As some pundits had predicted, Cisco has acquired Springpath, the maker of hyperconverged infrastructure (HCI)solutions. The company’s HyperFlex HCI offering is based on an OEM from Springpath.
The two companies have been working very closely since Springpath was founded in 2012. The product has been extremely well received by customers and channel partners, resulting in a little more than 1,800 customers to date. In fact, nearly customer and channel partner wanted the companies to join.
Having finally made the move, Cisco said it will acquire the start-up for $320 million (€266 million) in cash, equity and other incentives.
As is the case with most Cisco acquisitions, this one is well timed, as the market for HCI is starting to evolve. Historically, the primary use case for HCI has been VDI, but the market has recently seen increased usage for other enterprise apps, including databases, unified communications and as remote office/branch office infrastructure.
The Springpath business will roll up under Liz Centoni, senior vice president and general manager of Cisco’s Computing Systems Product Group. That group has seen a slowdown of the business that was once red hot thanks to slow Unified Computing System (UCS) growth. However, HyperFlex and the rest of the HCI vendors should see strong growth as the market grows to $6 billion (€5 billion) in the next three years, as predicted by IDC.
State of the HCI market
Cisco’s jumping into the HCI industry creates some interesting competitive dynamics. Typically, when Cisco enters a new market, it can use its massive channel and huge marketing budget to steamroll the competition. A couple of years ago, that was certainly possible with HCI. Since then, the competitive landscape has experienced some significant changes that could challenge Cisco for dominance in the market.
Last year, HPE paid a cool $650 million (€540 million) for Massachusetts-based SimpliVity to complement its own efforts in HCI. At the time, SimpliVity was the number two vendor in the HCI market next to Nutanix, which went public earlier in 2016. Perhaps the most significant change in the HCI market was Dell-EMC jumping into the market with its VxRail/VxRack products. In actuality, these products had been available from EMC in the past, but they rolled those products, plus the VBlock and VxBlock, into a single, converged infrastructure group under the leadership of Chad Sakac.
Power of simplicity
There is no group in any company that has understood the power of simplicity better than Sakac’s team. They are extremely customer focused and masters of using software to mask the underlying complexity of building engineered systems. VBlock adoption took off like a rocket because there was no faster way to build a private cloud. Now, the organisation taking that expertise to HCI, and it’s having an equal amount of success.
Also, the group formerly known as VCE is in complete lock step with the VMware vSphere roadmap, giving it a unique advantage when customers want to use HCI to support VMware (which is most customers). It is for these reasons that in September of 2016, the prediction was made that Dell-EMC was in a position to take the lead in HCI.
Like most industries, HCI had been led primarily by start-ups. The recent activity by HP and Dell-EMC certainly changed the dynamics. Having Cisco jump into it now with its own product will certainly continue to add fuel to the HCI fire that is also burning hot.
IDG News Service
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