Nutanix has its own branded HCI appliances and partners with other hardware vendors including Lenovo on hyperconverged boxes. Additionally, some of Dell EMC’s HCI appliances and rack-scale systems run VMware’s software stack.
So naturally, IDC’s latest converged systems tracker that ranked HCI market shares was going to leave somebody unhappy. And that somebody is Nutanix.
According to IDC’s numbers, Dell EMC’s share of the HCI segment grew to 29 percent in the second quarter of 2017. This represents year-over-year growth of 149 percent. Nutanix dropped to No.2, with 20.9 percent of revenue share.
This unleashed a maelstrom of headlines, online comments, and alternate statistics.
Nutanix vs. Dell EMC
“What does the market look like if Nutanix gets credit for all Nutanix-powered HCI solutions, hardware and software?,” wrote Greg Smith, VP of product marketing at Nutanix in a blog post. “The less-than-surprising result: Nutanix remains the clear No. 1 HCI market share leader. For the latest reported quarter, Q2 2017, total Nutanix sales were approximately 46 percent greater than Dell.”
Not true, says Dell EMC.
“IDC data shows Dell EMC was No. 1 in HCI systems for Q2 and grew substantially faster than the market any possible way one could look at their data,” said a Dell EMC spokesperson in an email. “IDC also measures the HCI market — and all markets — the right way. This is by the absolute revenue that customers spend with which vendors. Hardware, software, and services are all part of the HCI value proposition for HCI systems.”
Despite this spat, both companies describe the other as a “great partner.”
“To be clear, Nutanix is a great partner, and we continue to work together to meet customer needs,” the Dell EMC spokesperson said.
The Nutanix blog ended with similar sentiments. “Dell is a great partner, and we’re happy that Nutanix software is fueling Dell’s hardware business and driving some amazing customer wins including the FBI and Nasdaq,” Smith wrote. “We look forward to our continued partnership in supporting our customers on their digital initiatives. Here’s to our continued mutual success!”
So who is the real HCI market leader? It’s still Dell EMC, according to IDC analysts.
How IDC Calculates Market Share
IDC counts four HCI deployment types based on the way the system is packaged and the “relationship between the brand of the solution and the owner of core software-defined storage controller software.” These four categories are: single-vendor appliances (like Nutanix NX Series or Scale Computing HCS); multi-vendor appliances (like Dell EMC-branded appliances running VMware or Nutanix software); software and certified servers (like VMware’s vSAN ReadyNodes) and software-only solutions.
IDC only tracks the first three deployment types in its quarterly converged systems analysis. It doesn’t track software-only HCI solutions in this market.
Nutanix’s beef is with a change IDC made to the second quarter of 2017 market tracker. Previously, IDC counted all vSAN ReadyNode sales and some ScaleIO-based HCI systems in the “other suppliers” market share — it didn’t count these revenues in the Dell EMC column.
“What we discovered was Dell has a program that is very similar to ReadyNodes,” said IDC analyst Eric Sheppard. “When I discovered that program, it looked a lot like the VMware ReadyNode, so I put it under other suppliers and moved on.”
Later Sheppard learned the Dell EMC vSAN Ready Nodes and Dell EMC ScaleIO Ready Nodes — despite using the same lingo as the VMware product — “take things a step further than the VMware ReadyNodes.”
The Dell EMC systems, he said, are more tightly integrated. “Dell walks you through the configuration using VMware’s tools, they work through the best software licenses and configuration for you, and you buy it as a single solution,” he said. “Dell builds that configuration in their factory, they install all of the software up to the hypervisor, and they ship it as an appliance.”
For this reason, the latest IDC tracker counts these as single-vendor appliances (Dell EMC ScaleIO ReadyNodes) and multi-vendor appliances (Dell EMC vSAN ReadyNodes). And it attributes revenue for these products to Dell.
“It didn’t change the value of the market,” Sheppard said. “It didn’t change Nutanix’s share of the market.”
Brand on the Box
Attributing 100 percent of the revenue to the vendor that brands the product is how IDC has been calculating market share for years, he added. “We do that with the enterprise storage space — we have since 1994 — and the server space. So Intel and Microsoft don’t get a ranking for their server business, and VMware doesn’t get a ranking in the converged systems business. This idea of brand on the box is very common within IDC.”
Sheppard said he hadn’t read the Nutanix blog. When asked about the market share numbers in it, which Nutanix said came from IDC data, he said: “I don’t think we approved any use of our data, and we’re not really exposing model-level information at this point.”
‘Massive’ HCI Opportunity
A separate HCI software-only ranking will be published in December, Sheppard said. But in the meantime, there’s plenty of opportunity for both companies to coexist in the fastest growing segment of data center technology.
“In hyperconverged, including all software and hardware, total user spend was $2.863 billion for the 12-months ending in June 2017,” Sheppard said. “That was up 70 percent year-over-year compared to June 2016, when it was $1.683 billion. And the total enterprise infrastructure market is at best flat, probably in decline. This [HCI] is a really rapidly growing market that’s still in its early days. The opportunity is massive.”
Sheppard expects investment and innovation in HCI to continue.
“It’s clear that hyperconverged has become a key pillar of hybrid cloud environments, and you’re seeing incredible amounts of innovation from companies like Nutanix to make that happen. This is now the platform that unites the on-premises private cloud and off-premises public cloud — the hybrid cloud world. Dell is at the front of it, but so is Nutanix.”