Does IBM acquire Nutanix?


Last time I pointed out the possibility that IBM would use Google GCP instead of its own IBM Cloud.

Of course, IBM, as an SI vendor, handles both AWS and Azure, but this time, they’re not as serious.

I’m not so sure about Nutanix, which provides components for the local GCP equivalent of AWS Outposts.

My prediction (fantasy) is that Cisco, an IBM ally, will acquire it.

I would like to explain why I have come to such a prediction.

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Why Nutanix?

Hyper Converged Infrastructure (HCI) with a set of servers is selling well these days. Most server vendors offer Nutanix HCI in combination with their own servers.

The best-selling HCI is Dell/VMware’s VxRail, Nutanix, the original inventor of HCI, is now the second best-selling HCI vendor.

Its main application is Virtual Desktop Interface (VDI). The main focus is VDI, although there’s talk of selling enterprise software configurations these days.

As the name “Virtual Desktop” implies, what you have in your hand is a “just-off-the-shelf PC”. It looks like a computer, but the body (the real content) is stored on a server or in the cloud somewhere.

… No, no, it’s not a server. It’s too much work to put the server on the ground and install the software every time, so we buy the HCI, which is already built.

It takes only a few minutes to set up and initialize the device. It’s fast.

The reason why HCI has become so popular is that it is not only easy to install, but it is also easy to expand.

In other words, it’s similar to AWS Outposts, where you install “ready-made devices like a refrigerator”. That’s why Google and Nutanix collaborated and started offering Nutanix version of local GCP for users who want to do in-house GCP.

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Strictly speaking, it’s a little different story, but in this case, think of it as a local GCP created with Nutanix HCI. Anyway, even for Google, which provides GCPs, it is necessary to set up local GCPs at the customer’s site in accordance with the recent changes in the world situation.

Why Cisco?

And IBM is a good friend of Google as well. This Power chip-based system is now available in Google GCP, which is why we have a Power system inside GCP.

Not only that, but we’re also pushing for a GCP migration from IBM mainframes, although that may be just a decision on Google’s part.

The groundwork is in place for IBM to adopt Google GCP, but the groundwork is in place, and given the competition from Dell/VMware, acquiring Nutanix seems worthwhile.

So why Cisco and not IBM? There are reasons (history) for this as well.

First of all, IBM sold its PC server business to Lenovo, and now it is either Lenovo or Cisco. And now they resell UCS servers from either Lenovo or their ally Cisco as needed by their customers.

If IBM acquires Nutanix here, it will complicate the relationship with Cisco. As an added bonus, as far as I know, Cisco is the only vendor that does not offer Nutanix HCI.

Of course many users use Cisco UCS servers, and in fact Nutanix runs on UCS servers as well. That’s why customers or Nutanix is building them.

Originally Nutanix provided Nutanix software for UCS servers without the consent of Cisco for a long time. And Cisco has been providing its own HCI software for UCS servers.

In other words, Cisco does not want Nutanix to do well. And on top of that, when the Nutanix acquisition rumors arose, Nutanix CEO said “I don’t want to be acquired by Cisco, I want to be acquired by Dell”. (Actually, Dell not only offers VxRail, but Nutanix HCI as well.)

It’s hard to make things work in theory when things get so complicated: Dell will maintain its partnership with Nutanix, but won’t try to acquire it, and Cisco has acquired a new HCI vendor called SpringPath. And Cisco’s newly acquired an HCI vendor called SpringPath.

So a few years later, Cisco is the “third largest in the industry” by a wide margin to Nutanix, although the acquired SpringPath offers an HCI called HyperF! lex. Sales of HCI are growing in these days; Cisco’s video conferencing system, WebEX, for example, is also selling well. If Nutanix is available here, the business is likely to increase greatly.

And then last month Nutanix CEO announced his resignation, someone who is not good for Cisco is gone. The conditions are finally in place.

Wrap Up

For the above reasons, I expect (or fantasize) that Cisco may acquire Nutanix. Incidentally, due to the recent difficult situation, Nutanix, whose VDI sales have been growing, is also cutting jobs.

Well, Dell/VMware was opening the floodgates to Dell/VMware, so it was a situation that would happen at some point. But for Nutanix employees, the timing was bad.

On the other hand, if you look at Cisco (IBM), it’s an easy situation to get things going. After all, when sales are tight, internal pending assets are the key to success.

Anyway, HCI is struggling with HPE and we are almost at the point where the winners are in sight, and I think it would be best for those of us in the HCI industry to find another job soon.

So I’ll leave you with this one. I’ll see you soon.

Write: Sei Yotsuba