Mumbai: Months after speculations, Hewlett Packard Enterprise (HPE) announced the acquisition of SimpliVity, a hyperconverged IT company for $650 million. The acquisition intends to give a competitive edge to HPE which competes very closely with companies like Dell EMC in the hyperconverged space. The acquisition is very strategic for HPE and it is also expected to impact the partner ecosystem of both the vendors. HPE will continue to offer its existing hyperconverged products for customers and partners, however, there are no immediate changes in the channel plans of SimpliVity.
For months, HPE was rumored to be pursuing SimpliVity, which also offers convergence tools for servers from Dell, Lenovo and Huawei. The move accelerates the HPE’s ability to deliver a modern, multi-cloud, multi-IaaS platform, powered by automation software and composable infrastructure.
“This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers,” said Meg Whitman, President and CEO, Hewlett Packard Enterprise. “More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That’s exactly where we’re focused.”
The hyperconverged infrastructure has become quite popular as companies seek to streamline their existing data center footprints and also find alternatives to expensive storage from top providers like EMC and NetApp. The market was estimated to be approximately $2.4 billion in 2016, and is expected to grow at a compound annual growth rate of 25 percent, to nearly $6 billion, by 2020.
By bringing together HPE’s infrastructure, automation and cloud management software with SimpliVity’s software-defined data management platform, HPE and its partner ecosystem will deliver the industry’s only “built-for-enterprise” hyperconverged offering. Analysts believe the combined HPE and SimpliVity portfolio will offer a set of enterprise data services across hyperconverged, 3PAR storage, composable infrastructure and multi-cloud offerings.
Also Read: Four Things Partners Can Learn From Hyper-Converged System
There are many speculations regarding the new channel strategy of HPE post acquisition for enterprise partners. For current HPE customers and partners, the company said it would continue to offer its existing hyperconverged products, the HC 380 and the HC 250. For SimpliVity customers and partners, there will be no immediate change in the product roadmap and HPE will continue to support existing SimpliVity customers and platforms.
Since HPE split from HP Inc in late 2015, the company has continued to refine the company’s holdings. In May 2016, HPE announced spin out its enterprise services unit and merge the business with Computer Sciences (CSC) in an $8.5 billion transaction. Then, in September, HPE announced it would merge its software operations unit into Micro Focus International in an $8.8 billion transaction.
Now by bringing SimpliVity under its umbrella, HPE intends to add hyperconverged capabilities to its core offerings to compete with the Dell EMC. Dell EMC has been investing heavily in the market, and resells Nutanix hardware to its customers.
Founded in 2009 and based in Westborough, Massachusetts, SimpliVity is the second-largest pure hyperconverged IT company next to Nutanix , which went public in September 2016 and has a nearly $4.3 billion market cap. SimpliVity has backing from Accel Partners, Charles River Ventures, DFJ Growth, Kleiner Perkins Caufield & Byers, Meritech Capital Partners and Waypoint Capital. A March 2015 fundraising put SimpliVity’s valuation at more than $1 billion.
The transaction is expected to close in the second quarter of HPE’s fiscal year 2017, subject to regulatory review and approval, as well as other customary closing conditions and adjustments.