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Nutanix CEO Dheeraj Pandey maintains that the hyper-converged infrastructure pioneer is to blame for its recent sales slowdown. He said Nutanix took its eye of the ball when it comes to marketing, and that's why he forecast weaker than usual revenue this quarter.
Still, Nutanix faces stiffer external competition than ever in its 10-year history. Its biggest HCI software rival VMware is now part of the Dell IT behemoth that is also the server and storage leader. VMware virtualization is becoming the key part of Dell's cloud strategy and VMware vSAN HCI software is gaining importance among Dell EMC storage products. At the same time, public cloud providers Amazon, Microsoft and Google are moving their technologies on premises into hybrid-cloud architectures.
We spoke with the Nutanix CEO last week at the Nutanix .NEXT user conference about these internal and external threats, as well as the HCI vendor's chance to replace VMware as the "Switzerland of computing." Nutanix CEO Pandey also talked about his company's multi-cloud strategy, its move into data protection with Mine and recent Hewlett Packard Enterprise partnership.
Your revenue growth slowed last quarter and you expect it to slow more this quarter. Does that mean you're facing greater competition in hyper-convergence?
Pandey: The threats to us have nothing to do with the world outside. Over the last six to nine months, our shortfall is because of things we are doing internally -- marketing, demand generation, sales execution, product integration, product quality. They're all internal things. As long as the market is large, I don't have a risk from the competition. Most of the risks are from within our company.
You generally get high marks for your products and technology but are considered expensive compared to competitors. Have you considered lowering prices since your soft forecast?
Pandey: The issue was resources for lead generation, improving the discipline around that, and looking at it six months in advance.
Your main HCI competition comes from Dell, which is a partner on the hardware side but owns VMware. At the recent Dell Technologies World, most of its product news revolved around VMware. VMware's vSAN HCI software is becoming an integral part of Dell's storage portfolio. How big of a threat is it that Dell is a leader in servers, virtualization and storage -- key pieces of hyper-convergence?
Pandey: I think they have to be careful not to give the other server vendors reason to pause. VMware is the Switzerland of computing right now. If they cede that position, we can earn that position. We'd love to be the Switzerland of computing -- the operating system that can run on every hardware platform and happily be supported by every server vendor.
Most of your customers use VMware's hypervisor. What will it take to make your AHV hypervisor a viable option to vSphere?
Pandey: It has to be 10-times simpler, and it has to be 10-times faster in deployment and workload performance. We're telling our customers the hypervisor is a means to an end now, it's not an end. It's part of a cloud experience, but it's not something to be paid for, not a thing to be certified. IT abstracts those things out.
How important is your new HPE partnership?
Pandey: I believe in many markets around the world they're No. 1 in servers. They've gotten out of the tier 1 cloud low-margin server business and they've gotten out of China, but if you take that aside, HPE is still the No. 1 server vendor out there.
As with Dell, HPE is now a partner, but also a competitor. HPE already sells an HCI product based on SimpliVity software.
Pandey: We are a platform company. SimpliVity is an app that can run on our platform at some point if they want to. Otherwise, there are good use cases where they will continue to use SimpliVity and a lot of use cases where they can use Nutanix on HPE servers. And the market will decide.
Dheeraj Pandey CEO, Nutanix
That leaves Cisco as the last major server vendor that doesn't partner with Nutanix. Cisco also sells an HCI product based on UCS. Do you think Cisco will ever partner with you?
Pandey: We'd love to work with them. Right now they feel like they have their operating system, but without a hypervisor it's hard. Because you don't have the base operating system on top of which you can build the compute layer, the automation layer, and the network and security layers. They all have to be tied to the application and the application is tied to the hypervisor, which is tied to the server. It's hard to make a good case for an operating system without a hypervisor.
Everybody's talking about managing multi-clouds, but how many of your customers are actually doing that?
Pandey: We said when we launched our business that hyper-convergence was an infant, and 10 years later we're still in the early stages of hyper-convergence. Forget multi-cloud, getting to a cloud is afive- to 10-year journey. But you can't copy and paste later on. We're learning a lot from the public cloud. So the SaaS tools we're using and the control planes we built are for the multi-cloud. If we had been an ostrich in the sand, we never would have learned how they're building things for the public cloud. And a lot of those lessons need to be applied to the enterprise cloud.
And public cloud providers are learning from the on-prem world. They're moving on premises with Microsoft Azure Stack, AWS Outposts and even Google Anthos. Are they a threat to Nutanix?
Pandey: Azure Stack has been around for five years. It used to be called CPS [Cloud Platform System]. So we know it well. Outposts needs to be multi-cloud first before it becomes a for-real platform because platforms need to work with every cloud out there as opposed to working only on one cloud. Anthos is container-only right now. We work with Anthos with our platform and [Google Kubernetes Engine].
What is your container strategy?
Pandey: We've delivered containers with Karbon. We're trying to deliver networking and security around that. Just delivering Kubernetes alone is not enough. We have to make containers extremely IT ops-friendly, which currently it's not in terms of storage and networks, and security and compute.
You just launched a data protection product, Mine. What led you into that market?
Pandey: We're making our platform accessible to other software applications for data management. It takes us deeper into data, helps us design these hyper-converged backup appliances with partners and deliver them as a single product.
How does that fit into your software-centric business model? You're going outside for software in this case.
Pandey: We designed it in our factories. Between the two engineering and design teams and product management, it's all happening in the channel. We don't recognize any hardware revenue.
How big of a market is backup for Nutanix?
Pandey: We know there's a lot of data out there, a lot of backups that are big. At least in our adjacency, the Nutanix customer base, we can make backup simpler. We can't make it simpler for everyone, but in our community we can make backups really simple.