Everybody's Darling: How Nutanix's Pairings With Lenovo, Cisco Could End Its Relationship With Dell After The EMC Merger

As Dell closes in on its acquisition of EMC, some Nutanix partners are wondering what the future holds for Dell's relationship with the hyper-convergence startup.

Nutanix has been stepping up its focus on Lenovo since forming an OEM agreement with the server vendor last November. Nutanix has also been talking with Dell archrival Cisco about a hyper-convergence partnership in which its software would run on UCS servers, sources told CRN recently.

As Nutanix looks to broaden its market reach with additional server partnerships, and EMC aggressively touts its VxRail hyper-convergence offering, partners are wondering if Dell will continue to feature Nutanix after it brings competing technology into its portfolio.

[Related: Exec: Lenovo-Nutanix Hyper-Converged Solution For SMBs Leaves Dell, Cisco, HP With 'A Lot Of Work To Do']

"That's the million-dollar question," said Scott Winslow, president of Winslow Technology Group, a Waltham, Mass.-based Dell solution provider. On one hand, maintaining the Nutanix relationship "may seem counter-intuitive because [EMC's hyper-converged offerings] VxRail and VxRack will be Dell's own [intellectual property], but [Dell Chairman and CEO] Michael [Dell] is all about options and customer choice."

Yet other solution providers said that given the amount Dell is paying to acquire EMC, it will try to steer customers toward EMC's VxRail instead of Nutanix.

"Dell will not need Nutanix once the EMC deal is done. I also believe that EMC's ScaleIO is better than Nutanix in terms of performance and scalability," said one EMC partner, who didn't want to be named.

"Nutanix and Dell are going to have a problem," said an East Coast EMC solution provider who has moved aggressively into the hyper-converged space. "Sales reps get paid on different promos, and it'll just take a couple of promotions to steer reps away from Nutanix and toward VxRail."

Dell and Nutanix inked an OEM agreement in mid-2014 in which the vendors jointly sell and market XC series hyper-converged appliances running on Nutanix software. The agreement also called for joint investment in sales, service, marketing and support, as well as the alignment of product roadmaps.

Now, Nutanix is in the midst of talks to form a strategic partnership with Cisco, a key Dell competitor. Sources have told CRN the companies are working out engineering details and other terms of the relationship, which could be announced as early as September.

CRN first reported in May that Cisco and Nutanix were talking about a strategic partnership in which channel partners from both vendors would sell Cisco Unified Computing System (UCS) servers with integrated hyper-convergence software from Nutanix.

But sources said recently that the partnership also involves integration of Cisco's software-defined networking -- known as Application Centric Infrastructure (ACI) -- with Nutanix's hyper-convergence technology.

A Dell executive who wished to remain anonymous acknowledged that a Cisco-Nutanix relationship would likely impact Dell's Nutanix strategy. "We will maintain a Nutanix relationship," the executive said. However, "the strategic value of that relationship could be impacted as you would expect."

It's also clear that Nutanix executives feel Dell needs Nutanix more than Nutanix needs Dell.

"We are fairly confident that whatever happens with Dell-EMC will not dramatically impact our long-term trajectory," Howard Ting, Nutanix's chief marketing officer, told CRN. "With Dell, there are many people who see the value of Nutanix and want that partnership, and probably some who don't. We will see after the Dell-EMC deal closes. In any case, it would be hard for [Dell] to walk away from that business."

Ting's take on the future of the Dell relationship is in contrast with Nutanix's clear enthusiasm for its relationship with Lenovo, a Dell competitor that does about 85 percent of its business through the channel. Executives from both Nutanix and Lenovo have stressed the importance and power of that relationship recently, and even went so far as to call the Dell-Nutanix relationship into question.

"I think it's important to understand if you look at three, four, five years out, the reality is it's going to be harder and harder for Dell and Nutanix to not compete against each other, with the pieces of the business that come over from EMC," said Gerry Smith, Lenovo COO. "We have a purer matching. It's a cleaner partnership and a cleaner future, I believe."

Chris Morgan, Nutanix vice president of channel and distribution, was just as direct and forceful when he addressed an audience at Lenovo's annual Accelerate partner conference recently. "When our engineers really started to work with Lenovo engineers around our joint product line, the feedback was universal: The best servers in the world are made by Lenovo, bar none."

"We found they were the easiest to get running, they were the easiest to develop software for; they were the easiest to add new features and capabilities with," Morgan said. "We know that together we will be able to develop a world-class set of products. When you find a partner that shares your core values and can be additive to the overall value proposition, and is like-minded in how you go to market, you have to partner with them. We've worked many, many hours together to figure out exactly how we align our channel visions."

A Dell spokesman wouldn't comment on how much Dell has invested in its partnership with Nutanix, or on how many people are on the Dell team working with Nutanix.

"Dell absolutely remains committed to offering the industry’s broadest hyper-converged infrastructure portfolio which includes engineering and development for the Dell XC Series," the spokesman wrote in an email. The spokesman pointed to recent announcements detailing Dell hyper-converged infrastructure product updates.

More recently, Nutanix introduced its Xpress software aimed at the small- to mid-size business market hand-in-hand with Lenovo's line of HX-series hyper-converged appliances powered by Xpress software. Nutanix at the time said it was in talks with Dell about developing an Xpress-based solution.

Also, Nutanix's development of its own Acropolis hypervisor puts the company in direct competition with VMware, and that puts solution providers in an odd spot, said a top executive at a Canadian solution provider that partners with both Dell and Nutanix.

"It's a quickly developing puzzle. The EMC VxRail solution powered by VMware VSAN presumably becoming a Dell solution is causing a lot of sales confusion on recommending a path for customers. I really hope Dell doesn’t dismiss the hyper-converged infrastructure leader in Nutanix, but if you read between the lines however, Lenovo seems to be betting on just that," the Canadian solution provider said. "Clients have choice in terms of how they can procure Nutanix software and in which flavor based on vendor hardware platforms, which is the positive, but it's politically trying to keep the vendors playing nice on behalf of the customer’s best interest."

"Dell is handling the Nutanix relationship with basically a handful of people, so it will be interesting to see how this all plays out," said another partner who works with both vendors. "There are some very large companies doing some massive Nutanix deployments on Dell."

One Nutanix partner told CRN they decided to work with the startup because of the flexibility it offers, including being able to run on multiple hypervisors -- Nutanix’s own Acropolis, Microsoft Hyper-V or VMware ESXi.

"Some Dell customers will want freedom of choice, to run Hyper-V or Acropolis, and I see the Nutanix relationship continuing mainly due to that," said the partner, who didn't want to be named. "The only thing I think that will be a big shake up to the Dell-Nutanix OEM partnership is if Nutanix is acquired by a primary competitor to Dell."

"On the Nutanix side, I doubt you will see reps selling Nutanix plus VMware. We still see great demand for Hyper-V, especially from people with Enterprise Agreements. Microsoft customers are gravitating to Nutanix and Hyper-V is getting more mature."

Since Dell formed its partnership with Nutanix almost two years ago, the market for hyper-converged infrastructure – which refers to compute, storage, networking and virtualization running together on x86 servers – has become red hot, growing at triple-digit annual rates, according to some estimates, and prompting legacy vendors to jump into the game with their own systems on top of their partnerships with the likes of Nutanix and other hyper-converged start-ups like SimpliVity.

Dell's more-than $62 billion acquisition of EMC is expected to close by the end of October.