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HPE's acquisition of Nimble Storage was a smart move

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March 8, 2017

In acquiring Nimble Storage LLC for $1.2 billion, Hewlett-Packard Enterprise sent out a message to the IT industry that it needs a complementary all-flash array architecture to its 3PAR StoreServ array systems.

The company is also getting the storage industry’s leading cloud-based management and predictive analytics capability (InfoSight) and with Nimble itself planning a hyper-converged offering soon, HPE can decide whether to go ahead with that or concentrate on its still new SimpliVity acquisition’s technology.

In acquiring Nimble, HPE is also returning to public cloud storage as Nimble’s Cloud Volumes run in its own cloud.

Things are looking good these days for HPE. Nimble was one of three hybrid array startups, along with Tegile and Tintri, that re-invented the SAN array concept and came to the fore as fresh-faced startups in the 2010 to 2014 period.

It became public in December 2013 and shares peaked at almost $34 but then the bottom fell sharply. The company’s lateness to the all-flash array market didn’t help, but it recovered from that and there have been strong hints it is developing a hyper-converged offering, and naturally HPE noticed that.

Nimble CEO Suresh Vasudevan said in a letter to enterprise customers-- “We are confident that by combining Nimble Storage’s technology leadership with HPE’s global distribution strength, strong brand, and enterprise relationships, we’re creating several expansion opportunities for the combined company. Our mission of enabling applications to perform without disruption will continue as we move forward.”

“We believe that joining forces with HPE enables us to further accelerate the pace of innovation that has been a hallmark of our value proposition to customers,” he asserted.

It’s clearly apparent that Nimble has been pushing hard for short-term growth in revenues and has been operating at a loss as it builds its infrastructure and develops several products. The net loss has been slowly shrinking over the past three quarters, but not dramatically.

The company is facing growing competition as the all-flash array market matures and both hyper-converged infrastructure appliances and the public cloud take larger and larger bites out of the external array storage market.

Additionally, with Dell acquiring EMC and HPE getting a hold of SimpliVity, the era of the survivable and profitable major stand-alone storage company is over.

For its part, it looks like NetApp is the only one if its kind, at least for now anyway and, by fleeing into the dollar-lined arms of HPE, Nimble has settled for the ultimate safety, it would appear.

It can use HPE funds to develop its product, HPE’s back-office to save its own accounting expenses, and HPE’s complex reseller channel to expand its own sales.

There are three technologies that HPE is benefitting with its Nimble acquisition. First an all-flash and hybrid disk array line that slots in between its 3PAR StoreServ high-end arrays and entry-level MSA storage.

Second, the well known InfoSight cloud-based Nimble array monitoring and predictive analytics package. HPE says it will bring this to its other storage products and that should be a feature its customers will value highly.

Third, HPE is getting Nimble’s Cloud Volumes, which have data stored in the public cloud near Amazon and Azure data centers to support cloud compute, and offer data portability between AWS and Azure.

However, HPE could shrink its 3PAR line to go down-market, build its own analytics and enter the public cloud storage market itself.

It has chosen to acquire Nimble and get itself some cool technology for these three areas in a manner that could have taken it close to a year to duplicate. Time is money, and in this competitive market, HPE knows that.

It will see HPE as a stronger but not yet equal competitor in the basic all-flash array market. The InfoSight offering will be strong competition to any Dell EMC equivalent and Dell EMC has nothing like Nimble Cloud Volumes.

Dell EMC will realize that size matters as an IT supplier, and will probably feel being vindicated by HPE, swelling itself up with SimpliVity and Nimble. We'll see in the next few quarters.

But looking at this from a different angle, NetApp has three all-flash arrays: E-Series, SolidFire and All-Flash FAS. The 3PAR and All-Flash FAS arrays are sort of equivalent. HPE doesn’t have a stripped-down, fast E-Series box equivalent, but Nimble looks sort of like a SolidFire equivalent, especially if its HCI intentions mean it has the wherewithal to create a single virtual block storage pool across multiple Nimble nodes.

Brett Roscoe, NetApp’s vice president of product & services marketing said-- “We are confident in our solutions and ability to compete successfully against a combined HPE-Nimble. Our Data Fabric portfolio of flash-enabled, cloud-integrated offerings provides customers with the future-proof solutions required for success in a datacentric world. In the all-flash array market, there's no question we're growing faster than rivals. In cloud, our ability to help customers seamlessly manage their data as they adopt the cloud is a clear differentiator.”

“We recently shared our intent to deliver the next generation of hyper-converged infrastructure, built on SolidFire innovation, which will be the first fully cloud-integrated HCI solution in the industry. It will bring enterprise customers the flexibility to run multiple workloads without compromising performance, scale, or efficiency. We offer the only portfolio that ensures customers will have seamless data management across all their deployment models, whether on-premises, hybrid or public cloud environments.”

What does this mean for Pure Storage? HPE now has a commodity, off-the-shelf-based all-flash array with no proprietary ASIC, which is the 3PAR badge of honor.

HPE will then be able to sell its AFAs into a wider spectrum of businesses and the InfoSight capability is probably better than anything Pure has in that line.

Source: Hewlett Packard Enterprise.

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