Dell, Nutanix Fight For Hyperconverged Market Lead; HPE Soars

Although worldwide hyperconverged system sales slowed down significantly in the second quarter of 2020, Dell Technologies, Nutanix and HPE are still leading the way. CRN breaks down the new HCI market- share data from IDC.

HCI Market Growth Slows Down In Q2 2020

Dell Technologies and Nutanix continue to battle for hyperconverged infrastructure (HCI) system leadership as worldwide revenue growth slowed down significantly in the second quarter of 2020 even as Hewlett Packard Enterprise made big gains.

The worldwide hyperconverged systems market grew only 1 percent year over year in the second quarter of this year, reaching $1.86 billion, according to new data by research firm IDC. However, in the first quarter of 2020 hyperconverged sales grew 8 percent year over year, while fourth- quarter 2019 HCI sales were up 17 percent.

“The overall converged systems market showed a decline during a difficult second quarter as broader weakness in enterprise buying across server and storage also impacted HCI,” said Paul Maguranis, senior research analyst for infrastructure platforms and technologies at IDC, in a statement.

CRN breaks down the top three vendors that ruled the hyperconverged market in the second quarter along with an overview of the market today.

Hyperconverged Sales Slowing Amid COVID-19 Pandemic

Total hyperconverged system sales grew at the lowest rate in years during the second quarter of 2020, according to IDC, with revenues of $1.86 billion, up only 1 percent year over year.

Looking at the past five quarters sequentially, HCI global revenue was up year over year by 8 percent in first-quarter 2020, 17 percent for fourth-quarter 2019, 19 percent in third-quarter 2019, 24 percent for second-quarter 2019 percent and 47 percent in first-quarter 2019.

The worldwide converged system market—which includes sales from HCI, integrated infrastructure and certified converged reference systems, and integrated platforms—fell 4.5 percent year over year in the second quarter 2020 to $3.9 billion.

“The certified reference systems and integrated infrastructure and integrated platforms segments both declined this quarter while the hyperconverged systems segment was able to witness modest growth despite headwinds in the market,” said IDC’s Maguranis. “This growth was mostly due to strong HCI performance in Asia-Pacific, especially in China and Japan.”

3. Hewlett Packard Enterprise

Second-Quarter Market Share: 7%

Hewlett Packard Enterprise had one of its best quarters in hyperconverged system sales, growing significant market share by generating $130 million in revenue during the second quarter, up a whopping 53.5 percent year over year. San Jose, Calif.-based HPE won 7 percent of the global hyperconverged market in the second quarter, up from 4.6 percent share during the same quarter one year ago.

The HPE revenue gains include HPE systems that run Nutanix’s hyperconverged software, the result of the HPE-Nutanix OEM deal created last year.

“This shows that the HPE-Nutanix relationship is bearing fruit,” said Erik Krucker, CTO of Comport Consulting, an HPE Platinum partner. “This allows Nutanix to sell incredibly well-engineered hardware from HPE. … We hit the ground running with Nutanix on HPE. It’s been awesome for us.”

HPE’s flagship hyperconverged offering is HPE SimpliVity. “When we show customers how they can do automatic backup and data management on SimpliVity, they love it,” said Raymond Tuchman, CEO of HPE channel partner Experis Technology Group. “That automatic backup and data management functionality has been a key competitive differentiator when we go up against Dell VxRail.”

2. Nutanix

Second-Quarter Market Share: 13.6%

The hyperconverged software star no longer sells hardware but its software is so prevalent in HCI systems that Nutanix won second place in worldwide hyperconverged systems by capturing 13.6 percent share. However, this represents a slight market-share drop for the San Jose, Calif.-based company, which captured 14.1 percent global share in second-quarter 2019.

Total HCI system revenue for Nutanix in the second quarter reached just over $253 million, down 2 percent year over year compared with $259 million in hyperconverged sales one year ago.

In terms of the hyperconverged software market share, Nutanix won nearly 30 percent of the global HCI software market in the second quarter, trailing only VMware.

Last month, Nutanix CEO Dheeraj Pandey unexpectedly announced that he was leaving the company he co-founded in 2009 and built into a $1.2 billion software superstar.

“All 6,000 of our employees, all 18,000 of our customers and all 10,000-plus of our channel partners, I know they’ll carry the torch forward. I think they’ll understand that this is an extremely personal thing, where this pandemic did make me think a lot about what really matters,” said Pandey in an interview with CRN.

1. Dell Technologies

Second-Quarter Market Share: 27.9%

The Round Rock, Texas-based infrastructure giant continues to dominate the hyperconverged system market as innovation in its flagship VxRail was just taken up a notch with the injection of Kubernetes technology via VMware.

Dell Technologies won nearly 28 percent share of the global hyperconverged system market in the second quarter, slightly down from 29 percent share year over year. The share decline stems from Dell’s hyperconverged revenue hitting $520 million in the second quarter, down 2.6 percent compared with $533 million year over year.

VxRail’s new VMware Tanzu integration allows customers to build, run and manage Kubernetes container-based applications in a fully integrated hyperconverged infrastructure solution.

In a recent interview with CRN, Dell Technologies founder and CEO Michael Dell said his company’s HCI strategy with VMware has been a wild success.

“We’re seeing substantial growth rates and continuing adoption of VxRail. I think because it’s the easy button to hybrid cloud,” said Dell. “As I talk to customers, that’s certainly the overwhelming theme—they want hybrid cloud and multi-cloud. … Clearly, Dell Technologies continues to be the industry leader in HCI no matter how you count it. We’re going to continue to enhance [VMware integration] with new edge offerings and new footprints as customers require a wide range of solutions from rugged edge solutions to scaling up their core data centers and beyond.”