OnApp enters hyper-converged space with Intel partnership – and low cost appliance

OnApp, which has a larger global share of the market, enters the HCI market with their software in Intel hardware, and a channel-only model with a master reseller/distributor in each geo.

Ditlev Bredahl, OnApp’s CEO

U.K.-based OnApp, which is a strong player in the service provider platform market, is moving into the infrastructure [HCI] enterprise market. In partnership with Intel, they have designed OnApp Enterprise, a turnkey targeted at the enterprise private and market. It combines OnApp’s comprehensive cloud management software stack – designed to provide service provider scalability – with Intel Data Center Blocks hardware. In addition to the scalability, they also are priced well below the major players in the space, and will go to market through a single Intel Technology Provider distributor in each geo, who in turn will bring in other resellers as they see fit in their region.

OnApp, which began operations in 2010, has been very successful in the service provider market, where they have a 30 per cent share, and essentially sell direct, which is feasible because of the limited number of customers, all of whom know each other.

“The enterprise market is entirely new to us,” said Ditlev Bredahl, OnApp’s CEO. “We have 3500 service provider customers, and we were curious whether our technology would be applicable to the enterprise space. We need to continue to grow and there is just not enough space left with an exclusive focus on service providers.”

OnApp discussed their value proposition with Intel and Dell, both of whom were strong partners in the service provider market.

“We concluded that the issues of scalability, security and uptime which are so critical in the service provider market have become just as important in the enterprise,” Bredahl said. “While we have worked closely with Dell in the service provider space, we concluded that Intel was the right partner for us here because they have no competing product.” Dell EMC, Nutanix and HPE Simplivity are the most high-profile competitors in the space.

OnApp Enterprise marries OnApp’s software with Intel Data Center Blocks, including Intel Xeon Processors, SSDs, server boards and other components, in a configuration optimized for OnApp’s software capabilities. That software provides a full suite of private cloud deployment and orchestration tools, as well tools for server management, access control and governance. It has a scalable software-defined architecture with up to 254 servers per cluster and fully asymmetric storage and compute. It also features a single UI for private and public cloud management across multiple clusters, data centres and clouds.

“The code is the same as our service provider product, but we have added some things for the enterprise,” Bredahl said. “For example, workflow management, which is not important to service providers is to the enterprise. There are also full billing solutions and other service provider features that we are not emphasizing here, but they are still in the platform.”

Bredahl highlighted three elements of OnApp Enterprise that they believe will let the company’s channel partners effectively challenge the incumbents in the HCI space.

“First is the massive scalability, which is at a service provider level,” he said. “It’s critical for service providers. They can’t go to market without it. We haven’t reduced it for the enterprise, which makes it a differentiating feature.”

The second differentiating feature is price.

“We have looked at the of the major players in the market and we can take 25 to 30 per cent off their prices,” Bredahl said.

The third will come from the channel model that OnApp has designed to take the products to market.

“Until a year ago, when we started thinking about this, we had no resale side at all,” Bredahl said. “Breaking through to enterprise was daunting to us, especially since we knew we didn’t know much about it. We closely examined possible go-to-market strategies, and decided going direct to the enterprise was too much of a task.

“Once we realized we had to start going through channels and distribution, which we hadn’t done at all, we began to create a channel organization in Europe and the U.S. Initially, we were going to use a multi- channel strategy, but we concluded that at the start it would be best to use an exclusive channel distributor in each region. We started to put that in place at the beginning of Q2.”

OnApp decided on using a single Intel Technology Provider in each region, who will take on a master distributor role, rather than a VAD or broadline distributor.

“We didn’t choose a company like Arrow or Ingram Micro because, as a new player in the market, we wanted white glove, customized, well supported treatment,” Bredahl said. “We wanted more of a boutique relationship, not just to be put in a catalogue.”

These partnerships are exclusive to their region.

“The Canadian partner, for example, will own Canada,” Bredahl said. “All resellers will have to go through that master partner. We will leave the go-to-market strategies to the partners themselves. If, for instance, they are strong in federal, as some of these are, they may decide to own that sector, and find other partners to cover verticals like health care that they do not.”

One thing the select partner won’t have to worry about is direct selling competition from OnApp.

“We will not be selling direct to the enterprise.” Bredahl said. “Both us and Intel will hand over leads that we get to the regional partner.”

All this will make for a much stronger value proposition for the channel.

“The channel often sells software licenses at cost, or even at a loss,” Bredahl said. “That will change now, as the exclusive relationship and our differentiated offering, together with our lower price, will provide strong differentiation.”

Those regional partners are as follows: Iron Systems in the US, New Era Informatique in India, Army Technology in South America, Rectron in South Africa, and Hammer in Europe. OnApp Enterprise cloud appliances are available through them now

So where’s the Canadian partner? There is one, Bredahl emphasized, but the final paperwork wasn’t done in time for the launch.

“The Canadian deal isn’t signed yet,” he said. “It was mentioned in the draft press release, and we are close, but it wasn’t done so we had to take it out.”

ChannelBuzz will provide this information to the Canadian channel audience as soon as we have it.

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