CIOs and IT organizations plotting or expanding a hybrid cloud strategy in 2017 may have a good reason to add Hewlett-Packard Enterprise to their vendor short lists, given HPE's move to acquire SimpliVity for $650 million in cash. Here are the key details from HPE's announcement:
By bringing together HPE’s best-in-class infrastructure, automation and cloud management software with SimpliVity’s industry leading software-defined data management platform, HPE and its partner ecosystem will deliver the industry’s only “built-for-enterprise” hyperconverged offering.
“This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers,” said Meg Whitman, President and CEO, Hewlett Packard Enterprise. “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.”
Simplivity's "hyperconverged" appliances combine compute, storage and networking along with a management software platform called Omnistack, which appears to be a key driver for HPE's interest in the company given HPE's substantial hardware assets. Indeed, there is clear overlap between Simplivity and HPE's own hyperconverged offerings, but HPE provided some details on how the products will be rationalized after the deal closes:
For current HPE customers and partners, the company will continue to offer its existing hyperconverged products, the HC 380 and the HC 250. For SimpliVity customers and partners, there will be no immediate change in the product roadmap and HPE will continue to support existing SimpliVity customers and platforms.
Within 60 days of closing the transaction, HPE intends to offer the SimpliVity Omni Stack software qualified for its ProLiant DL380 servers. In the second half of 2017, the company will offer a range of integrated HPE SimpliVity hyperconverged systems based on HPE ProLiant Servers.
The hyperconverged systems market is hotly contested and expected to grow rapidly in the next few years. Top vendors in the mix include Dell Technologies and Cisco, as well as Nutanix, which conducted a successful IPO last year.
Meanwhile, the sale price for SimpliVity was far less than the nearly $4 billion bid HPE was reportedly mulling in November, and seems much more down to earth. For HPE, the deal looks to fill an important hole in its lineup.
"It looks like HPE did not have all the answers to run cheap on-premises infrastructure," says Constellation Research VP and principal analyst Holger Mueller. "The verdict is out on how much on-premises will be part of the hybrid equation, and how much revenue HPE and others can make with traditional on-premise sales."
That the rules of the game have changed is clear, Mueller adds. "It has to be software-defined and cheap—and converged appliance makers like SimpliVity will help get HP more revenue runway from on-premises IT automation."
One question is whether HPE will continue supporting SympliVity's Omnistack software for other platforms. SympliVity currently supports a range of hardware, including Dell, Huawei, Cisco and Lenovo. Given the stakes in the hyperconverged systems market, HPE may decide that exclusivity trumps openness.
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