evaluating "buy vs. build."

Several partners pointed at the hyper-converged infrastructure startup SimpliVity as a viable purchase option, as Cisco already has a relationship with the Westborough, Mass.-based startup whereby it sells SimpliVity's hyper-converged software and hardware card on UCS servers.

A top executive at one solution provider that partners with Cisco, EMC and VCE said one of the big vendors is going to have to make a serious leap into this red-hot space.

"I think they're just afraid of who they're going to [get upset]," said the executive of a solution provider ranked on CRN's 2014 SP500, who declined to be identified. "We've been saying the same thing ever since VCE came out, which is a nice baby step in that direction, but the problem with it all is, you want the code streams, the hardware, the support, all to come from the same entity, and not a third party that puts them all together, because that's not ideal."

In response to questions about its hyper-converged infrastructure strategy, Cisco in a statement issued to CRN said UCS is an "ideal platform" for hyper-converged solutions.

"[UCS] supports an open ecosystem of hyper-converged partners on UCS products, combining scalability with easy deployment and management. Our open ecosystem is expanding, and current partners include Stormagic, SimpliVity, EMC Scale-IO, VMware VSAN and Maxta," Cisco said in the statement.

Research firm IDC estimates that the hyper-converged market will hit $806.8 million in sales this year, growing to $1.57 billion in 2016.

"The hyper-converged systems market is growing quickly as customers are recognizing the benefits of eliminating the complexity, expense, and latency often associated with SAN-based storage solutions," said Jed Scaramella, research director of servers and data centers for IDC, in an e-mail to CRN.

Scaramella said that up until recently, pure-play startups Nutanix and SimpliVity mostly drove the market. In 2014, larger OEMs started to take notice and introduced products such as VMware's EVO:RAIL, which was a major product launch that almost every server vendor became involved with, according to Scaramella. With industry leaders like Dell and Cisco forming partnerships with the hyper-converged startups, the hyper-converged market is poised to hit the mainstream audience.

During a Gold partner lunch with Cisco executives at Cisco Partner Summit 2015 last month, partners were asked which of them thought Cisco needs to make an aggressive move in the hyper-converged space. Around 75 percent of the partners in the room raised their hands, according to one executive at an East Coast-based solution provider in attendance.

"[CEO John] Chambers made a comment, something along the lines of, 'We think we need to be more aggressive in this space too,' " said the executive, who declined to be named. "So they're going to do something. I thought there were legs to the Nutanix [acquisition rumor]. … If they could offer hyper-converged where the logo on the outside matters, they want to do that."

Hyper-converged solutions will account for a larger share of the overall converged infrastructure market, jumping from 3.5 percent in 2014 to 11.5 percent in 2018, according to a report last month by Technology Business Research (TBR). The hyper-converged platforms market will also grow at a five-year CAGR of 71.6 percent from 2013 to 2018 as customer demand for a more streamlined virtualization experience increases, said TBR.