Nutanix is a dead issue for me, but I keep seeing people talk about Dell/VMware as the reason for Nutanix fall, and that just simply isn’t the case.
Nutanix mgmt grew their portfolio too quickly and/or didn’t grow their sales force in a proportional manner to sell this expanded portfolio. This caused Sales to take their eye off the ball and HCI sales/pipeline suffered…somewhat predictably. I uttered this very concern after attending their sales kickoff last August; the new products were cool and definitely in-line with market trends, but having been in the IT sales universe for a while, I know humans still sell these things and humans don’t always do well with rapid change and focus.
Here is what I wrote after their last ER:
Hindsight is always 20-20, but I should have done a better job pointing out that NTNX core business is infrastructure, and infrastructure is largely an afterthought to anyone outside of IT within the Enterprise. Developers don’t care, for example…they just want access to their workloads when and where they want. The workloads are more valuable, and thus garner the higher P/S ratios.
Another area I probably didn’t hit up enough was that Nutanix is competing, not just against other HCI vendors, but against standard storage vendor solutions and standard server/blade vendor solutions and against converged systems and against the public cloud.
But they were kicking butt, because they were laser-focused, and they simply expanded the portfolio too broadly too quickly. In most sales organizations, whether VARs or Vendors, you have specialist sales people for software vs hardware and further specialized within each.
Selling HCI was akin to selling a hardware appliance. That skillset is very different than selling Beam or Calm or Frame. Different audience too. When you sold Nutanix, you often had to go above the Storage Admin because they make a living being the resident “expert” on whatever standard incumbent storage platform existed (netapp, emc, 3par, hitachi, ibm, etc). So Nutanix HCI reps usually targeted the Dir of IT, or Mgr of IT, or lead Infrastructure contact, or VP of IT or CIO. Most IT reps don’t get a lot of at-bats, if any, with the CIO, in reality. So if you are trying to sell Beam (analyze your multi-cloud app spend) odds are the contacts you had for HCI aren’t the right fit. There is probably a Cloud team or it would be the CIO, or even the CFO if it is all about reducing cloud costs. If you sell Frame, you could be dealing with the legacy desktop/notebook leads and not your Dir of IT contact. Logistics and quality sales approaches really do matter. Yes, you need a good product in the first place. But the CEO admitted he “let chaos reign” which is all we really needed to hear I guess, to explain the lack of pipeline that led to a low forecast.
Amazon is really amazing, when you think this through. The ability to pivot in very different businesses is an art and a science and most companies can’t do it. Even TEAM, a highly celebrated company, capitulated to Slack when they couldn’t penetrate that market with their own project, then did a partnership where they agreed to shutter the competing division.
You can’t just say “we are going to be the O/S for the multi-cloud!” and hope your sales reps just figure out how to make that happen on the backs of an HCI hardware-ish appliance-ish sales motion dna.
I don’t care if I miss out on a 10-bagger in NTNX down the road, the less I learned is to stay away from hardware and/or infrastructure software that mimics the hardware sales cycle, like HCI does. Too many other/better stocks to invest in and focus on, imo.