Trey Layton says the future of the datacenter is all about convergence and while he congratulated HPE for last week’s SimpliVity acquisition, he didn’t appear too optimistic about its prospects for success in the still small but rapidly expanding hyperconverged infrastructure (HCI) subsegment. “As related to Simplivity, we rarely see them in a deal… we don’t see them when it comes down to evaluation and comparison”, said the CTO of Dell EMC’s Converged Platforms & Solutions Division (CPSD), the group currently sitting atop the integrated infrastructure market, which includes HCI.
As the world rushes to all-digital, all-the-time, somewhere there is a datacenter powering all that software making DX possible. While numbers of the overall market are sketchy, a slew of recent surveys reinforce the growing need for datacenters of all sizes:
-the global datacenter market will grow at a CAGR of 10.72% during the period 2016-2020;
-the modular and containerized datacenter market will grow at a 12% CAGR between 2017-2021;
-the mini datacenter — a self-contained system designed to be from a single rack (micro datacenter) to up to 40 rack enclosure (containerized and aisle containment solution) — market will grow at a CAGR of 17.17% during the period 2017-2021; and,
-the hyperscale datacenter market — also called cloud 2.0 — will explode 4100% between 2016-2023, from $869.7 million in 2016 to $359.7 billion in 2023.
Increasingly, these datacenters are turning to integrated, or converged solutions that IDC breaks down into four segments:
-integrated infrastructure and certified reference systems are pre-integrated, vendor-certified systems containing server hardware, disk storage systems, networking equipment, and basic element/systems management software;
-integrated platforms are integrated systems that are sold with additional pre-integrated packaged software and customized system engineering optimized to enable such functions as application development software, databases, testing, and integration tools; and,
-hyperconverged (AKA hyperconverged infrastructure or HCI) systems collapse core storage and compute functionality into a single, highly virtualized solution; a key differentiator of hyperconverged systems is their ability to provide all compute and storage functions through the same server-based resources.
Not liking to play well with others, Gartner prefers to label HCI as hyperconverged integrated systems (HCIS). However, whether HCI or HCIS, this segment is still relatively small: hyperconverged sales grew 104.3% year over year during Q3, generating $570.5 million worth of sales, or 22% of the total converged market, according to IDC. It will account for just 24% of the integrated systems market by 2019, but it will reach ‘mainstream use’ and is expected to be worth close to $5 billion, stated Gartner.
According to the latest available numbers (Q3), the combined integrated infrastructure and certified reference systems market accounted for the lion’s share of the total converged market (52.2% of $1.36 billion), down 11.4% year-over-year. Dell Technologies held 49.4% of the two segments, followed by Cisco (22.9%) and HPE (189.3%). Integrated Platform sales ($671.8 million), represented 25.8% of this market, but were also down 9.7% YoY, with Oracle (45.8%) and HPE (10.6%) the only two vendors of note. The fourth, and smallest converged segment, HCI (22%), shot up 104.3% to $570.5 million.
Released in October, Gartner’s Magic Quadrant for Integrated Systems put EMC in the Leaders category, along with HPE, Nutanix, SimpliVity, Oracle, NetApp, and Cisco. Dell was in the Visionary category, although things have changed somewhat with the EMC and VCE acquisitions.
Almost half (46%) of the respondents to a new survey from Maxta, a provider of software-centric hyperconvergence, plan to undertake an infrastructure refresh project within the next 12 months. General purpose infrastructure refreshes are the top choice for people considering hyperconverged infrastructure (36%), with data center consolidation also a top choice (14%).
At $650 million, HPE is paying less than 20% of what it was reportedly considering ($3.9 billion) to buy SimpliVity back in November. It’s not that the convergence market has cooled off so dramatically, but that there are ‘simply too many big fish in the pond’, said SiliconANGLE. “Dell is the top of the HCI marketplace,” Stu Miniman, a senior Wikibon analyst, said in an interview today on theCUBE, SiliconANGLE’s video studio. Its hyperconverged holdings include VMware Inc.’s vSAN and VxRail as well as ScaleIO, a scalable software-defined storage solution. Dell is also an original equipment manufacturer for SimpliVity rival Nutanix, as well as for SimpliVity itself. “Hyperconverged was one of the top reasons Michael Dell wanted EMC,” Miniman said.
“I don’t think SimpliVity’s valuation suggests that the greater hyper-converged market is flattening,” said Charles King, president and principal analyst at Pund-IT Inc. “It is common in leading-edge business software for the market to coalesce around particular platforms, leaving secondary players with less attractive prospects.”
The HPE acquisition should help ‘accelerate data center adoption of HCI’ and gives SimpliVity technology the engineering and go-to-market investment it needs, said Terri McClure, Senior Analyst, Enterprise Strategy Group. It is a great fit for pretty much the entire HPE portfolio because it plugs in everywhere as a data services layer, she said, and also comes with a strong install base — 6,000 systems shipped and 1,300 customers.
Layton expects further consolidation as smaller convergence vendors get acquired. Right now, Nutanix and Dell EMC are in the lead, he told IT Trends & Analysis, and they’re also partners. How that relationship will be transformed with HPE’s SimpliVity acquisition, Cisco’s relationship with SimpliVity, and the Nutanix/Lenovo partnership remains to be seen. He said they’re very satisfied with their convergence strategy and have “doubled and quadrupled our investment in it.”
A month ago Layton identified the top trends he believes will shape the converged systems industry, including:
-as Software-Defined Infrastructure (SDI) matures, the ability to manage both private and public cloud environments as a single coordinated IT resource, hybrid clouds will become the technology rule versus the exception;
-the data center as we know it today will soon become boundary-less; application workloads are already moving bi-directionally between both on-premise IT environments and public cloud as well as between public cloud providers as part of multi-cloud strategies;
-the rise of the variable application workloads; close to half of the 53% of respondents that had moved or are considering moving workloads away from of a public cloud cite better performance or need a less expensive way to deploy certain classes of application workloads as the primary reasons for making the shift; and,
-heading into 2017, it’s apparent that SDI technologies running on premise will achieve parity in terms of flexibility with public cloud capabilities; the next challenge will be finding the means to make use of public and private clouds as application workloads economically warrant.
It’s still early days for convergence, and the Dell EMC business, but Layton said they want to be “that essential infrastructure company”, with the ability to address every use case. CIOs are looking at how technology differentiates and enables you to be successful, and there isn’t a one-size-fits-all answer, he said. “Sell me business outcomes, don’t sell me parts.”
DISCLAIMER: I hold shares of a number of vendors referenced in the story.