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Cisco Systems, deciding to board the hyperconverged infrastructure market train going into 2018, revealed Aug. 21 that it plans to acquire HCI software provider Springpath for $320 million.
The transaction is expected to close later this quarter, the company said.
Springpath, based in Sunnyvale, Calif., has developed a new-generation distributed file system specifically for hyperconverged architectures that enable server-based storage systems. The startup competes in the same market as formidable foes Nutanix—the leader at 20 percent market share—and VMware.
Cisco and Springpath will have a ways to go before they’re major players in the HCI market, but it’s growing so fast—110 percent year-over-year growth from 2015 to 2016, according to researcher IDC—that there appears to be plenty of room for other providers.
For the record, a hyperconverged system refers to platform offerings that share computing and storage resources, based on software-defined storage, software-defined compute, commodity hardware and a unified management interface. Hyperconverged systems deliver their main value through software tools, commoditizing the underlying hardware.
Cisco has been aware of 5-year-old Springpath for a while. The world’s largest internet networking hardware provider led Springpath’s $34 million series C funding round two years ago. In 2016, the two companies launched HyperFlex, an HCI system with Springpath software built on Cisco’s hardware.
The Aug. 21 news means Cisco will bring the HCI software stack in house and will have full control of its subsequent development.
Hewlett Packard Enterprise made a similar acquisition in January, acquiring HCI software maker Simplivity for $650 million.
VMware supplies the HCI engine for Dell EMC, the market’s fast-rising vendor. Dell EMC markets HCI systems based on VMware’s vSAN software.
Cisco/Springpath’s HyperFlex already has more than 1,800 customers, Rob Salvagno, head of Cisco’s M&A and venture investment team, wrote in a blog post.
HCI is a booming market. According to IDC, HCI will be a $6 billion opportunity by 2020 and is the fastest-growing segment in the data center space. In 2016, the hyperconverged system market surpassed $2.2 billion in global revenue, up 110 percent compared to 2015.
As IDC data reported, Dell EMC was the fastest-growing hyperconverged system market vendor, growing revenue at a whopping 206 percent in 4Q 2016 year over year, based on the sales of VxRail Appliances, VxRack Systems and the XC Series.
Taking a look at IDC tables for 4Q 2016, Dell EMC held a 17 percent market share of the HCI market, behind only Nutanix (20 percent), which together were distantly followed by H3C (3 percent), HPE (2 percent) and SimpliVity (2 percent) among named vendors.