Nutanix CEO Ramaswami talks HCI, 'invisible' cloud strategy

Rajiv Ramaswami's first year as president and CEO of Nutanix has been a challenging one.

The first hurdle he had to jump was a lawsuit filed by his former employer VMware, claiming he brought insider information that provided an obvious advantage to Nutanix. After he won that battle, he set about running his company in the midst of a surging pandemic, making several quick adjustments to the Nutanix portfolio.

Since then, Ramaswami has doubled down on Nutanix's multi-cloud strategy and focused on deepening existing partnerships with Microsoft and AWS, engaging with those companies in more meaningful joint development work. He has also established new partnerships recently, including one with Kyndryl, the IBM managed services spinoff. And, as always, he has looked to strengthen the company's hyper-converged infrastructure (HCI) strategies in its tooth-and-nail competition with VMware.

Ramaswani sat down to discuss these issues, including how he sees Nutanix's business evolving over the next few years, competitors and the company's goal to make cloud infrastructure invisible.

Some of your competitors, as you do, talk about the cloud as an operating model, not a destination. What is distinctive about your approach?

Rajiv Ramaswami

Rajiv Ramaswami: There are many ways of [using cloud as an operating model]. If you look at AWS, they have a unique set of services and tooling. If you're a company looking to use multiple clouds, you end up training your teams to use different tools and processes, and that's a lot of work for the IT folks. You're also worried about getting locked into any one of these clouds, and you have concerns about cost. In an Andreessen Horowitz white paper earlier this year, they noted the cost of operating in a cloud at scale is twice that of operating it yourself on prem.

What we enable is the ability to treat each of these clouds as a single entity, where we have one platform a customer buys to deploy applications on any one of these clouds. And they can do so without having to retrain their teams to manage their cloud operations across every cloud and not get locked into any one cloud.

How has your HCI technology strategy evolved the past year or two, and how will it evolve moving forward?

Ramaswami: First, our HCI core story is still very much in place. It's still a good place to modernize your infrastructure going from legacy to HCI. That was the fundamental value proposition for HCI -- to break down silos across compute, storage and networking and bring it all together into a software-defined infrastructure and run it on commodity hardware.

But now our HCI is ready to take on almost any workload that's virtualized, including complex mission-critical database and ERP workloads. HCI has moved from being a tool you use for specific workloads to one that can be used to run all applications in the enterprise. That's one thing that has happened. The second change is the platform itself, which is evolving from a private cloud on prem to a hybrid multi-cloud platform. The portfolio itself has grown to provide a complete software stack to build and run managed applications across clouds.

In the year since you took over as CEO, has Nutanix's approach to partnerships and acquisitions changed?

Ramaswami: When I took over, I outlined four priorities. First, to complete our journey toward being a subscription-based business. Second, to simplify our product portfolio, making it easier for customers to deploy. Third, continue building strategic partnerships, and fourth, acquiring talent. But also we focused hard on expanding partnerships with the OEMs like HP and Lenovo. We strengthened our relationship with Microsoft's [Azure] to where we are doing more joint development work. We still work with Amazon, where we now deploy our software on their bare-metal servers. We also made good progress with Citrix and Red Hat, specifically [Red Hat's] cloud-native stack that includes OpenShift and Red Hat Enterprise Linux and we are now certified to run them on the Nutanix platform.

In the last quarter, it appeared earnings growth stalled, with analysts attributing that to your transition to a subscription-based model. How long do you expect this transition to take?

Ramaswami: I wouldn't characterize it as stalling. In fact, we reported 31% year-over-year growth.

They were talking about earnings.

Ramaswami: Yes, but revenues continued to go up, and we're close to breakeven with free cash flow. We have made tremendous progress driving toward profitability. This past June we said our top line would grow at 25% year over year through fiscal 2025. We will get to sustainable positive free cash flow by the end of fiscal 2022.

We have most of the hard work behind us in terms of our subscription journey. What is happening now is the renewals of the contracts we sold a couple of years ago are starting to come up, which comes at a pretty low cost for us. We don't have to invest a lot to get those renewals, which provides top-line growth and bottom-line leverage.

Despite the top-line growth, some analysts suggest you could improve your competitive positioning if you merged with a company like Citrix or HPE. What is the short-term likelihood you would consider that scenario?

Ramaswami: I would say we are squarely focused on the execution of what we have said before, which is to continue to grow as a company by driving top-end growth, bottom-line profitability and to realize that vision of a hybrid, multi-cloud world by executing on partnerships.

What kind of company do you envision Nutanix to be in five years?

Our vision for the next five years is around … making clouds invisible. Clouds are the new silos, and we want to make it easy for companies to go use them wherever they are.

Ramaswami: What we have talked about for the last 10 years was our journey to make infrastructure invisible. Our company was based around the vision of making enterprise infrastructure simple, making it truly invisible so people can run their business and not worry about the individual complexities of the infrastructure and/or running everything separately.

Now, our vision for the next five years is around doing the same for making clouds invisible. Clouds are the new silos, and we want to make it easy for companies to go use them wherever they are.

Making clouds invisible over five years may not be such an easy thing to do.

Ramaswami: It's clearly an aspirational goal. But we've already taken steps along the way to get there. If you look at where we are today, customers using our cloud, on-prem private clouds and AWS in a seamless manner. Just last quarter, we talked about a couple of customers with busy holiday shopping seasons who need a lot more capacity. They use an on-prem platform but they also use our platform to extend into AWS as they need to. A lot of federal agencies are doing the same. It allows them to use AWS in a completely invisible way.

Another example is a large real estate company that had to migrate some of its data centers to the public cloud. Within a month, they were out of those data centers because they were able to do that using a platform like AWS to run the same apps with zero refactoring.

You came in as CEO at a tough time about a year ago with the pandemic still raging. What sort of quick adjustments did you have to make to the business?

Ramaswami: It was the four priorities I outlined. But also, we had many individual point products going to market that had good value propositions but were difficult for our resellers to sell. We combined them into suites, making them simpler offerings their customers could easily consume. We did a lot of interoperability testing so the suites worked correctly with validated reference models. All they did is take it out of the box and put it to work.