Nutanix, Pure, VMware are booming. Other enterprise IT vendors? Not so much

Cisco is discounting its HyperFlex hyperconverged infrastructure product, Commvault is under competitive pressure,  Microsoft AzureStack lacks traction, and NetApp is replacing IBM storage arrays, while Nutanix, Pure and VMware are booming.

This market intelligence is provided by Jason Ader, analyst at William Blair, an investment bank, who surveyed 45 resellers in North America and  Western Europe in the December 2018 quarter. He found “a continuation of the healthy [enterprise IT] spending environment” of the past few quarters due to to “normal budget flush at year-end, continued on-premises infrastructure refresh, and the strategic urgency of IT investments (which makes it difficult to delay projects.)”

He said lines of business (versus IT managers) are “driving project activity at large customers, and that this is a key reason for the current robustness in IT spending.” 

According to Ader’s survey panel, “areas of product strength include security, analytics, hybrid cloud, and HCI/ storage. Momentum in on-premises storage refresh continued in the fourth quarter, driven by data growth and outdated infrastructure. Meanwhile, backup and disaster recovery continues to be a hot space, driven by private vendors Rubrik, Cohesity, Veeam, and Zerto.”

Blair delved in more detail into at some vendors. We have reproduced his storage-related points from his communication to William Blair clients (thank you, Jason.)

Cisco

  • Cisco’s HyperFlex HCI products looked to be gaining some steam last quarter but the excitement faded somewhat this quarter, perhaps due to mixed customer satisfaction. Cisco continues to seed customers with the product and offers heavy discounts to gain market share.

Commvault

  • Reseller feedback continued to show a business with surprising resilience but also under increasing pressure, with sales turnover and competitive encroachment taking their toll.
  • At the same time, VARs are positive on Commvault’s new pricing model, which massively simplifies licensing into four main SKUs: 1) Commvault Complete Backup & Recovery, 2) Commvault HyperScale, 3) Commvault Orchestrate, and 4) Commvault Activate.
  • Specifically, customers like Commvault Complete, the company’s new consolidated backup and recovery product package, which offers simplified pricing and includes several features that were previously only available as add-ons such as snapshot management, hardware replication support, reporting, synchronization of virtual machines across locations, and file sharing.
  • We heard of growing activity for Commvault HyperScale appliances with more active deals and a growing pipeline. VARs note that the appliances have worked through early technical and go-to-market kinks, and are now sparking interest among new and existing customers given the simpler and more resilient value proposition.
  • VARs continue to see traction converting customers from one-year maintenance plans to three-year subscription agreements; this drives up-sell opportunities and locks customers in to the Commvault solution (thwarting competitive takeout bids).
  • On the competitive front, VARs are battling to keep Rubrik, Cohesity, and Veeam out of Commvault accounts.
  • We have not heard much detail on the new CEO search, though we hear murmurings that a new CEO could be announced in the first quarter.

Microsoft

  • Microsoft’s cloud business continues to be extremely strong; both Office 365 and Azure are seeing broad adoption and activity.
  • We hear of minimal traction for AzureStack thus far; several VARs believe that Microsoft has relied too much on third- party hardware manufacturers who lack incentives to push the AzureStack solution.

NetApp

  • Overall channel feedback remains positive on NetApp’s business and channel friendliness, with several large VARs posting strong growth with NetApp in the December quarter and feeling good about sustained growth in calendar 2019.
  • Storage refresh activity remains elevated due to pent-up demand in a healthy economic environment and the shift to all-flash architectures.
  • VARs and customers believe that NetApp has become an innovator again and see NetApp’s product lineup as strongly positioned, especially around AFAs and cloud data services.
  • The channel is largely positive on NetApp’s HCI technology, and while deal-count is growing, some VARs think it will be hard for NetApp to catch HCI leaders Nutanix and VMware.
  • While Dell-EMC’s market position has stabilised, its product portfolio is still viewed as long in the tooth, which creates ongoing displacement opportunities for NetApp.
  • IBM appears to be de-emphasising its storage array business, which is leading to significant replacement of IBM storage by NetApp.

Nutanix

  • A continued robust demand environment for the hyper-converged infrastructure (HCI) category from both new and existing customers—customers love the simplicity, one-click operation, and scalability of the architecture.
  • Increasing deal sizes (including more $1 million-plus deals), indicative of customer confidence in Nutanix— they increasingly see Nutanix as a strategic vendor. In the past a big deal for Nutanix was in the $300,000 range; now a big deal is north of $1 million, and we heard of several mid-seven-figure deals closed in the quarter.
  • Best-of-breed product positioning, with VMware/Dell-EMC as the main HCI competitor at this point. Nutanix does lose to Dell at times, but almost never on technical merit.
  • Strong momentum in the federal and SLED verticals—the VARs we spoke with noted minimal impact from the partial government shutdown, with DoD and intelligence agency customers open for business with growing budgets.

Pure Storage

  • Continued positive feedback from VARs on sales momentum and market share gains.
  • We continue to hear of strong deal activity driven by on-premises storage refresh and the shift to all-flash arrays.
  • VARs consistently note that Pure is a great company to work with, with first-rate salespeople, products, and support.
  • Pure’s NVMe story (NVMe across its entire product line) and unique Evergreen model (eliminating the need for forklift upgrades) are driving product differentiation and getting Pure onto more customer short lists.
  • FlashBlade is starting to become material to key channel partners as use-cases become more apparent.
  • While Dell-EMC’s market position has stabilized, its product portfolio is still viewed as long in the tooth, which creates ongoing displacement opportunities for Pure.
  • Several VARs note success with Pure displacements of legacy IBM and HDS storage.

VMware

  • VAR feedback remains almost universally positive on VMware’s sales momentum, product positioning, and cloud story.
  • Several VARs point to particular momentum with vSAN (often via Dell VxRail) as the HCI category takes hold.
  • The overall number and size of commercial VMware Cloud on AWS (VMC) opportunities is ramping up nicely with some VARs noting that the lower node count for entry-level clusters, the ability to deploy mixed node types (all-flash or hybrid), and the recent price reduction are driving higher adoption.
  • Federal VARs are extremely positive on the launch of VMC on AWS GovCloud, with a very strong pipeline developing. Several VARs we spoke to believe this can be a game-changer for VMware in the federal market.
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