Sources: Cisco Inks OEM Deal With Startup Springpath, Preps UCS Hyper-Converged Appliance

Cisco Systems is preparing a new hyper-converged appliance that combines its UCS servers with technology gained from an OEM agreement with hyper-converged software startup Springpath, multiple sources with knowledge of the matter told CRN on Monday.

The sources said Cisco has also made an undisclosed investment in Springpath, which was founded in 2012 by former VMware storage engineers as Storvisor and emerged from stealth mode under its new name last February.

Under the pact, Cisco has the option of acquiring Springpath, said the sources, who all spoke on condition of anonymity because the information is confidential.

[Related: Here's Why Cisco Partners Think A Springpath Acquisition Would Make Sense]

In November, Springpath parted ways with its public relations firm, canceled planned appearances at technology conferences and stopped answering its phones, triggering speculation about its future direction.

The sources said it's possible that Cisco may share details about the Springpath-based UCS appliance next week at its Data Center Partner Connection conference in Maui, Hawaii, or at its annual Partner Summit event in San Diego in late February.

Meanwhile, Cisco has been rewriting the code base for Invicta, the flash storage technology based on its 2013 acquisition of Whiptail, and may use it in the new UCS hyper-converged appliance, said the sources.

Cisco shuttered its two Invicta product lines last July after being unable to fix persistent scaling issues with the technology.

A Cisco spokesman declined to comment. Springpath representatives didn't respond to a request for comment.

Springpath, based in Sunnyvale, Calif., develops software that enables compute, storage, networking and virtualization to run on x86 server hardware. Co-founders Mallik Mahalingam and Krishna Yadappanavar were previously engineers at VMware, helping to create technologies like VMFS (Virtual Machine File System) and VXLAN (Virtual Extensible LAN).

Springpath has raised $34 million in a single funding round from investors New Enterprise Associates, Redpoint Ventures, Sequoia Capital and Stanford University, according to Crunchbase.

A Springpath-based UCS appliance would bring to an end months of speculation in the channel over Cisco's strategy for the hyper-converged infrastructure market, where it's being overshadowed by startups like Nutanix and SimpliVity, which together have raised over half a billion dollars in venture funding.

Nutanix last week filed for an initial public offering in which it's looking to raise up to $200 million, while SimpliVity CEO Doron Kempel subsequently told CRN his company will file for an IPO when "the timing is right."

An executive from a national Cisco partner told CRN he'd be thrilled to see the networking giant team up with Springpath to tackle the hyper-converged market.

"This would be fantastic news, and I would love to see how this would compare to Nutanix or [VMware] EVO:RAIL from a pricing and performance standpoint, as well as ease of management," said the partner, who didn't want to be named.

Cisco formed a partnership with SimpliVity last September to sell the startup's OmniStack software and proprietary hardware card with Cisco UCS C240 rack mount servers. But multiple sources have told CRN in recent months that the partnership hasn't led to significant sales, and SimpliVity signed in OEM deal with Lenovo in August.

Reports surfaced in May that Cisco was looking to acquire Nutanix, the top dog in the hyper-converged market with more than $312 million in funding. Nutanix CEO Dheeraj Pandey subsequently denied that this was the case and said Dell -- which inked an OEM deal with Nutanix in 2014 -- would have dibs if the startup did decide to sell.

Three sources told CRN that Cisco did make multiple bids to acquire Nutanix and also talked about doing an OEM agreement with the startup. But after Nutanix rejected the acquisition bids, Cisco pulled out of the talks entirely, according to the sources. Cisco and Nutanix spokespeople declined to comment.

Although the hyper-converged infrastructure is still in its infancy, many Cisco partners would like to see the vendor pull the trigger on an acquisition or OEM agreement. And while Springpath doesn't have the brand-name cachet of Nutanix or SimpliVity, one partner executive told CRN he's confident that it'll fit the needs of Cisco customers.

"The Springpath way does seem like it's the most viable option for Cisco right now," said the Cisco partner executive, who also spoke on condition of anonymity.

Mark Haranas contributed to this story.

PUBLISHED JAN. 4, 2016