Hewlett Packard Enterprise's $1.2 billion acquisition of Nimble Storage left industry analysts wondering how HPE will mix Nimble's branded Adaptive Flash hybrid and Predictive All Flash arrays with its 3PAR flash storage.
The second HPE acquisition of the year came as a surprise to storage insiders, who were split on how much Tuesday's deal will help HPE.
Scott Sinclair, a storage analyst at Enterprise Strategy Group in Milford, Mass., called the deal a smart move for HPE, particularly the pickup of Nimble's InfoSight analytics. InfoSight technology provides proactive monitoring at the application level.
"I'm a big fan of Nimble's technology, "Sinclair said. "Their predictive flash is very compelling in its ability to blend both all-flash and hybrid in a single pool. The Nimble InfoSight predictive capability isn't easy to do and really helps build a passionate fan base among customers."
The deal can give a boost to sagging HPE storage sales, which declined 12% year over year to $730 million in January. Nimble generated $403 million in revenue last year and claims more than 10,000 customers.
"Seems like more of an eliminate-a-competitor play and [the chance to] acquire Nimble's installed base and channel. It also gives HPE a storage system to sell that is not a server-based technology," said Eric Slack, a senior analyst at Evaluator Group on Boulder, Colo.
Nimble gives HPE a set of storage products designed for the small and midsize market, said Eric Burgener, a research director of storage at IT analyst firm IDC.
The InfoSight data analytics is unique in that data scientists behind the scene look at trending information.
Bill PhilbinGM of storage and big data, HPE
"3PAR StoreServ has some products in those price points, but it does not provide as good a value as Nimble. [It requires] downscaling what, in effect, is enterprise storage architecture. Nimble was made for that space, so now HPE will have a stronger product set with higher customer value," Burgener said.
This marks the second HPE acquisition in 2017, coming less than two months after it bought hyper-convergence pioneer SimpliVity for $650 million.
"Nimble continues our additive approach," said Bill Philbin, HPE's GM of storage and big data. "We have 3PAR (StoreServ) for our enterprise-class customers and StoreVirtual for customers that are more price-conscious. With Nimble, we now have a strong SMB and midmarket play."
Philbin said HPE will integrate InfoSight technology into its other storage systems, staring with its 3PAR StoreServ hybrid and all-flash arrays.
"The InfoSight data analytics is unique in that data scientists behind the scene look at trending information. That allows them to fingerprint cases found by a customer and apply that to (other) customers en masse," Philbin said.
Nimble finds escape hatch, can focus on midsize storage
Nimble this week announced 30% year-over-year revenue growth to $117 million last quarter. Still, it faced headwinds moving up market as more companies explore converged infrastructure and hyper-converged systems. Nimble continued to lose money -- $36 million last quarter and $158 for last year. Those losses were greater than the previous year. Nimble finished the year with $185 million in cash.
"Nimble's expansion from midrange to enterprise was always going to be difficult. Under HPE, there is less pressure to move upmarket. HPE already has 3PAR and (XP) OEM systems from Hitachi in the tier one space," said Henry Baltazar, research director of storage at 451 Research in San Francisco.
In a blog post about the HPE acquisition, Nimble CEO Suresh Vasudevan acknowledged the "challenge of scale and significant exposure" that impelled its decision to sell.
The deal rescues Nimble from an uncertain fate, said Roger Cox, a Gartner research vice president covering data center infrastructure. But he wonders why HPE wants to buy Nimble.
"Nimble just gives HPE another SAN platform, which is in complete conflict and overlaps with the HPE MSA Series, the P Series (Smart Array) and the entry level 3PAR series," Cox said. "I don't see the synergy. It also doesn't solve the basic problem HPE has in its storage portfolio. They still lack a competitive scale-out NAS product and their own object storage." HPE sells object storage in partnership with Scality.
Sinclair, however, said HPE can take its time and decide how to use the different storage platforms.
"I'm a big believer that having overlap in your portfolio is better than having a gap," he said. "I would assume they'll just add Nimble to the portfolio and not make any major changes right away. That allows each of the portfolio technologies to more naturally address the space it was designed for. Over the long run, they'll have to see which technologies make the most sense to invest in."
Was HPE acquisition done with Dell EMC in mind?
George Crump, president and founder of Storage Switzerland, said HPE may be looking to match up better against its chief rival Dell EMC.
"They probably feel the need to match Dell EMC in each category," Crump said. "Getting Nimble allows HPE to push 3PAR to the extreme high end, where VMAX is. Nimble becomes their response to Dell EMC Unity in the midrange space. And they have StoreVirtual to go after customers buying (Dell EMC) ScaleIO and MSA systems for customers buying Dell PowerVault."
HPE's Philbin said the vendor was not yet prepared to discuss its roadmap for Nimble Storage, including branding and how it will handle duplicate platforms. He declined to say how many Nimble employees will be retained or whether Vasudevan will join HPE's executive management.
He said the general implementation will follow the blueprint that followed the HPE' acquisition of 3PAR. HPE paid $2.35 billion for 3PAR following a bidding war with Dell in 2010, and 3PAR quickly became HPE's flagship storage platform.
"With 3PAR we took high-end features that were available to the service provider market and brought them down to the midrange," Philbin said. "The other thing we did was make flash available without compromising data resiliency and data compaction capabilities. Adding Nimble allows us to take those same rich data service capabilities and extend them to our midmarket customers."
