Analysis: Cisco's Whiptail Buy Less About EMC, NetApp And More About HP, Dell

After years of speculation that Cisco would acquire a storage vendor, Cisco's unveiling of a planned $415-million acquisition of flash storage vendor Whiptail is, in the end, not about storage, according to Cisco and its storage partners.

Instead, Cisco plans to integrate Whiptail's all-flash storage technology into the Cisco UCS server platform as a way to accelerate applications from the server side while ensuring UCS continues to work with the company's storage partners own storage-side flash technology, said Paul Perez, senior vice president, general manager and CTO for Cisco's Data Center Group.

Instead of impacting the business of -- and relations with -- Cisco storage partners like EMC, NetApp, VCE and Hitachi Data Systems, the main impact of adding flash storage technology to UCS will be felt by server competitors including Hewlett-Packard and Dell, which compete with Cisco in the converged infrastructure solution market, Perez said.

[Related: Cisco Storage: How To Dominate The Market Without Selling A Single Disk ]

"In preliminary discussions with our partners, we made sure they understand that this competes against server vendors with integrated solutions," he said. "Nothing prevents future Vblock, VSPEX and FlexPod solutions from having integrated flash on both the server and the storage side."

Cisco Chairman John Chambers, in moving to acquire Whiptail, is not looking to displace its storage partners, said Jamie Shepard, regional vice president of Lumenate, a Dallas-based solution provider and close partner of Cisco, EMC and VCE.

"It's always been speculated that Chambers wants the whole data center, and who Cisco will buy on the storage side," Shepard said. "But Chambers is doing what's right for the customers. This is not a knock on any hardware vendor. Not on EMC, NetApp or VCE. It's Cisco making its own software-defined infrastructure."

EMC has been ahead of the curve with software-defined infrastructure for years with its acquisitions of software-defined storage developer ScaleIO and all-flash storage array developer XtremIO, Shepard said.

"EMC has set the table on what hyper-converged infrastructure is," he said.

NEXT: Cisco Crosses the Storage Chasm, But Won't Mess With Storage Partners

Keith Norbie, director of server, virtualization and storage for the Eastern U.S. at Technology Integration Group (TIG), a San Diego-based solution provider and partner to EMC, NetApp and Cisco, said that Cisco has finally crossed the wide chasm between it and storage, there will be no impact on other storage vendors for the short term.

"Nobody on any side of this game will do anything in the short term," Norbie said. "They won't want to screw up anything. These companies have reference designs and a lot of customers. This is just a revenue-expansion opportunity for Cisco."

Cisco has had plenty of opportunities and the financial capabilities to acquire a company like NetApp for years but didn't, Norbie said.

He also said he doesn't expect EMC to react to Cisco's acquisition of Whiptail, and said the only time EMC has ever reacted to another vendor's move was when EMC snatched Data Domain away from NetApp after a prolonged bidding war.

"Cisco's acquisition of Whiptail will be great for Cisco, and great for companies looking for more from Cisco," he said.

That seems to be the consensus of storage vendors that closely partner with Cisco.

Todd Pavone, executive vice president of product development and strategy at VCE, a joint venture of EMC, Cisco and VMware, called Cisco's Whiptail plans good news for his company.

"Cisco is doing a technology buy," Pavone said. "They're buying technology to add to the fabric of UCS. We like it when our parents acquire new technology. And, Cisco has made it clear that they don't want to offer stand-alone flash storage."

Before officially announcing the Whiptail acquisition, Cisco made it clear that it is focused on its UCS strategy, Pavone said. And, he said, that in turn means improvements to VCE's Vblock converged infrastructure offerings, although the improvements will not come in time for next week's planned new Vblock solutions.

"Cisco will incorporate Whiptail technology into UCS," he said. "We will incorporate it in our Vblock to increase performance similar to what we will do with EMC's new VNX2 arrays."

An EMC spokesperson told CRN that Cisco has been "crystal clear" regarding the company's intent toward Whiptail.

"Whiptail will serve as a server-resident memory, not an enterprise storage system that would compete with their storage ecosystem," the spokesperson said. "Cisco is entering a part of the market where EMC partners on the hardware side, and adds value in software. This will enable us to further extend our partnership with Cisco around VCE and VSPEX collaboration initiatives."

NEXT: NetApp, EMC Say All's Well, But Is It?

NetApp, in an emailed statement attributed to a company spokesperson, wrote that Cisco's move to integrate Whiptail's flash storage technology is natural.

"The integration of solutions for flash acceleration is a natural direction for the server market as rapid data growth and rising application performance requirements push the limits of today's architectures. Cisco and NetApp share a common vision for the potential for flash memory technology to be used across the entire IT stack, from the server-level to the network-level storage arrays, and we continue to execute on an extensive joint development roadmap to complement each other's technology innovation. This partnership includes the integration of Data ONTAP technology more tightly with Cisco hosts, and continued innovation with FlexPod, our leading converged infrastructure," NetApp wrote.

One solution provider said Cisco, NetApp and EMC are expected to say everything is fine, but the reality is still that Cisco is serious about storage.

"Cisco doesn't want to say it's in the storage business," the solution provider, who requested anonymity, said. "I'd be shocked if EMC or NetApp execs are not sitting around the table saying, 'We have to watch Cisco.' Instead, they put out these nice statements about seeing what happens. This is all a plan for Cisco's world domination. Cisco wants software-defined everything."

Cisco's Perez said that while Cisco will continue to support existing Whiptail customer relationships with stand-alone arrays for now, the focus going forward will be in integrating Whiptail's all-flash technology into UCS.

"What we see here is a substantiation of converged infrastructure," he said. "Our intent is to sell UCS and Whiptail together. This is different from Cisco going into the storage market. That's not our intent."

Lumenate's Shepard said Cisco's Whiptail acquisition will not mean the death of any storage vendor, although system vendors like HP and Dell will feel the heat.

"I have big customers using UCS and EMC's XtremIO," he said. "These customers won't say, 'Give me Whiptail.' Of course, it all depends on how Cisco addresses the Whiptail business."

Instead, Perez said, Cisco's customers have been pushing Cisco to add a flash acceleration layer to UCS that can be managed all together.

"We looked at tens of flash storage vendors, and Whiptail is the best," he said. "We are now in the 'Wild West' of this market. Analysts tell us the flash acceleration market has a CAGR [cumulative annual growth rate] of 40 percent. Speed to market is important. Whiptail is within our means, and has a good storage DNA."

NEXT: Cisco Early Investor In Whiptail

Cisco should know about Whiptail's DNA. Cisco was an early investor in Whiptail, and it has a record of occasionally acquiring companies in which it invests, Cisco's Perez said. However, he said he was not able to comment publicly on other possible storage vendors in which Cisco invested.

TIG's Norbie said the real winner in this acquisition is storage startup PernixData, which develops technology that ties the flash storage and SSDs in multiple servers into a cluster to provide a high-performance storage tier for virtualized environments.

"PernixData is integrating server and flash storage," he said. "The Cisco acquisition of Whiptail unlocks validation of a move toward more pools of shared resources. It's a good day for PernixData in a subtle way. They'll see the benefits in the future."

For solution providers, the integration of server and flash storage resources will mean a change in how they approach customers, Norbie said.

"Typical VARs have a Cisco practice and a separate storage practice," he said. "Now the question becomes, who owns what? TIG is 100-percent focused on mission-critical solutions for customers regardless of the boundaries."

PUBLISHED SEPT. 10, 2013