What Nutanix Does

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Really though, there is only one other competitor in HCI, VMWare. Essentially Nutanix and VMWare each have 35% and growing of the market with Nutanix ahead by a hair. Others in the space are in the scraps and leftovers section with the next closest a handful in the 5% range. With how fast HCI is growing it will be nearly impossible for any other player to gain share. That doesn’t mean the small player can’t have success. Unless those top players stumble and while I’m not studying VMWare, Nutanix sure isn’t.

What makes Nutanix number ONE?

Just read through those reviews and you can see the differentiation. If VMWare didn’t have an already large customer base to sell into they wouldn’t have the position they do. The highlights VMWare customers agree on are really about what all HCI brings to the table but don’t seem to be something really unique about VMWare especially. The VMWare operated VXRail from Dell EMC seems to be particularly a pain to install and get running with poor support until it finally gets running and people are happy.

It’s better than 3 Tier infrastructure.
Compared to 3 Tier VMWare HCI is
-Easier to Install
-Higher performance
-Easier to Scale
-Easier to Update
-More Efficient
-Saves money in long run

That’s true of ALL HCI. Nutanix gets all of those marks but with a more in the front.

But where it looks like Nutanix pulls away from the pack is its software that is not just trying to give a new hyper converged infrastructure but to bring an Enterprise Cloud Platform. That’s it’s name after all.

“Thought we were buying some hardware, ended up with a private cloud”

“Our platform is constantly evolving from an alternative to three-tier architecture towards a fully functional private cloud in-a-box. We were not counting on all the extra features we get with each release (included with our support contract).”

“I came in on a Monday to a package from Nutanix containing memory for one of my nodes. This is how I found out I needed to swap a stick of RAM as it was predicted to fail. Then I listened to the voicemail on my phone and read the e-mail from Nutanix support. They responded to an issue before I even knew there was one.”. IT department for your IT department.

“Migrating from VMWare to Acropolis was a massive risk as we had so much invested in our virtualized infrastructure. Now that we made the leap, we are glad we did. We no longer waste cycles on shelfware, or pay licensing on product features we have never used or deployed.”

“Do it. Do it now, and don’t be nervous. There is a reason why this product is so disruptive to the industry.”

“I have been in IT for nearly 20 years, and nothing has impressed me as much as Nutanix. Nothing”

“One click upgrades is an absolute god send. Being able to upgrade our entire cluster with the click of a button during business hours with zero downtime has made managing our infrastructure so easy.”

“Ease of administration. There is a simplicity to Prism that is lacking in other vendors management panes. But nothing is lacking in the capability and power.”

“What i like most about Nutanix is the ability one gets with Prism. A single dashboard to manage the whole infrastructure is a dream for any operations manager or systems administrator. We have also noticed significant performance improvement when compared with our Hyper-V or Xenserver clusters”

“The ability to build a webscale infrastructure and a trully private cloud. Acropolis, Beam, AFS, Flow, Calm and indeed Prism make this product standout from the others.”

“Nutanix support is brilliant. Sometimes i come to office and receive a call from the tech guys sitting somewhere in India or Europe to tell me they’ve noticed an alert on our cluster. They are so proactive. They also help in upgrades. Its just like having another team somewhere out there who can assist whenever you need them.”

That’s a sampling from the 200+ reviews on Gartner. The advantage is the platform, namely the interface dashboard Prism and its capabilities. It seems customers are also very happy with the way the product keeps your infrastructure running strong with the one click updates and auto detection of problems and analytics to head off problems before they happen and the Nutanix Support.

Darth

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Frankly all this cynicism has created a Wall o Worry to be climbed by Nutanix’s stock.

Other than the numbers continuing to be tremendous, one can review quickly what Nutanix was and is up against and yet they remain #1.

VMWare, if memory serves, has more than 100,000 and it maybe 500,000 customers they can sell into.

VMWare is owned by Dell who sells a good chunk of the servers that HCI products are installed on. Despite great incentive to make it happen, Nutanix is still the #1 HCI product that ships on a Dell server. If Dell could, Dell would certainly just ship VMWare HCI.

The “small fry” in this business have similar, and even larger customer bases to sell into. From HPE to Cisco to EMC and NTAP. Yet, despite it all, Nutanix thrives and has grown from 0 to now more than 11,000 customers. Each customer, most likely a customer of one of either VMWare and/or one of the small fry.

Nutanix has such great service that they even take calls from customers regarding VMWare HCI issues.

Nutanix also is actively, frantically, moving to improve its product even if it cannabilizes what they currently sell.

Given this I find it more amazing that VMWare is keeping pace with Nutanix even though practically every server Nutanix runs on also runs VMWare virtualization software. Red Hat also sells a lot of open source virtualization software, and like NTAP, has just started into this market as well. Everyone wants in to this market. Red Hat appears to be focusing more on edge computing and not trying to be one of the small fry like Cisco or HPE in the data center. Good luck keeping up with 10 years of Nutanix investment and counting.

For whatever that is worth.

Tinker

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Then again, despite all of this and how Nutanix still sells so much product, it is also fair to say, dang that is a very competitive industry, no wonder why Nutanix has a smaller multiple (stock price to revenue wise) than many of the other stocks we discuss here.

And that is all fair. In fact, that is exactly what I argued in the past. Has something changed? You know, from the title of the other Nutanix thread, it seems to me that Saul changed on Nutanix for the positive. I do not follow all these things, but I recently did as well when Nutanix hit its recent lows. There is just a sense that things are accelerating in regard to the business as it approaches the HCI chasm that moves HCI mainstream, and Xi just having rolled out. None of it felt as if it was priced into the shares. Perhaps 25% later it is, or isn’t. But that is why I bought into Nutanix.

Tinker

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Happy Fool Birthday, Tinker.

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That’s a sampling from the 200+ reviews on Gartner.

Darth, that was very helpful, Thanks, Saul

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Darth, thanks!

Denny Schlesinger

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Good information Darth. I’d like to offer an opinion based on my experience running datacenter in the past. Often times the biggest impairment to moving to a new player like Nutanix is your legacy architecture and time/effort needed. Most companies are still running 3 tier converged with VMWare ESX or Microsoft’s Hyper-V on-prem or in combination with public cloud in a hybrid configuration. So a few discussion points/concerns/thoughts:

1)A lot of folks may not want to undertake getting rid of their incumbent hypervisor to migrate to Nutanix’s version. This could be for a variety of reasons, time (competing priorities public cloud move vs working on datacenter tech), complexity of change (think changing airplane engine while flying), DR architecture (Hypervisor is typically at the heart of design e.g. VMWare SRM), incumbent backup compatibility, people skillsets, etc.

2)IMO the largest “competitor” is AWS and Azure, not VMWare. As companies move to AWS/Azure, often times that will be driven by/accompanied with rewriting/refactoring business applications and there are a lot of good reasons to move to serverless architecture, PAAS, and SAAS off-load. These require less sunk cost, easier to manage, less surface area to secure, and have a built in ability to scale quickly. Sometimes these still require “computing” engines such as AWS EC2 or Azure VMs but much of the hardware/hypervisor need is greatly reduced. Also, AWS is releasing their own “stack” to deploy into your datacenter but manage via their console (AWS Outpost).

3)VMWare is certain to hold onto some significant piece of the market due to their maturity and incumbency. Like Cisco, there are a certain number of CIOs/CTOs who will not move away from the known quantity (VMWare) due to product maturity, risk, and customer support…this of course is until they move to public cloud and then point #1 comes into play.

However, in light of the above and other scenarios, I do believe Nutanix’s ability to offer cloud-like-management, ease of scalability, ability to extend hardware life, and ability to integrate with public cloud for those running legacy hypervisors and hybrid architectures. I think it’s worth a look. I also wouldn’t be surprised to see them snatched up by someone like an HP/IBM who needs a future cloud horse to ride.

Thanks for your time.

(Disclaimer: I own NTNX & AMZN)

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Sorry - made a mistake and didn’t realize I couldn’t edit.

3 should say: …until they move to public cloud and then point #2 comes into play.

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One more for fun.

“I love the fact that I spend time LOOKING for something to do/fix with it. I actually get excited when there’s an upgrade to do because it means I get to do something!”

Signed The Maytag IT guy

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Paul, quick note on Nutanix and its hypervisor issue that you raised.

Nutanix is hypervisor agnostic. Meaning they will run on anyone’s hypervisor, including VMWare’s. In fact, last quarter (if memory serves) only 35% of customers were running with Nutanix’s hypervisor. That number continues to increase every quarter (thus Nutanix is making incremental but systematic improvement in that metric) but Nutanix does not force you to use their hypervisor, or anyone’s hypervisor. Use whatever hypervisor you want.

Nutanix is attempting to enable the same agnostic choice in regard to public cloud and private cloud.

Surveys indicate that IT managers are very concerned about vendor lock in with public cloud, and overwhelmingly the hybrid cloud appears to be the choice. There are many things that need to stay in the private data center either out of practicality (like enormous databases to run AI) or information that must be held within a region, or for security reasons, or it just is much more economical.

Nutanix is trying to fulfill these desires of cloud agnostic, with the private cloud integrating with the public cloud to make it all mesh as one as far as the customer is concerned.

But that is the goal. Nutanix is not taking on AWS but instead focusing on what AWS does not do well, thus Nutanix fixes those problems for customers. At least as articulated by management.

Thus the hypervisor issue is not a barrier for adoption of Nutanix. Neither do I feel the cloud titans are either. If they were they would not be partnering with VMWare and Nutanix as they are. There are 10 years plus of software development in what Nutanix and VMWare offer and even the cloud titans cannot just create that stuff from scratch to be competitive. It would make great sense for Google to outright buy Nutanix.

Nutanix, like Zs, spurned offers to be acquired pre-IPO. Cisco I believe made the offer (which is the same with Zs, but both companies spurned Cisco and went public instead). Cisco and HPE both thereafter bought secondary HCI companies. To date, although propaganda from HPE would make it seem otherwise, both HPE and Cisco are at 5% marketshare plus or minus a bit. Neither company was able to build the product in-house, they had to acquire.

Anyways, a bit more color about where Nutanix stands in the HCI market.

Tinker

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That’s a sampling from the 200+ reviews on Gartner. The advantage is the platform, namely the interface dashboard Prism and its capabilities. It seems customers are also very happy with the way the product keeps your infrastructure running strong with the one click updates and auto detection of problems and analytics to head off problems before they happen and the Nutanix Support.

It’s no wonder Nutanix has a Net Promotor Score of 90!!!

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Good info. To be clear on my hypervisor comment - I didn’t mean to imply they weren’t agnostic or that the hypervisor was a barrier…more of an excuse for some. What I was trying to say, the case for displacing VMWare or Hyper-V completely, is difficult due to those factors and thus some shops will not buy-in as its additional cost.

With regard to the public cloud providers, again - I’m speaking more to what IT decision makers may think or do, not about these companies viewing one another as competitors. Of course they all have partnerships, AWS and MS want no barriers to people putting their workloads in the cloud and the HCI companies must have it or they will be eliminated from consideration. The data center is often where 60-70% of IT cost lives, if a CIO is making a wholesale transformation to public cloud (and lots are) they will make a priority on reducing datacenter technologies and cost to off-set. The push to serverless is real…Kubernetes, Docker, Pivitol, Lambda, etc are all pointing to this. CIOs do not want to run applications in their datacenter if they don’t have to. CAPEX ->> OPEX might as well be datacenter → cloud.

My post was not to deter from NTNX, just my thoughts for discussion. I think they are well positioned especially for hybrid workloads.

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1)A lot of folks may not want to undertake getting rid of their incumbent hypervisor to migrate to Nutanix’s version. This could be for a variety of reasons, time (competing priorities public cloud move vs working on datacenter tech), complexity of change (think changing airplane engine while flying), DR architecture (Hypervisor is typically at the heart of design e.g. VMWare SRM), incumbent backup compatibility, people skillsets, etc.

Interesting that you are confirming what I said, high switching costs!

“While there should be high switching costs I don’t see much network effect, everyone can run their own brand of HCI. What makes Nutanix number ONE?”

Earlier Tinker wrote

Then again, despite all of this and how Nutanix still sells so much product, it is also fair to say, dang that is a very competitive industry, no wonder why Nutanix has a smaller multiple (stock price to revenue wise) than many of the other stocks we discuss here.

In Gorilla Game terminology Nutanix would be “royalty,” the King, which is a lower grade than Gorilla. This corresponds to my observation of the lack of network effect. While a Gorilla might take upward of 65% market share, a King will take well below 50%. This is the reason for the lower relative valuation.

None of the above is to say that Nutanix is not a good investment but investors should not overestimate the potential.

Denny Schlesinger

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Sounds all the ‘gonna be great stuff’, but:

After being in biz for ten years, why aren’t they profitable? Have they been, earlier?

(Can their clearly superlative user’s features-benefits be delivered at a consistent profit?)

[Been burned before (long ago), on ‘how great it’s gonna be’, color me skeptical, but receptive.]

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https://www.quora.com/Why-has-Salesforce-never-turned-profit…

I don’t know, why did it take Salesforce so long to turn profitable? Just a silly little company that created and disrupted an industry. They are of course now profitable but it took them so long that as recently as 2017 this question pops up.

Not coming even close to say Nutanix is like Salesforce, other than, who knows.

Tinker

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Hopefully all of the above better defines what Nutanix does.

There appears to be a continued thirst for understanding Nutanix. Unfortunately, while this post got a ton of recs, it actually doesn’t answer the question, and, unfortunately, is either incorrect or misses the actual point in a number of instances.

The difference between Cloud and Server isn’t what machine a user is on. Cloud Latency, or lack thereof, isn’t a key selling point for Nutanix. Hardware redundancy needing specialized hardware isn’t unique to HCI or Nutanix. Comparing gas engines to Tesla software isn’t a good analogy to Nutanix’s advantages. Heck, Microsoft Word is not SaaS. While pitching the ability to “improve all three (compute, storage, networking) at the same time” may sound nice, in reality many applications may require a specific concentration (like more CPU than memory, or vice-versa).

I would suggest those really wanting to know the space in which Nutanix plays and what Nutanix does should read these two posts:
https://discussion.fool.com/it39s-really-not-that-hard-34020522…
https://discussion.fool.com/what-nutanix-really-does-33158672.as…

From one of those:
The elevator summary for Nutanix is that it makes software that enables companies to setup computing servers on their own premises really easy. The configuration of storage, networking, compute, and virtualization resources is unified, simplified, and scalable.

Although Nutanix has branched out quite a bit, for its main business the value proposition they push is that companies today go to Public Clouds like AWS, Azure, and GCP not because they’re cheaper or better, but because they’re easier. And so Nutanix is trying to make in-house (known as “on premise” solutions almost as easy. Their larger goal is to enable companies to easily move applications between cloud and on-premise servers, but they’re apparently still a ways off from achieving that, except for a few specialized applications like backup.

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