HPE To Acquire Hyper-converged Infrastructure Vendor SimpliVity

The $650 million deal will help it compete more directly with Dell in the HCI arena.

• By Keith Ward
• 01/17/2017

Hewlett Packard Enterprise (HPE) made a major new push into the hyperconverged infrastructure (HCI) market today, acquiring the No. 2 player in the industry, SimpliVity, for $650 million cash.

HCI combines compute, storage and networking in one stack, and is becoming increasingly important as companies move applications and data to the cloud. That's a chief reason HCI is exploding in popularity; a roughly $2.4 billion market now, it's predicted to grow 25 percent annually, to $6 billion by 2020.

HPE's Antonio Neri, executive vice president and general manager of the Enterprise Group, explained in an online Q&A why HPE, which hasn't been on a buying spree of late, made the deal:

"The SimpliVity acquisition will enable a unique enterprise-grade offering and deliver the industry's only built-for-enterprise hyperconverged technology to HPE customers and partners.

SimpliVity's software will significantly advance HPE's vision to make hybrid IT simple, bringing a modern software-defined enterprise data service across its hyperconverged, 3PAR storage, composable infrastructure and multi-cloud offerings."

SiliconANGLE's John Furrier blogged about the deal, saying "The $650 million represents a good deal for SimpliVity, but well below expectations according to investors who hoping they would be as big as Nutanix." Nutanix remains the clear leader in the HCI startup community.

In the Q&A, Neri said that HPE will continue to sell its HCI products, the HC 380 and the HC 250. He added that nothing will change for SimpliVity customers, and HPE "…will continue to support existing SimpliVity customers and platforms."  

The move immediately makes HPE more competitive in the HCI space with the Dell/EMC behemoth.  Dell acquired a lot of HCI expertise when it bought EMC, and its subsidiary VMware, last year.

In the wake of the purchase, speculation about a possible Nutanix acquisition will surely begin swirling again. It was reported in the tech press last year that Cisco tried to acquire Nutanix as far back as 2015, and also looked at SimpliVity. Other major HCI vendors include Pivot3, Atlantis Computing, Hypergrid/Gridstore, Scale Computing and Stratoscale.

The deal is expected to close in the second quarter of HPE's fiscal year 2017, subject to normal regulatory review and approval. HPE said it intended to start offering SimpliVity software for its ProLiant servers within 60 days of the closing.