Rumor: HPE Acquiring Simplivity?

HP Enterprise (HPE) may bid to acquire SimpliVity for $3.8 billion or more, according to The Register. In theory, SimpliVity could bolster HPE's hyperconverged data center strategy vs. Cisco Systems, Dell Technologies and Lenovo, in particular. But is a buyout really on the table?

HPE and SimpliVity did not comment at the time of The Register's report. We've reached out to both companies to see if they have any comment.

SimpliVity's technology converges all IT infrastructure onto x86 servers. Key partners include Cisco Systems' UCS business, Dell PowerEdge servers and the Lenovo System X business. Curiously, HPE is not yet listed as a SimpliVity technology alliance partner. So perhaps the HPE-SimpliVity rumors actually involve partnership discussions rather than a full-blown buyout.

Headquartered in Westborough, Mass., SimpliVity has raised $276 million in venture capital and employed about 750 worldwide as of October 2016, the company says. SimpliVity’s business model is 100 percent indirect, and its solutions and professional services are available worldwide through its network of resellers and distributors, the company asserts.

HPE Buying SimpliVity?: Potential Upside

CEO Meg Whitman has largely stabilized HPE's business over the past year. But the company is spinning off various consulting and software assets. HPE also depends heavily on hardware sales, and lacks cloud-centric services that so many corporate IT departments now crave.

In theory, SimpliVity would give HPE a stronger story in corporate data centers, especially as CIOs decide whether to (A) modernize and hyperconverge their datacenters, (B) outsource some workloads to public clouds or colocation centers or (C) pursue both steps as part of a hybrid cloud strategy.

SimpliVity reorganized in 2015 -- potentially setting the stage for a 2016 IPO. Rival Nutanix launched its IPO in September 2016. SimpliVity responded by explaining its own market momentum -- but I don't know where the potential IPO plans currently stand.