Is Nutanix Doomed ? I Think Not !

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Disclaimer: This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated.

Part One : Win with “Dell EMC VxRail & VMware VSAN Over Nutanix HCI”

Part Two : The Last HCI: vSAN, VxRail, and Nutanix

Part Three : Is Nutanix Doomed ? I Think Not !

Part Four: Is Nutanix Cheaper than Dell EMC VxRail !?

Introduction

Nutanix market share is down, stock value is down, revenue growth is down, and sales growth is down, 2019 has not been kind to Nutanix so far to say the least. Q1 2019 IDC converged systems market report released on June 25th shows that Nutanix has significantly been losing the HCI battle to Dell Technologies both on the branded hardware and software fronts.

IDC HCI 1Q19 Findings

The report shows that based on Q1 2019 numbers, Dell Technologies which include both Dell EMC and VMware dominated the branded HCI market with revenue of $586.7 Million representing 32.2% market share up 3.4% from last year while Nutanix Q1 2019 branded HCI revenue reached $255.7 Million representing 14.0% market share down 6.2% from last year. Considering the size, workforce, impact, customer base and history of Dell Technologies compared to Nutanix, the numbers make sense and Nutanix should be doing just fine, but …

The very alarming point here is that Nutanix 1Q19/1Q18 Revenue Growth is only 1.9% while Dell Technologies 1Q19/1Q18 Revenue Growth is a staggering 64.0% . Remember that Nutanix throughout its whole history has never made profit so to do so they need to drastically increase revenue growth quarterly until they reach a point were the subscription model starts paying off steady income outweighing operational costs and eventually producing profit. This is what is scaring investors, partners, and customers alike, at least customers that are approached with this information by Dell technologies representatives (Yup !).

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Dell Technologies has always had the upper hand when it came to branded HCI market but what about the software side where Nutanix almost always claimed clear dominance. The report shows that for Q1 2019 numbers, VMware has produced software only HCI revenue of $750.7 Million with 41.1% market share up 4.8% from last year while Nutanix produced software only revenue of $526.5 Million with 28.9% market share down 2.3% from last year.

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Amazingly, VMware software alone which is vSAN made a staggering 66.3% revenue growth while Nutanix made 31.4% revenue  growth, now considering that Nutanix is shifting to a software-only with subscription based licensing, the revenue growth software wise is not bad given the long term revenue it will bring as a subscription model but when compared to VMware software growth over the last year, which is nearly double, Nutanix is in trouble.

King of HCI ? For Now …

Politics, opinion, and personal preferences aside, the Q1 2019 numbers clearly show that Dell Technologies currently sits on the throne of the HCI market as of now, no amount of twitter rubbish can change that. I wish it were but this is not game of thrones so don’t expect sudden dramatic unexpected turn of events, public companies have most of its data available to the market so we know for a fact that Nutanix has a major issue with sales hiring’s, lead generation, and pipeline builds as noted by Nutanix CEO Dheeraj Pandey recently which is not going to be solved this year so I believe this trend is going to go on until next year when the Nutanix transition is over and the ROI for the move is clear.

Although these are agreed upon Nutanix weaknesses that are being addressed, my take on the reason behind this fall is very different although complimentary to the issues listed before yet totally different in term of root cause of the issue, which I will detail at the end of this post in the hopes Nutanix do something about it.

Its Not You, Its Them .!

Continuing to blame the company transition to software only and subscription based licensing for the continuous downfall for the last two quarters does not explain how Dell Technologies was able to achieve such a rise in a market that was dominated by Nutanix especially on the software side. Many companies such as Citrix has made and is still making for example the transition to cloud with subscription based licensing but have not been impacted in the same way, actually their stocks got higher in a relatively short time. Hiring more sales is definitely a step in the right direction to get more leads and better pipeline but that also does not account to the rise of Dell Technologies SDS in this pace. Nutanix strategy, pitch, and approach rather than technology and logistics need to change, else Nutanix is going to become just another vendor in the market even for HCI.

No sane human being would ever wish for a company to fail even if it was his/her main rival and competitor, we definitely do our best to be better in every level ultimately winning but that should be about it, yet honestly speaking because of the “cult-like” attitude of many Nutanix personnel, I find it hard to sympathize, although one should because they have a great technology and more so the company was founded by a very respectable humble individual that most want him to succeed, God knows I do. Nutanix has capitalized on Gartner and IDC in their rise to HCI power for so long now that I do not blame Dell Technologies for making the most out of it although not to the extent of calling customers whenever Nutanix stock value drops !

More so and I say this with the best of intentions, why on earth are you calling your offering the enterprise hybrid cloud. Nutanix CEO insists on this naming in every interview and I fail to understand how is that true, software is not cloud. Hybrid by definition is bad for your core business and this is why Nutanix Move is built to migrate workloads from AWS to Nutanix platform not the other way around, more so Nutanix had an article early on named ” The Myth of Hybrid Cloud ” which was removed from the site recently. Any workload moved to the cloud is hurting your core business that being production/dev/test/DR or otherwise. Your Cloud products except for Xi Leap have nothing to do with hybrid cloud unless the broad meaning of hybrid is stretched out thin to fit Nutanix marketing. Eventually when Nutanix has all its products technically ready to be hosted on the cloud for example or extend with the cloud say AHV on-premises and AHV-On-Azure then call it that but as of now there is nothing truly hybrid in the solution except for Xi Leap which only supports GCP.

You Should Have Listened …

Ok, I am not a financial market expert nor am I a magician but I have warned Nutanix in my previous blogs and in the same time encouraged Dell technologies of the market future for both which seems to have turned out exactly as predicted. The message for Nutanix was simple, HCI technology wise has reached saturation meaning there is nothing more to add to a pure HCI SDS solution technically that would drastically effect its market share for Nutanix thus it was time to branch out into other software defined solutions such as hypervisor, security, networking, Devops, and cloud (I did not mention VDI before but they acquired Frame so I missed that).

The message to Dell Technologies was even simpler, VxRail was still missing key parts of an SDS solution such as file services, analytics, integration, … some of which have been added recently, yet Dell Technologies was already light-years away in other software defined solutions such as networking, security, and cloud so until Nutanix could catch up with those already established products, VxRail and vSAN teams have the opportunity to close the HCI gap with Nutanix and start the path of deep integration of HCI with all the other software defined products to form the ultimate software defined stack.

Ultimately Nutanix came out with Flow for networking and micro-segmentation for AHV-only which conceptually cover VMware NSX customers that opted for vSphere only for pure micro-segmentation, Calm for private cloud automation, orchestration, and self-service that is suppose to cover VMware vRa customers that opted for vSphere only for automation, Karbon for container automation and orchestration with Kubernetes which is suppose to compete with VMware PKS, Xi cloud services such as Leap, Beam, and Epoch to cover multi-cloud governance, monitoring, and DR, Frame to cover VDI competing with Horizon and Citrix, and last but not least Move to facilitate the migration of workloads from the cloud or hypervisors to AHV thus competing with vSphere/vCenter.

I don’t want to repeat myself as you can refer to the older blogs on more details but Nutanix has stretched themselves thin opening so many fronts at the same time. They have functional products but with limited functionality when compared with established products such as NSX, vRa/vRo, Horizon, PKS, HCX, SRM, RP4VM and so on … It is a step in the right direction and a must but its going to take some time to catch up with Dell Technologies while the last uses this time to perfect their HCI offering and so they have been doing with the latest release of VMware Cloud Foundation (VCF) on VxRail producing a full software defined solution stack with centralized configuration/management/operations portal giving customers an end-to-end private cloud solution with full functionality.

Pat, You Shouldn’t Have !!!

Oh how many times I have applauded the class of Dell Technologies staff in their professional and level-headed approach in response to Nutanix personnel, marketing, pitch, and strategy. If you are aware of the unfortunate path Nutanix has taken in terms of dealing with competition publicly then you can appreciate how Dell EMC and VMware handled it quite a bit. I was surprised yesterday that VMware CEO Pat Gelsinger gave the following statement to CRNI think Nutanix has sort of reached the end of their strategy. Where do they go from here?” said Gelsinger in an interview with CRN, With their offerings, [Nutanix’s] ability to scale further from where they are is a challenge. I think our scale and capacity is almost unlimited [in] where we’re going from where we already are. … We’ve been building on our position with VxRail with vSAN. We respect Nutanix as a competitor, they helped create the category, but now I’d say we have a better product, a better strategy and a much better vision of where that’s going.

The message itself is a first from VMware CEO on Nutanix as a company and what Pat said in terms of strategy is relatively true for now and I will come to that in a bit but what struck me, aside from the comment being made to CRN which is the most preferred news medium of Nutanix CEO, is that Pat said the following, “we have a better product“ which to me is simply not true at all. Does Dell Technologies as a whole have a better strategy and vision than Nutanix, Da, the numbers clearly show that year on year and numbers do not lie. Is VxRail as an HCI product better than Nutanix as an HCI product, No, No, definitely Not . Is vSAN as an HCI SDS product better than Nutanix as an HCI SDS product, No, No , and definitely Not. Is Nutanix as an HCI product better than VxRail as an HCI product, No, No, definitely Not. Is Nutanix as an HCI SDS product better than vSAN as an HCI SDS product, No, No , and definitely Not.

For years now I have been battling the vendor world in an attempt to convince them that customers are now educated enough to question, assess, and validate statements especially cliché statements that scream marketing FUD. Generally speaking only the rash or desperate would utter absolute statements because they are almost always proved wrong, not only in IT but this applies to everything in this world as a general philosophical rule. For statements to be true, they either have to be subjective which one can totally respect and understand if enough details is provided for me to understand why subjectively this statement is true to you and does it apply to me. Objective, on the other hand, is something that should apply to everyone regardless of their specifics and in our case, its just like saying Nutanix is a better product than VxRail and vSAN which Nutanix has been saying since its inception (since vSAN inception to be accurate) or VxRail and vSAN are better than Nutanix which what Pat’s message implies but normally is not the absolute message of Dell Technologies to be honest at least from my experience and from public marketing and content.

Objectively speaking, VxRail is not better than Nutanix and Nutanix is not better than VxRail . Subjectively, it depends on your environment, network, workloads, requirements, sizing, budget, desired outcome, limitation, and so on .. so many subjective points come into play specific to you as a customer that it would not be logical to say a product is better until all of these specifics have been identified after which a suitable product is deemed better. This is so important to understand and apply in order for a vendor to propose the right solution and for a customer to assess the right product accordingly. There are always general rules that come into play but for the sake of a simple example, if a customer wants an end-to-end private cloud stack then VCF on VxRail is of course a better product than Nutanix. If a customer wants an HCI based native file cluster then Nutanix is a better product than VxRail. Nutanix cannot offer an end-to-end private cloud stack with all the required features in the same manner that VxRail and vSAN do not support native file services as of yet. Its all relative to the customer requirements and not absolute, bare that in mind when you pitch a solution or want to buy one.

Is Nutanix Doomed ?

The short answer is no they are not. The long answer is that, if Nutanix does not acknowledge that their sales pitch, sales approach, sales aggressiveness, and marketing non-sense is greatly damaging their reputation as a company then I don’t think hiring more sales is going to do them any good in producing more revenue, increasing market share, and catching up with Dell Technologies. I truly want Nutanix to succeed or else I wouldn’t have bought their stocks,  the technology is good and the future is bright in terms of the market segments they are tackling with their new products and the pace of innovation but something needs to change and that something is purely internal.

I have said it before and I will say it again, forget VMware and do what you do best without the urge of wanting to stand in their issues with every product or offering and burn them in every customer engagement. I have been to countless customers where they tell me that the discussion with Nutanix was 80% competition and 20% their own product … ! What pisses me off is that you have a good product that gives value to most customers out there so why spend time burning VMware while I tell you from extensive experience that Dell Technologies personnel don’t spend a minute discussing competitors unless asked about them. Horizon doesn’t want to support AHV so I acquire Frame ! Instead of perfecting existing private cloud software such as Calm and Flow which now cover very important segments of the SDS stack, you acquire a VDI solution which would open a front with Citrix on top of VMware.

Seriously, what did the vTax campaign with all its marketing silliness targeting VMware offices and customers benefit Nutanix as a company !? What is the constant twitter attack on VMware from some Nutanix employees do for the company as a whole !? How did the rash creation of multiple products in an effort to compete with VMware  do to Nutanix operational costs and what is the ROI on that with customers !? Has the hiring of VMware employees some of which are really disgruntled do any good for the company !? Has the public shaming of VMware community and professional accreditation increase the customer base for Nutanix !? Believe me when I say , there is nothing humble in the market approach and trend set by Nutanix in terms of marketing and competition which has never been seen in the IT vendor competition scene before.

Conclusion

Eventually, the transition period will end and Nutanix will start picking off the benefits and rewards of this change early on in the company’s life but for me for Nutanix to dominate the market again, it needs to acknowledge these mistakes, be transparent about them, not repeat them again, and most importantly conduct internal workshops to re-educate employees on its core values which is being humble and honest. Nutanix approach to marketing, strategy, sales, pitch, competition and positioning would need to differ drastically for them to impact the market in the coming quarters.

Part One : Win with “Dell EMC VxRail & VMware VSAN Over Nutanix HCI”

Part Two : The Last HCI: vSAN, VxRail, and Nutanix

Part Three : Is Nutanix Doomed ? I Think Not !

Part Four: Is Nutanix Cheaper than Dell EMC VxRail !?

May the Peace, Mercy, and Blessing of God Be Upon You

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