Nutanix Shares Take A Hit On HPE's Planned Acquisition Of Rival SimpliVity

Share prices of hyper-converged infrastructure technology provider Nutanix took a hit Wednesday, the day after Hewlett Packard Enterprise said it would acquire SimpliVity, a Nutanix rival.

Nutanix saw its share price fall $1.88 (6.26%) to $28.17 in trading on Wednesday as investors assessed the potential impact of HPE moving into a market that has traditionally been dominated by smaller providers.

HPE said it plans to acquire Westborough, Mass.-based SimpliVity for $650 million in a deal expected to close in the second quarter of HPE's fiscal 2017. HPE plans to integrate the SimpliVity software and hardware with its industry-leading servers to grab a share of the fast-growing hyper-converged infrastructure market.

Analyst firm Gartner recently estimated that about 30 percent of the global storage array capacity installed in enterprise data centers would be deployed on either software-defined storage or hyper-converged infrastructure solutions based on x86 hardware systems by 2019, compared to under 5 percent now.

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Besides VMware, which develops a number of hyper-converged infrastructure technologies including VxRail, VxRack, and VSAN, Nutanix is the only publicly-listed vendor in this market. VMware shares fell $1.29 (1.58%) to $82.78 in Wednesday trading.

Nutanix went public in late September of 2016 when it opened trade at $26.50 per share. Share prices spiked early on and, in the period between Oct. 3, 2016, and January 18, 2017, Nutanix shares have lost about 23 percent of their value.

Nutanix was unavailable to respond to questions about HPE's planned acquisition of SimpliVity.

Dell EMC is a large partner of Nutanix, selling the Nutanix technology integrated with Dell servers as the XC Series through its channel partners.

A Dell EMC spokesperson told CRN via email that the company is not concerned about potential impacts of the acquisition.

"[SimpliVity's] average sales price of $27K is the lowest in the industry – an indication of a pursuit of SMB, not enterprise opportunities. We don’t expect customers to consider them for mission critical deployments," the spokesperson wrote.

Channel partners were mixed about the potential of HPE's planned acquisition of SimpliVity.

Steve Johnson, president and CEO of Corus360, an Atlanta-based solution provider who partners with both SimpliVity and HPE, said the acquisition is a good one, and that he can't wait to see how it will play out.

"HPE is a great company in terms of services, support, and marketing, so SimpliVity can get a big boost from the acquisition," Johnson told CRN.

Because SimpliVity is not a public company, there are no details on actual sales of the company's solutions, said Johnson. However, he said, his company is seeing a lot of success. "We have 62 sales reps, and at least half have had some success selling SimpliVity," he said.

Scott Winslow, president of Winslow Technology Group, a Boston-based solution provider and partner of both Dell and Nutanix, told CRN via email that his company sees Nutanix, along with VMware's VxRail and VxRack technologies, as the top hyper-converged infrastructure market contenders, and not SimpliVity.

"The very low $650 million purchase price for SimpliVity by HPE tells you all you need to know about how unexciting this acquisition is in the hyper-converged marketplace," Winslow wrote. "We see two clear leaders in the space: Nutanix and Dell EMC and we are very fortunate to have partnerships with both companies."