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Cisco Acquires Springpath; Battles HP Enterprise SimpliVity, Nutanix, Dell EMC HCI

Cisco Systems (CSCO) is acquiring Springpath, a hyperconverged infrastructure (HCI) alternative to Nutanix (NTNX), HP Enterprise‘s (HPE) SimpliVity business, and Dell EMC‘s data center offerings.

Cisco confirmed the $320 million Springpath buyout yesterday, and expects the deal to close later this year. The two companies have worked together since 2016, and M&A rumors involving the duo have popped up from time to time.

Springpath’s software allows customers and service providers to converge and manage compute and storage on servers. Cisco is acquiring the company in a bid to generate growth outside of its traditional network hardware and data center businesses, which are struggling amid the shift to cloud services and OpEx consumption models.

Cisco & Hyper Converged Infrastructure (HCI) Market Forecast

Indeed, Cisco’s most recent quarterly results — released last week — disappointed investors. And in February 2017, Cisco CEO Chuck Robbins conceded that he’d like to see the company make more progress in the HCI market.

The HCI market is certainly growing. Indeed, the global market for hyperconverged infrastructure (HCI) will reach $12.8 billion in 2022, up from $804.5 million in 2015, according to Stratistics MRC. That’s a compound annual growth rate of 48.4 percent, the researcher says. Moreover, HCI is not just for enterprises. Some channel partners expect HCI to extend down into the SMB sector.

On the one hand, that’s an impressive forecast. But on the other, the market is filled with giant rivals and nimble startups. HP Enterprise acquired SimpliVity in January 2017; and Dell EMC has its own technology along with a Nutanix relationship.

Lenovo, Nutanix: Time to Merge?

The potential losers here? Lenovo and Nutanix, which are working with each other — but may need to do something more dramatic to offset potential enterprise-class competition. Lenovo announced a surprise quarterly loss last week and a double-digit percentage decline in its data center business. Nutanix, however, has been in growth mode — with Q3 2017 revenues rising 67 percent to $191.8 million vs. Q3 2016.

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