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HPE Invests $650M to Acquire Storage Maker SimpliVity

NEWS ANALYSIS: It's clear that HPE is investing in storage and related IT and depending less on selling general enterprise software.

It's interesting to see where Hewlett-Packard Enterprise is lining up its priorities for 2017 and beyond.

Four months ago, the iconic Silicon Valley corporation revealed that it is spinning off its software division in a merger with Micro Focus to create a significant new entity in the software development world and make Micro Focus a force with which to be reckoned.

[On a side note, Chris Hsu, Chief Operating Officer of HPE and Executive Vice President of HPE Software, was selected Jan. 17 to be the Chief Executive Officer for the future combined company.]

Following that news, HPE on the same day (Jan. 17) announced that it will acquire software-defined hyperconverged storage provider SimpliVity for $650 million in cash. The deal is expected to close in Q2 2017.

Privately held SimpliVity was founded in 2009 and is headquartered in Westborough, Mass. The company's software-defined, hyperconverged infrastructure is an original design aimed to meet the needs of enterprise customers who require on-premises technology infrastructure with enterprise-class performance, data protection, and resiliency, at cloud economics.

The combined HPE and SimpliVity portfolio will offer a large set of enterprise data services across hyperconverged, 3PAR storage, composable infrastructure and multi-cloud offerings, HPE Vice-President of Marketing for the Software-Defined & Cloud Business Group Paul Miller told eWEEK.

What SimpliVity Brings to the HPE Storage Lineup

Adding SimpliVity's intellectual property to HPE's hyperconverged portfolio provides the following benefits to customers, Miller said:

--built-in enterprise data protection and resiliency that simplifies backup and enables customers to more quickly restore operations;

--enterprise storage utilization and virtual machine (VM) efficiency that helps customers control cost and performance;

--always-on compression and de-duplication that guarantees 90 percent capacity savings across storage and backup; and
--policy-based VM-centric management that simplifies operations and enables data mobility, making development teams and end-users more productive.

"By bringing together HPE's best-in-class infrastructure, automation and cloud management software with SimpliVity's industry-leading software defined data management platform, HPE and its partner ecosystem will deliver the industry's only 'built-for-enterprise' hyperconverged storage offering," Miller said.

One In, One Out

HPE's software division moves out to join Micro Focus as a new storage entity moves in. As Rick Blaine, the central character in the classic 1942 movie "Casablanca" said: "Well, that's the way it goes: One in, one out."

What does that say about HPE's plan going forward? Looks suspiciously like storage -- especially the new-generation, hyperconverged variety--is climbing up the company's priority list. HPE already owns the intellectual software property of previous independent storage software makers 3PAR, StorageApps, ApplQ, LeftHand Networks and several data management companies that interface with storage. It hasn't bought a storage company since 2010 (3PAR), however.

The focus on storage is certainly understandable. The creation of data is booming, has been for a long while and isn't expected to slow down anytime soon, so there is plenty of demand for places to store it all. The hyperconverged market was estimated to be approximately $2.4 billion in 2016 and is expected to grow at a compound annual growth rate of 25 percent, to nearly $6 billion, by 2020.

Miller told eWEEK that he believes little or none of SimpliVity's product line will overlap with HPE's current offerings.

For current HPE customers and partners, the company will continue to offer its existing hyperconverged products, the HC 380 and the HC 250. For SimpliVity customers and partners, there will be no immediate change in the product roadmap, and HPE will continue to support existing SimpliVity customers and platforms, Miller said.

SimpliVity Omni Stack Will Be Integrated into ProLiant Servers

Within 60 days of closing the transaction, HPE intends to offer the SimpliVity Omni Stack software qualified for its ProLiant DL380 servers. In the second half of 2017, the company will offer a range of integrated HPE SimpliVity hyperconverged systems based on HPE ProLiant Servers.

"This transaction expands HPE's software-defined capability and fits squarely within our strategy to make Hybrid IT simple for customers," HPE President and CEO Meg Whitman said. "More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That's exactly where we're focused."

Doron Kempel, Chairman and CEO of SimpliVity, said that "HPE's broad sales reach, extensive partner channel, complementary technology and commitment to innovation will accelerate SimpliVity's journey and significantly strengthen our ability to deliver the best-in-class hybrid IT solutions our customers are looking for."

Whether Kempel will remain with HPE for the time being wasn't part of the news announcement. Kempel previously has been with EMC and Diligent, which was bought by IBM in 2010.

"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," said Antonio Neri, Executive Vice President and General Manager of HPE's Enterprise Group.

What a Competitor Says About the Deal

Ron Nash, CEO of SimpliVity competitor Pivot3, told eWEEK that the deal eventually should help position HPE for better success in HPI storage market but that it will take time to integrate the two companies and technologies and provide a strong solution to the market.

"Plus, SimpliVity is a mid-market vendor, which is not HPE's sweet-spot market. So they will have to recalibrate their solutions for HPE's more traditional market and those customers' enterprise-grade data, scale, and processing needs," Nash said.
Nash's general take on the importance of the acquisition to the enterprise market:

"It's clear that all the major IT companies covet this market. They are realizing they can't compete with a repackaged converged solution, and they have to have technology that is truly hyperconverged and is architected to meet the needs of customers. Customers require software-defined infrastructure that is agile, flexible and scalable to support the needs of the business, and they need it to scale to enterprise volumes.

"As adoption of HCI continues, customers will be demanding capabilities to support multiple mixed workloads on consolidated infrastructure. Every major vendor will need to have a solution in this space."

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...