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Retiring Nutanix CEO Pandey ponders what's next

As he prepares to hand over the reins of Nutanix, CEO Dheeraj Pandey said the vendor's next big question is, 'How will HCI morph in this world of hyperscalers?'

Retiring Nutanix CEO Dheeraj Pandey said hyper-converged infrastructure will remain the core of the vendor's technology, even as he predicts the HCI acronym will come to stand for something else.

"It's at the core of our existence," Pandey said of hyper-convergence, in an interview following his final Nutanix Next keynote.

Hyper-converged infrastructure (HCI) didn't exist when Pandey helped start Nutanix in 2009 and combined storage, compute and virtualization management services onto a server. Now it is a multi-billion-dollar market, with VMware, Dell, Hewlett Packard, Cisco and NetApp all vying for a piece of the pie. The HCI players now see it as a jumping point to hybrid clouds, and Nutanix is lining up public cloud partnerships as fast as it can.

Pandey compared Nutanix's HCI Acropolis operating system to Apple's iOS, which remained the foundation of Apple's mobile technology even as it added to the iPhone with the likes of iTunes, App Store, Apple Music and Apple TV. "The core foundation, the operating system of Apple is still iOS. So for us, it's very important that the core operating system doesn't get diminished," Pandey said.

"That's why we're not abandoing the acronym HCI, hyper-converged infrastructure. Now as we hyper-converge the cloud, the words have changed. It's hybrid cloud infrastructure. But the operating systems remain. The real question in everyone's head is, how will HCI morph in this world of hyperscalers?"

There is no question that Pandey sees Nutanix morphing from a pure hyper-converged platform to a hybrid cloud play that can move workloads onto hyperscalers' public clouds. In the past month, Nutanix has made its on-premises HCI clusters available to run on AWS and Microsoft Azure.

When asked what Nutanix directors -- including Pandey -- are looking for in his replacement, he included an understanding of the vendor's hyperscaler strategy as a qualification. "We're looking for someone who over the next three to five years looks at the infinite game with the hyperscalers," he said. "Someone who will resonate well in this hyperscaler market is someone with a good understanding of the business model and subscriptions, and is extremely people-oriented."

Pandey suddenly announced his retirement Aug. 27, pending the board of directors finding a replacement. He has been the only CEO in Nutanix's history.

Pandey said the board -- which includes two Bain Capital executives following the private equity firm's $750 million Nutanix investment -- is likely to go outside the company for the next CEO. Embracing a subscription model is a key, as that's how public cloud providers sell. And Pandey said if he could do one thing differently during his 11 years running Nutanix, it would be to transform sooner from selling server-based HCI to selling subscriptions.

IT retraining staff, customers to work virtually

Customers who spoke this week during the Nutanix Next digital conference discussed how they combined internal private clouds with public clouds, sometimes due to necessity.

Zafar ChaudryZafar Chaudry

Zafar Chaudry, CIO of Seattle Children's Hospital, said his hospital has gone from no remote workers to 4,000 people working from home since COVID-19 hit. It also expanded telehealth visits from around 100 to 15,000 per week. Chaudry's IT team consolidated data centers, installing Nutanix HCI and Citrix virtual desktop infrastructure for its 4,000 remote workers, with 99.999% availability. Chaudry said the hospital also uses public cloud for genome research, ramping up compute during peak times.

"We've seen patients, parents and caregivers wanting to consume healthcare in a different way," he said. "They don't want to come to the hospital. We've had to retrain people to think differently to work virtually, and we've had to do the same in teaching patients, parents and caregivers to use the technology to interact with our doctors and nurses."

He said setting up a private cloud to use with a public cloud was phase one of the pandemic-caused shift. The next phase will consist of using HCI for more high-performance applications.

Khaled Soudani, group deputy CTO of French bank Société Générale, said he also uses a hybrid strategy. Soudani said he likes many features of public clouds, but banks must keep regulated data internal. Société Générale deploys Nutanix to host most of its 70,000 virtual machines on a private cloud.

Khaled SoudaniKhaled Soudani

"Sometimes you need to go to the public cloud," he said. "Sometimes you need the capacity or bursting. We have an algorithm for risk calculation, and we cannot provide all the compute power for that internally. But with a bank you have regulation, data confidentiality, data location, data gravity. You must decide what can go out and what has to stay in. The decision between private and public cloud is not easy. So our strategy is hybrid."

Soudani said his bank started its "cloud journey" in 2014, one year before bringing in Nutanix.

[Nutanix has] set in motion this whole cloud platform strategy and a shift in perception.
Bob LaliberteSenior analyst, Enterprise Strategy Group

"We have the private cloud platform, with many services based mainly on APIs for our internal clients to consume and so we can deliver financial services to the public," he said. "For a bank, technology is the living heart of the company."

Nutanix cloud strategy 'set in stone'

Analysts who follow Nutanix say they expect the HCI vendor to continue its embrace of public clouds in the post-Pandey era.

"They've set in motion this whole cloud platform strategy and a shift in perception," said Bob Laliberte, senior analyst at Enterprise Strategy Group. "There are things that are set in stone, and it's going to be hard to dramatically shift them. It would be hard to argue with changing that vision and the direction the company is going."

However, the next CEO may take a long look at all the pieces of the Nutanix technology to cut costs and help the bottom line. Nutanix has never had a profitable quarter, despite steady revenue growth. For its last fiscal year that ended in July, Nutanix recorded $1.3 billion in revenue and a non-GAAP loss of $466 million.

"I don't expect Nutanix to make sweeping changes in strategy," Forrester Research senior analyst Naveen Chhabra said. "But when a company is backed by private investment, leadership wants to make the company profitable. That may mean changes to the investments that Nutanix has been making while expanding from HCI into other offerings. They may take a look at what's making money, and what's not making money."

Pandey said Nutanix will collaborate with more hyperscalers in the near future. He pointed to Nutanix's work with Google around virtual desktops as a serivce, and Oracle Cloud's database as a service. Referring to the melding of on-premises HCI and the public cloud, he said, "All we need is commodity servers, commodity storage and commodity networks on both sides of the aisle, the private and public cloud."

Signing off during his Nutanix Next keynote, Pandey said he will always be a proud Nutant -- the name Nutanix employees use to describe themselves.

"As we did to computing and took it from visible to invisible, now it's myself going from a visible leader of this company to an invisible Nutant forever," he said.

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