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Server vendors? Pah, they're mere resellers

What's good for customers isn't so good for the industry

Comment A few days ago Dell announced that they are reselling hyper-convergence solutions bundling software coming from Nutanix and VMware – and possibly others, too.

From my point of view this is not a good strategy. Yes, it will boost some sales in the short term, but what is your differentiator in the long term? What is your value?

They are all (big) resellers

Dell, Cisco, Lenovo: they are all the same. They are running after any potential software partner to bundle software with their server or sign up a reselling agreement of some sort. When I say software here, I mean infrastructure software like VSA or other hyper-converged solutions, for example.

Lenovo is probably the most aggressive of the bunch, but the other two look very similar to me. Now, when a small software vendor announces a partnership with Lenovo, my only thought goes to Lenovo’s product catalogue – how big is it now? And what’s the real value of this deal?

Well, there is value actually. But it’s not the added value of the “pre-certified solution” you might think.

At the end of the day it’s good for end users. For them it’s probably just a simplification of the procurement process. If you are a Dell customer it’s probably easier to buy a Dell XC than a Nutanix NX, isn’t it? It’s all the same, but you don’t have to certify and enrol a new vendor – and in some large organisations that could be a real pain in the neck.

The same goes for the small software vendor. The small startup is a nobody and, again, the certification process to become a direct supplier of a large organisation is long and expensive – and you are not as credible as a large vendor when it comes to hardware support. A partnership with a larger vendor is more than welcome in these cases. Once you have convinced your potential customer from the technical point of view, all you have to say is: “you can buy it from your [large vendor of choice], we are in all the catalogues.”

So: it’s an advantage for the end user, as well as for the software vendor … but where is the advantage for the server vendor?

Yes, again, they can sell some more boxes today … but they are just a box mover, a facilitator in a transaction led by others. If the end users love the new software vendor, especially when it comes to storage, virtualisation and hyper-convergence, the box is non-influential. Once they are hooked on that particular software layer, then they can switch to different hardware anytime.

Closing the circle

I know selling hardware is tough and every sale counts as a win – especially if you have to achieve growth quarter after quarter … or worse, like when you have to convince a lot of people that becoming the largest hardware vendor in the world makes sense.

Large vendors stopped innovating a long time ago, but lately it’s getting more difficult. All the innovation comes from startups, but even buying a startup is a huge risk now. In most cases large vendors lose key figures from acquired startups just after a few months and product evolution starts to stall pretty quickly.

At the end of the day all servers are the same (same CPU, same RAM and same network). Yes, we could argue that some vendors have better features when it comes to management but we are going towards a software-defined world where even this aspect is becoming less and less relevant. You are no longer innovating on the hardware side, and infrastructure is all about software now. It is software that makes the difference – and you are not investing enough in it.

One last thought goes to HP(E). It seem to be less keen on chasing down these kinds of partnerships. Does it have a different strategy? Is it building its own hyper-converged infrastructure? Or is it just that HPE is slower than others? ®

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