Cisco Partners 'Smell' Hyper-Converged Acquisition or OEM Agreement Following Invicta Shut-Down

Partners have been waiting for months to see if Cisco will dive into the fast growing hyper-converged infrastructure market organically or through an acquisition.

Some solution providers are saying the shuttering of its Invicta storage business is a sign that the networking giant is gearing up for a strategic acquisition or new OEM agreement targeting the hyper-converged space.

Michael Girouard, executive vice president of sales at TekLinks, a Birmingham, Ala.-based solution provider and Cisco Gold partner, said "there's no doubt" now that Cisco will be seeking some type of acquisition or partnership in the near future around hyper-converged, rather than creating a solution organically.

[Related: Chuck Robbins Day One: Cisco Taps Former HP Cloud Exec As CTO]

"I'd be shocked if we didn't see something by the end of the calendar year with like a Nutanix or something like that," said Girouard.

Another top executive solution provider and Cisco partner said shutting down Invicta along with the recent sale of Technicolor for $600 million opens up the opportunities for a hyper-converged acquisition.

"It does smell like an acquisition or partnership is brewing," said the executive, who declined to be identified. "Nobody really used Invicta. It's good they're getting rid of it, and Cisco never really pushed it hard. … Cisco hasn't been vocal to partners about its [hyper-converged] strategy, but an acquisition seems more likely now then ever."

Robert Keblusek, senior vice president of business development at Sentinel Technologies, a Downers Grove, Ill.-based Cisco and EMC partner, said he agrees that Cisco has been mum about its hyper-converged strategy to its channel community, whether it comes via acquisitions or OEM agreements, or if there simply won't be a solution.

"It would be nice for us to know as a partner where they are headed, because it's important to our business," said Keblusek. "They've communicated that they're just simply going at this via partnerships. To date what they're saying and what they're doing doesn’t match. … If they are going to do something more, like add more to its portfolio, it would be very nice to be prepared for that and be part of what's going on."

Partners said that although not all customers are seeking hyper-converged solutions now, it’s a growing market with "real" potential to become a revenue driver for the channel.

Research firm IDC estimates that the hyper-converged market will hit $806.8 million in sales this year, growing to $1.57 billion in 2016. The hyper-converged platforms market will grow at a five-year CAGR of 71.6 percent from 2013 to 2018 as customer demand for a more streamlined virtualization experience increases, according to a recent report by Technology Business Research.

Another solution provider close to Cisco said the networking giant isn't talking about any road maps related to hyper-converged infrastructure.

"Cisco is not that focused on a hyper-converged infrastructure offering," the solution provider said.

Instead, the solution provider said Cisco could do a hyper-converged offering based on its Cisco UCS Mini technology.

"[Cisco's] UCS Mini is definitely a product line that can compete on the smaller side of things," said Bill Smeltzer, chief technology officer of Focus Technology Solutions -- a Seabrook, N.H.-based Cisco and HP partner.

Smeltzer said closing Invicta "cements" that Cisco does not want to be in the storage business and opens the door for another acquisition.

"If they don’t have that Invicta business unit, ... it definitely seems they have some type of a hole in the storage side of things for [hyper-converged]," said Smeltzer.

Cisco recently told CRN in a statement, when questioned about its hyper-converged infrastructure strategy, that its UCS is an "ideal platform" for hyper-converged solutions.

"[UCS] supports an open ecosystem of hyper-converged partners on UCS products, combining scalability with easy deployment and management. Our open ecosystem is expanding, and current partners include Stormagic, SimpliVity, EMC Scale-IO, VMware VSAN and Maxta," Cisco said in the statement.

Cisco partners with hyper-converged software developer SimpliVity, where Cisco sells the Westborough, Mass.-based startup's hyper-converged software and hardware card on UCS servers.

SimpliVity recently told CRN that sales of its software on Cisco's UCS server platform have grown significantly over the past year.

TekLinks' Girouard said partners like the professional services work that goes along with selling separate storage, hypervisor and server solutions to customers, but keeping up with ongoing maintenance, upgrades and security patching can become extremely difficult to manage.

PUBLISHED JULY 27, 2015