HPE be Nimble, HPE be quick
Getting back to the acquisition, why would HPE want to make an acquisition at this point in time? There are a few possibilities:
- Age – as already discussed, 3PAR has had a good run and at some point will need to be replaced. Better to start early and look at customer transitions than get to the point seen with EVA, where the product was no longer fit for purpose. There’s still life left in 3PAR, but succession planning is important.
- Market – 3PAR fits the middle- to large-enterprise market well. I never really thought it scaled down as successfully. Nimble’s platforms fit the small to medium market well, with overlap, but that’s not a bad thing.
- Customers – Nimble has been gaining customers, many of which must have been at the expense of HPE. This brings those customers back into the fold (assuming they don’t jump ship again).
- Technology – Infosight is a good product which can easily be extended to the 3PAR platform. It’s another “value add” for customers that creates further stickiness for HPE storage.
- Price – Nimble was relatively cheap, at less than half the acquisition cost of 3PAR some 7 years ago. The share price was depressed and nowhere near their market highs.
I think there’s also a question as to how long Nimble could have continued to lose money. Although revenue was growing, so were losses and that’s an unsustainable position for any company.
The not-so positives
So now for some negative sentiment. Nimble’s acquisition isn’t a good buy for those who bought into the company at IPO or subsequently. Some people will have made a significant loss.
There will (naturally) be rationalization of sales and support teams, so some people will lose out there. One other area is what this (and the recent SimpliVity) acquisition says for HPE’s future. Over the past few years, the company has closed down its public cloud and sold off services and software divisions. The focus is squarely on hardware and hardware solutions, which is further emphasized by acquiring Nimble. The question has to be asked as to HPE’s storage software strategy. Where will StoreVirtual fit within this deal? Why hasn’t HPE acquired Scality yet?
The Architect’s View
Storage (hardware) is not a growth business and is in a period of consolidation. This process is a reactionary response to reduce costs and increase customer share.
The problem for vendors like HPE is that we continue to produce exabytes of new data every year, with only a fraction of that new information heading towards traditional storage. It’s getting increasingly harder to see how HPE and others will ever be able to increase their share of the storage market without having a strong portfolio of software products.
The problem here of course is that there’s no margin in this business, unlike the high-end hardware market, where margins float around the 60 per cent mark (one of the attractions of acquiring Nimble), which is clearly a problem for the likes of HPE.
I see this acquisition as no more than a holding position and preplanning for the retirement of 3PAR at some stage in the future. So HPE, what is your long term storage strategy? ®