Partners: HPE's Acquisition Of SimpliVity Reshapes Hyper-Converged Landscape, Puts Pressure On Cisco

Partners say Hewlett Packard Enterprise's $650 million acquisition of hyper-converged superstar SimpliVity will reshape the hyper-convergence landscape and put the heat on rival Cisco Systems.

HPE Tuesday announced a definitive agreement to acquire the privately held Westborough, Mass.-based startup for $650 million in cash. HPE said by bringing together its portfolio in infrastructure, automation and cloud management software with SimpliVity's software-defined data management platform, the company will deliver the industry's only "built-for-enterprise" hyper-converged offering.

"It's going to be a dynamite combination," said John Barker, CEO and co-founder of Versatile Communications, a Marlborough, Mass.-based solution provider and HPE partner. "HPE is going to get that benefit of SimpliVity having been in the space for a period of time with a mature product line that they can quickly integrate with their own."

[Related: SimpliVity CEO Kempel On Huawei Deal, Courting HPE And How Solution Providers Can Manage The Transition To Hyper-Convergence]

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HPE is using the SimpliVity software not only as part of a new family of HPE SimpliVity HC 380 hyper-converged offerings, but also as part of a broader set of enterprise software-defined storage fabric offerings.

The extensive HPE SimpliVity software-defined road map includes a full hybrid IT solution with SimpliVity becoming the software-defined storage layer, including tight integration with HPE's OneView management platform. HPE also plans to integrate the SimpliVity software with HPE Synergy and 3Par.

The first product from the blockbuster deal will be an HPE SimpliVity HC 380 hyper-converged appliance within 60 days of the close of the deal. Within six months additional HPE Simplivity hyper-converged appliances will be available including a VMware appliance, a backup and disaster recovery appliance and a Microsoft HyperV appliance.

Antonio Neri, HPE executive vice president and general manager of the Enterprise Group, said the blockbuster deal reshapes the hyper-converged and software-defined enterprise landscape.

"This is a phenomenal game-changer," said Neri in an interview with CRN. "We are making it easy for our partners and customers to buy and deploy this: full integrated solutions with HPE enterprise DNA and ultimately running on the best infrastructure on the planet. We are moving really fast here. This is an exciting road map from a hyper-converged appliance to a software-defined fabric for Synergy and data mobility with 3Par. In the next 12 months, we are going to deliver all of that for our customers and partners. For partners, this is going to be easy to sell because they can now sell a full portfolio depending on which workloads they want to land where. There is a lot of money and margins they can add here. The simplicity of bringing all of this together is the benefit to our partners. They can sell it as an integrated solution."

The acquisition is expected to close in the second quarter of HPE's fiscal year 2017.

Doron Kempel, CEO of SimpliVity, said in a statement that joining HPE was the company's logical next step.

"HPE's broad sales reach, extensive partner channel, complementary technology and commitment to innovation will accelerate SimpliVity's journey and significantly strengthen our ability to deliver the best-in-class hybrid IT solutions our customers are looking for," he said.

HPE said the hyper-converged market was estimated to be approximately $2.4 billion in 2016 and is expected to grow at a compound annual growth rate of 25 percent, to nearly $6 billion, by 2020.

"This (acqusition) will apply pressure to Cisco to step up its game in the hyper-converged space," said Matt Duncan, director of GDT Labs at General Datatech, an HPE and SimpliVity partner ranked No. 45 on the 2016 CRN Solution Provider 500. "If you look at the marketplace around hyper-converged, it started out as these separate players -- SimpliVity, Nutanix, Cisco partnered with SimpliVity -- and now Cisco is producing its own and so it's only natural for HPE to respond. It's a fantastic purchase for HPE."

Versatile Communications's Barker said the hyperconverged landscape is shifting to the larger market players like Cisco and HPE.

He expects SimpliVity's market expertise and history will boost HPE's channel sales around hyper-convergence. "SimpliVity has got street cred and it's going to help and probably put pressure on Cisco as a result," said Barker.

General Datatech's Duncan said SimpliVity needed to find a hardware home for its hyper-converged software.

"SimpliVity had to find a home because they didn't produce the hardware that went around their solutions. Sometimes it made it difficult to figure out how to sell, how to deliver and how to bring to market from different places," said Duncan. "This helps bring these solutions to market a lot faster to customers."

HPE said the combined portfolio will offer a rich set of enterprise data services across hyper-converged, 3Par storage, composable infrastructure and multi-cloud offerings.

Cisco took the wraps off its hyper-convergence play, Hyperflex Systems, at Cisco Partner Summit in March in front of thousands of partners. Hyperflex consists of Cisco UCS servers and software-defined storage technology developed through a strategic partnership with Springpath. By August, Cisco reported there was approximately 500 customers using HyperFlex.

"The market is going to have to start outputting feature functionally at the same rate as their competitors in that space," said Duncan. "It's a great thing for our customers and us as partners."