It seems the topic of hyper-converged infrastructure (HCI) comes ups in almost every conversation I have with IT leaders regarding their data center modernization plans.
A few weeks ago at VMworld, VCE—the converged systems group of EMC, now Dell Technologies—hosted an analyst breakfast, and as expected, HCI was a significant part of the discussion. Since then, I’ve had some time to talk to businesses about HCI and to noodle on the open discussion that we (the analysts) had with the head of VCE, Chad Sakac. I believe VCE's products and the way they go to market positions the combined Dell-EMC extremely well in the HCI market
During the breakfast and in a pre-call with the analysts, Sakac said the products in the HCI portfolio (VxRack and VxRail) greatly exceeded internal expectations. Moving forward, I see the strong momentum continuing, with VCE eventually becoming the market leader in HCI for the following reasons:
- Customers’ buying criteria has changed. IT used to be based on the concept of “buy and assemble,” meaning organizations would purchase individual components and put the infrastructure together, then run applications on it. The assemble process can take months to complete and often puts companies behind schedule. An interesting data point from ZK Research is that 90 percent of IT projects are delivered late. Much of the delay is due to trying to piece together a bunch of disparate IT components and then spending months tweaking and tuning. Now, instead of buy and assemble, organizations would rather “buy and consume,” which has been the primary driver for converged systems, such as VCE’s Vblock and now HCI solutions.
- VCE “magic.” VCE began as a joint venture between VMware, Cisco and EMC. The company was put together to simplify the deployment of technology from three market leaders so customers could enjoy the benefits faster. VCE’s flagship product, Vblock, was born from this vision. When VCE was founded, I recall a conversation with Cisco’s COO at the time, Gary Moore, where he told me, “VCE can stand up a fully functional private cloud in a few days. No other vendor can do that.” He was right about that, and since then, VCE has nearly perfected the process of assembling, sustaining and maintaining engineered systems. While there are other HCI vendors available today, VCE has a longer history and a stronger track record than any other vendor when it comes to building engineered systems.
- Tight alignment with VMware. There’s an obvious benefit in being under the same ownership structure as VMware. VCE’s VxRack and VxRail solutions are in lock step with the vSphere roadmap. If a customer has a high reliance on vSphere, then it makes sense to use a company that develops HCI solutions that natively integrate with it. Conversely, if vSphere isn’t a strategic vendor for a customer, then VxRail and/or VxRack are likely not the best choices. However, the VMware install base is enormous, so most organizations will be running vSphere in some capacity, giving VCE a large addressable base to go after.
- Distribution channel. One critical component of a vendor’s success that is often overlooked is distribution channel. Having great technology is important, but it’s not very useful if one can’t get the products in front of customers. EMC has always had tremendous distribution capabilities, and when it acquired VCE from Cisco, VCE inherited this channel.
The other half of the channel equation is customer demand. I attended both EMC World and VMworld, and based on the tremendous interest at the shows, interest from these two customer bases is high. Also, since the Dell-EMC acquisition was announced, I’ve talked to many Dell channel partners and there is definitely pent-up demand for VCE products. I believe Dell will be a significant distributor for both VxRail and VxRack.
Dell also resells Nutanix, so it will be interesting to see how the company juggles competitive products. Dell hasn’t made any statements on the future, but I suspect over time VCE products will fulfill most of the HCI business that flows through the company.
The HCI market has been led primarily by startups, but recently there has been a flurry of activity from mainstream IT vendors, which will shake up the industry. Of all the tier 1 infrastructure vendors with HCI products, Dell-EMC seems well positioned to become the market leader in a relatively short period of time.