CRN Exclusive: Nutanix CEO On Potential Dell-VMware Merger, Reducing Channel Conflict, And Helping Partners Elevate Their Services

Nutanix Goes Full Steam Ahead

Nutanix has been fielding questions about the future of its Dell hyper-converged infrastructure partnership for years, said Nutanix founder and CEO Dheeraj Pandey in an interview with CRN.

The questions range from "With EMC and Dell coming together, what will happen to our [Dell-Nutanix] XC line?" to "If they become closer to VMware, what is going to happen to the Nutanix relationship?'" said Pandey.

Following Nutanix's strong second fiscal quarter earnings report Thursday in which Pandey said Nutanix's software business is now at a $1 billion run rate, Pandey talked about the contributions partners have made to the company's success, why he respects Dell Technologies CEO Michael Dell, and the keys to reducing channel conflict.

Are you doubling down on your Dell partnership going forward?

It will be one of our key partnerships going forward. If you think about Dell's heritage, they come from the consumer space – laptops, they even had cellphones built years ago. So in the consumer space, it's not a zero-sum game. Look at Amazon as a retailer. They have a lot of their partners fulfilling products as well as Amazon's own warehouse. So Dell is actually cut from this cloth of consumer companies where it's not zero-sum mind-share. They would rather have an ecosystem where they can very comfortably compete with their partners and yet think about the end customer first.

Even if they become closer to VMware and become one company, they'll have to keep proving the fact that VMware and Dell are still making independent decisions because there's the server business -- which needs to flourish against HPE -- and then there's the VMware business that needs to be multi-server, multi-platform for years to come.

What are your thoughts on a potential Dell-VMware merger?

We're waiting and watching. I respect Michael Dell as a leader. He has massive roots in the server business. [Michael Dell] and [Dell infrastructure leader] Jeff Clarke have actually built this business on the strength of the server, and they would not want to lose that by not being close to us as well. There's only two operating systems that are really [growing] in this market: one is VMware, one is Nutanix.

One of the things we've continued to see over the last three or four years, this cloud of, 'With EMC and Dell coming together, what will happen to our [Dell-Nutanix] XC line? 'If they become closer to VMware, what is going to happen to the Nutanix relationship?' We've been fielding this question for the last 24 months. I think they're just smart as businesspeople just like how consumer companies who know they can compete with partners and still have a marketplace, an app store and all that stuff – that's what Dell is all about. They're getting closer to VMware. They probably might be one company, but for them to get close to another operating system would be a smart strategy.

What's one big benefit Nutanix partners will see from your acquisition of Minjar?

Minjar will make the total cost of ownership argument front and center. When they look at the budgets and look at the spend, partners can now really keep the public cloud expenditure honest and talk about what should run where. I think it's the very early innings of the journey where they can really make it about financial selling as opposed to only technology selling.

You've now achieved a $1 billion run rate for your software business. Are channel partners leading the way?

Yes. One of the big things that they're seeing is, 'What does it mean to really survive and thrive in the new world of cloud?' When they're able to actually take this story to their on-premise customers who are thinking about the cloud transformation itself, the story is getting really good. While they've figured out how to really embrace the subscription models and Opex consumption model itself, the fact that we're having them go help the customers is a very comfortable transformation for our channel partners. They have a lot of professional services on top of Nutanix and are elevating themselves to not just go and sell hardware, but doing transformation of their applications and security – a lot of those pieces are doing really well.

What's one way Nutanix is making life easier for channel partners?

We're seeing a lot of surge in Nutanix Calm, which is our orchestration product. So for a lot of channel partners who don’t have engineers who can provide code, they don’t have to write code with this automation. They can just use the Calm visualization engine, which is all about one drag-and-drop, building applications and helping automate for customers.

A piece that we're seeing more and more of is our channel partners going and helping with consumption because all that software has to be utilized for a customer to be successful. We're seeing them as a very good partner in the journey of customer success.

You said during the earnings call that you're helping to reduce channel conflict. Is that just because you're no longer selling hardware?

That's one piece of it. … Now it's not an either/or, you can take Nutanix software and put it on their other partner hardware and then go and sell it as a solution and get professional services on top of it.

The other piece of it is that when they go in there, especially with large customers, the large customers might have already tried the software. So there's less friction because now the customer was able to kick the tires by downloading our software and they were able to play with it on a random server. So there's less friction even in the overall sales motion because when they talk to customers they have a warm lead as opposed to a cold lead.

How can partners make money with Nutanix as a software-only company?

The fact that partners can actually go and add value and bring massively large data centers up in a matter of hours, and elevate themselves to go think about security, micro-segmentation, networking virtualization and app migration – there's a lot of stuff that helps elevate their services to a better gross margin business. Then there's the cloud story because at the end of the day, we're not talking about hyper-convergence alone, we're talking about a multi-cloud story where they don't have to go against the wind of cloud computing. They can go and talk about Nutanix Calm that can be a multi-cloud orchestrator and they don’t need to go write a lot of code. Similar with our operations management software, Prism Central, they can do managed services sitting on the outside. So they don’t need to be at the customer's side for a lot of their network operations, security operations and their overall infrastructure operations itself. Monitoring and alerting, upgrades and life-cycle management of infrastructure can be done with some of our tools where we don’t charge them anything.

What's your message to the channel?

What we really want to do with the new Gartner Magic Quadrant [for hyper-converged infrastructure] that's out, is to take that Magic Quadrant to all the customers. Really think of this as the tipping point in their journey of hyper-convergence; it's a very important story that we'd like to go and talk to every partner about. The second thing is how they need to embrace the idea of cloud, which is both public and private together in one, as opposed to just thinking of the public cloud itself.