HPE Acquires SimpliVity, Counters Hyperconverged Rival Nutanix

HP Enterprise is acquiring SimpliVity for $650 million in cash. The deal positions HPE and SimpliVity against Nutanix, Dell-EMC, VMware and Cisco Systems in the hyperconverged infrastructure (HCI) data center market.

Rumors about HPE acquiring SimpliVity have circulated since November 2016. The $650 million price tag is far lower than the rumored $3.8 billion price tag chatter from last year. The deal follows HPE's decision to sell-off certain software assets in 2016.

"This transaction expands HPE's software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers," said HPE President and CEO Meg Whitman in a prepared statement."More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That's exactly where we're focused."

What is Hyperconverged Infrastructure (HCI) ?

SympliVity is one of the early leaders in the hyperconverged data center market. A hyperconverged offering integrates compute, storage and networking into a pre-configured system. A single IT management platform can typically oversee the entire offering. The global market for hyperconverged infrastructure (HCI) will reach $12.8 billion in 2022, up from $804.5 million in 2015, according to Stratistics MRC. That’s a compound annual growth rate of 48.4 percent, the researcher says.

SimpliVity competes head-on against Nutanix, which has working relationships with a range of hardware companies -- particularly Lenovo, which launched a formalized data center partner program last week.

HPE and SimpliVity announced a product roadmap as part of the deal:

The transaction is expected to close in the second quarter of HPE's fiscal year 2017, subject to regulatory review and approval, as well as other customary closing conditions and adjustments.

Biggest HCI Rival: Public Cloud Services

As HPE and SimpliVity push deeper into data centers, they will face competition from non-traditional rivals. In particular, some customers could delay or completely avoid HCI data center rollouts -- instead opting for public cloud services like Microsoft Azure, Amazon Web Services (AWS) and Google Cloud Platforms.

In many cases, those public clouds leverage open source and commodity hardware rather than commercial HCI offerings.

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