The Cranky Admin

HPE Buys Nimble: What Does It Mean?

The enterprise giant paid $1.2 billion for the storage vendor.

• By Trevor Pott
• 03/09/2017

Hewlett-Packard Enterprise (HPE) has agreed purchase all-Flash and hybrid storage array vendor Nimble Storage for $1.2 billion. Nimble is often talked about as a peer to Tintri and Tegile; hybrid array companies that brought disruption to the traditional storage array market. Of the three, Nimble was the only one to have IPOed and now is the only one of the three to have been acquired.

Nimble and Tintri were both founded in 2008, with Tegile having been founded in 2010. Hybrid arrays didn't really start to take off until a few years later, and all three companies made names for themselves.

In many ways the development of Nimble, Tintri and Tegile have mirrored one another. These companies started out by offering hybrid arrays that married flash with traditional magnetic disk. Once hybrid arrays become just a feature and not a product, all three developed analytics platforms. Eventually, each created their own all-Flash offerings.

Making Sense of it All
At first glance, the HPE acquisition doesn't make a lot of sense to me. Of the three, Nimble was the more expensive company. I have personally been a Tintri user since 2015, and while I can see and understand the differences between the three competitors, I have not traditionally seen Nimble as all that much more advanced over Tintri.

There's also Pure Storage to consider. Pure is arguably top dog in the all-Flash space (Dell EMC would be the one to argue this). Where Nimble has succeeded in the midmarket space, Pure has gained a lot of mindshare among large enterprises and other big spenders.

Google says Nimble's market cap was $1.07 billion before the post-announcement spike. HPE agreed to purchase them at $1.2 billion. Pure's stock price is currently in a dip, but has had a market cap of anywhere between $2.5 billion and $3 billion over the past year.

HPE doesn't traditionally care much about the SMB, had never had great midmarket offerings, but loves the large enterprise. HPE does best when dealing with people who measure their datacenter footprint in acres. Pure's customers are more in line with HPE's approach to life, and isn't afraid of spending a couple billion extra if it gets them what they want. So why did HPE buy Nimble?

InfoSight: Nimble Analytics
I took the time to hunt down a few Nimble customers and ask them their views. The responses from every one of them were similar. The first thing to mind was Nimble's analytics package, InfoSight. Among Nimble's customers this functionality not only has a lot of mind share, it has acquired an almost cult-like devotion.

Nimble's customers also consistently mention price as a motivating factor behind their purchases. While I won't dispute the math on the price/performance or price/capacity calculations they put forth, I just don't buy this as an argument for HPE's acquisition. HPE does not traditionally focus on easily measurable, value-per-dollar metrics. Customers buy HPE because they want enterprise support, they want to do obscure and hard-to-do things, or they want to tie a whole lot of disparate types of systems together and manage it as one.

This leads me back to InfoSight. Tintri, Tegile, Pure and Nimble all have analytics packages. Among them, InfoSight is the best. Personally, I rather like Tintri's analytics, and have never had a need to look beyond them, but having spent the past 24 hours playing with all offerings as well as interrogating customers, it's clear that Nimble is the leader here.

The question: is InfoSight $1.2 billion dollars worth of leadership?

The 'Hard to Qualify' Stuff
There are 1,300 Nimble employees. As with any merger, "back end" staff such as accounting, HR, marketing and so forth will probably be invited to take redundancies. HPE just got a bunch of them from buying SimpliVity at fire sale prices, has a bunch of its own, and makes a yearly festival out of firing thousands of people. Getting past those folks, however, there is value in Nimble's human assets.

Someone at Nimble -- or a bunch of someones, more likely -- wrote InfoSight. This means conceiving of the product, doing things like testing, QA and refining the product. My investigations reveal that Nimble's InfoSight devs and management team are that rarest of the rare beasts: coders that listen to their customers and implement changes based on feedback. Surely this has value.

Perhaps more importantly, however, Nimble has created a sales force that has consistently driven growth in a highly conservative market. Storage admins resist change with a strength bordering on an elemental force and yet somehow Nimble carved out a sizable niche.

While HPE has little use for these sales folks continuing to sell storage -- it has a well established channel for that -- it has been forced to spin off its services business into a complex merger with CSC, and has also sold off "non-core" software assets in another spin-off merger with Micro Focus. Clearly, HPE could use sales nerds capable of actually driving growth all across the organization, meaning at least some of the value here might just be a small injection of new blood. This approach rarely seems to work in large vendors, but it never seems to prevent them from trying.

Nimble also has its own cloud play, Nimble Cloud Volumes, though as this is still a nascent offering with limited uptake, I'm unsure it would have been a big factor in HPE's decision. HPE has not had a lot of success running its own private cloud, and I'm told they're not eager to rerun the experiment. HPE does, however, have much better success setting up clouds for others.

The Waiting Game
In the end, we will have to wait and see to know if Nimble was worth the $1.2 billion. A lot of that value looks like it will depend on what HPE does with InfoSight. Good luck to all involved.