Hyperconverged infrastructure (HCI) is the fastest growing segment in the data center space. And it seems everyone, from sever to software vendors, wants a piece of this pie.

These platforms combine scalable software-defined compute, storage, and networking. They deliver their main value through software tools, using commodity hardware.

Overall, HCI revenue reached $418.3 million in the first quarter of 2017, according to Gartner’s most recent numbers. With an annual growth rate of 48.2 percent, HCI will be an $8.6 billion opportunity by 2020, the analyst firm forecasts.

Nutanix Chief Product and Development Officer Sunil Potti describes it as a “secular shift.” Nutanix is the top HCI vendor, according to Gartner, which says the company earned a whopping 40.3 percent of market revenue in the first quarter.

At the Deutsche Bank Technology Conference this month, Potti said three years ago enterprises were asking if they should use hyperconverged. “Now it’s become where should I not use it? Much like public cloud has become a secular shift,” he said.

Dell EMC holds the number two spot in Gartner's ranking with 23.7 percent share. Dell EMC's Chad Sakac made a similar comment during an interview at VMworld last month. Sakac, president of the converged platforms and solutions division at Dell EMC, said HCI “is no longer exciting. And no longer exciting is actually the most exciting phase for real work to occur. It used to be you’d get into a bar fight with someone about is HCI ready?”

These days, however, “everyone knows it works,” he added.

For the record: Gartner puts Huawei in the third spot with 14.1 percent HCI revenue share, driven primarily by the midmarket consumption in China. Other vendors gunning for a top rating include Hewlett Packard Enterprise (HPE), Cisco, Lenovo, NetApp, and Oracle.

HCI and Data Center Modernization

The reason why HCI is the darling of the data center is because it enables enterprises’ IT modernizations efforts including software-defined storage and networking and private cloud platforms.

HCI system (HCIS) appliances are now sufficiently mature and robust to support a growing number of mode one, mission-critical applications, including Microsoft Exchange and Microsoft SharePoint, as well as Oracle and Microsoft databases, said Gartner analyst Naveen Mishra. “It is emerging as a on-premise cloud alternative,” he said.

But, Mishra adds that public cloud poses challenge to the growth of HCIS.

In fact, the major HCI vendors agree that, if not necessarily a challenge to the growth of hyperconverged, public cloud will definitely influence what buyers expect from HCI systems.

“The future of HCI is going to see the landscape change quite dramatically and this is brought on by the off-premise cloud infrastructure,” said Dell EMC’s Trey Layton, CTO of the converged platforms and solutions division.

Layton said a new HCI customer is emerging. “And this buyer is completely driven by service level objectives, business outcomes. They care less about the type of CPU or the hypervisor. They are looking to buy an outcome that will meet the requirements needed to run their workload. The future hyperconverged platforms you will see is an on-premises HCI cloud platform that will provide utilization into off-premise cloud infrastructure.”

All companies will eventually have a hybrid cloud strategy, using both on-premises and public clouds, he added.

“A cloud strategy is not a destination, it’s an operating model,” Layton said. “And hybrid is the embodiment of what cloud is. The automation and operational technologies that we employ to enable the co-existence of an on-prem and off-prem investment are the realization of cloud.”

All Roads Lead to Hybrid Cloud

In other words, HCI enables this realization of cloud as an operating model. “HCI is absolutely critical to this.” Layton said. “It’s not the only technology, but it’s a foundational technology that will enable that outcome.”

In an interview with SDxCentral, Potti said HCI should have been called RCI — as in really converged infrastructure. And the next phase of hyperconverged looks like the next phase of Nutanix, which is all in one hybrid cloud.

“The private cloud will converge with public cloud,” Potti said. “The more folks adopt AWS [Amazon Web Services], the more they taste the wine of AWS, the more they crave that experience inside. They look at their data center, and even if they are able to move some of their workloads to the cloud, they would love that same experience in the data center.”

Any given workload should look and feel the same in the data center as it does in the public cloud, he added.

Nutanix still has work to do, which includes adding machine learning to the platform to enable automation, he said. “Whether it be AWS inside or AWS outside, it should all look like one cloud. It should be one experience. We use the term one cloud OS and one click.”

Of course, with the hyper-growth forecasts for HCI, many vendors are hustling to boost their market share.

Will a New HCI Vendor Take the Throne?

“This growth is prompting all leading data center providers such as Cisco, Dell EMC, HPE, NetApp, which have introduced their own HCIS in their portfolio, apart from partner-related activities,” Mishra said.

In January HPE paid $650 million in cash for HCI startup SimpliVity. Just last month Cisco said it plans to acquire HCI software company Springpath for $320 million, and this week said its cloud-based service to manage HCI systems in enterprise data centers will launch later this year.

Also in August VMware and Dell EMC loaded more VMware software onto Dell EMC hybrid-cloud and HCI systems. Even Microsoft quietly entered the space in October 2016 and then announced its first wave of HCI hardware partners in July.

NetApp promised to unveil a next-gen HCI system at its annual conference in October.

“Our approach is to bring to the enterprise, an enterprise-grade hyperconverged solution that deals with some of the challenges that first-generation hyperconverged solutions like vSAN and Nutanix has,” NetApp CEO George Kurian said on NetApp’s first quarter fiscal year 2018 earnings conference call.

Nutanix isn’t worried, Potti said.

“At the end of the day, if someone is trying to solve a problem that has already been solved — or was a problem four years ago but the requirements have changed for that problem — then that’s what they need to solve. We’re not concerned when someone says they have a better hyperconverged solution.”