WASHINGTON D.C. – At the Nutanix .NEXT event here, Dell EMC and Nutanix jointly took the stage to publicly reassure customers and partners that the relationship between the two companies remains on solid footing, despite the complications created since Dell’s merger with EMC and the onboarding of EMC and VMware’s own hyper-converged portfolio.
The close relationship between Dell and Nutanix began in June 2014, with the announcement that they would partner to create an XC series of appliances sold by Dell, which would put the Nutanix software together with Dell hardware. For Dell, which was aggressively building out its software-defined storage strategy around multiple partnerships with leading vendors in the space, this was a deal of significance. At the same time, the Nutanix announcement was just one of four such partnerships Dell announced that day. For Nutanix, however, this was a deal of SIGNIFICANCE. The company was much less well known then than it is today, and the partnership with Dell provided a public validation for the marketplace that was arguably of as great or greater value than the revenues that would flow from the OEM agreement itself.
The Dell XC series has been successful, and those revenues for both parties have been considerable. Dell’s acquisition of EMC and the EMC hyper-converged portfolio brought clear tensions to the relationship however, particularly after the introduction of the VxRail appliance, jointly developed by EMC and VMware, in early 2016. VxRail, unlike the short-lived VSPEX Blue appliance that it replaced, was an immediate success. More ominously, it was also targeted at much the same market as the Dell XC series. In November 2016, Dell EMC announced that the VXRail would become the priority offering in the VMware market, while the XC series would be focused on customers using Microsoft’s Hyper-V and Nutanix’s AHV hypervisors. That led many analysts and tech publications – including this one – to wonder whether the Dell EMC-Nutanix relationship would wind down, as many successful such relationships, including Dell’s own relationship with EMC in the last decade, had in the past.
That brings us to today.
“Every single XC customer, every analyst, all keep asking – ‘what’s the future of the Dell XC series with Nutanix,’” Nutanix President Sudheesh Nair asked rhetorically to the .NEXT audience in the Thursday evening keynote. Chad Sakac, President, Global Systems Engineering, at Dell EMC, then addressed the audience, and provided a flat reaffirmation of the relationship from the Dell EMC perspective.
“Our partnership is strong, it’s good, it’s growing,” Sakac told the audience. “It’s based on something Michael Dell believes and I believe, that customers want choices. We have to deepen our commitment to that every single day.”
Sakac discussed the issue with ChannelBuzz in much more detail.
“The story here is a simple one,” he said. “The question that everyone hears today is ‘What’s the state of the partnership?’ It would be disingenuous to say the relationship doesn’t have more complications now than it did before. Pre-merger, when Dell heard ‘HCI’, the answer was ‘XC!’ Now our portfolio centred around the VMware stack has also grown like wildfire.”
Sakac also noted that the issues raised around Nutanix by the Dell EMC merger were hardly unique.
“The merger created questions about a whole set of ecosystems,” he said. “Pre-merger, there was a very strong Dell-Red Hat partnership. We have continued to go down that path. People have continued to ask about our position on the Azure stack, because there is certainly a different dynamic with VMware and EMC and Microsoft. We have demonstrated that we will not only be there with Microsoft, but with a very deep integration.”
Sakac indicated that the future of the relationship had been discussed by the two sides.
“The original question that I asked Dheeraj [Pandey, Nutanix’s CEO] was this – ‘Do you see this as a market that is exciting, but in its earliest days, where the name of the game is to excite customers on the path of simplification?’
“If they said no, that every customer decision for HCI was a battleground choice, we would have gone down a different path,” Sakac said. “But they believed, as we do, that our job is to build simplicity for the customers. It’s not a zero-sum game. We are in the earliest days of adoption. When we made the strategic decision to continue the partnership, it was based on this strategic realization that the HCI market is not a zero-sum game.”
Sakac said that his number one rule of business is that you don’t punch your customer in the face.
“Customers are happy that the partnership is solid,” he said. “My second rule of business is that you don’t punch yourself in the face. Our revenues with Nutanix have grown year over year over year. A year ago, a third of our HCI customer base was Dell XC customers. Today, a third of our HCI customer growth is still Dell XC customers, even with our very strong growth elsewhere. We and Nutanix are having an amazing Q2 together. It would be strategically silly for us to cut off our nose to spite our face.”
Sakac also clarified Dell EMC’s positioning of XC.
“We see customers with two strong architectural approaches,” he said. “One is where VMware is standard, and there we lead with our VMware aligned stacks. The other is customers who want a more horizontal HCI, and XC can be appropriate there. And for those customers who just want a small appliance, we will still offer XC.”
Sakac emphasized that their entire portfolio including XC is necessary given the expanding state of the market.
“It is the official Dell Technologies strategic position that software defined software models are ready for the majority of x86 workloads,” he stated. “It’s not ready for all of them. There are still ones that need specific data services. But it is ready for the majority of workloads. Anyone who still says today that HCI is reserved for non-mission critical workloads is missing the mark. The reason is hybrid clouds. They have to run on a very simple infrastructure. HCI is the simplest, with CI being a close second. People want HCI because of that simplification.”