SimpliVity throws down gauntlet to infrastructure history

“Convergence 3.0” is disruption talk. Is SimpliVity CEO sabre rattling?

Respect. SimpliVity’s founder and CEO Doron Kempel has lots of it, especially when it comes to rival infrastructure vendors. He paces, commandingly, confidently, looking every inch the experienced entrepreneur but there is an edge too. Perhaps it’s perception, driven by the old Iraq war stories? There is still a touch of the soldier about him, his narrowing eyes penetrating, almost threatening, as he delivers his opening salvo at the much-hyped datacentre startup’s first global conference recently in Boston’s Marriot Long Wharf.

“We spent 43 months developing version 1.0, twice as long as any IT infrastructure company in the last 10 years,” says Kempel. It’s old ground but he was recapping, reinforcing his idea that by spending an extra two years on development, the company is in fact ahead of the competition, with deeper roots, or foundations to use his favoured skyscraper analogy.

“We have tremendous respect for all these very large vendors,” he says, keeping a straight face. The likes of IBM, Cisco, HP and Dell all got a mention. You could sense there was a ‘but’ coming…

“Most of those vendors have not delivered an in-house data platform in 15 years.”


Clearly Kempel is jostling for position. He believes SimpliVity is disruptive and that it is at the leading edge of IT infrastructure innovation. To drive home the point Kempel has a slide from which he discusses the lack of innovation at the large incumbent firms.

He cites Clayton M Christensen’s The Innovator’s Dilemma, saying that “the logical competent decisions of management that are critical to the success of their companies are also the reasons why they lose their positions of leadership.”

It’s not even a veiled dig. To the right of the quote he has a list of vendors – EMC, HP, NetApp, Dell, IBM and Cisco – with acquisitions next to them, names such as Symmetrix, Spinnaker and EqualLogic.

This, he says, is where the innovation comes from at the large incumbent brands: through acquisition. It’s a fair point. Hyperconvergence - the layering together of storage, compute, network, virtualisation - seems to have crept up on the big players as if they weren’t really thinking about it. Why would they? Why disrupt their existing business?

“There’s a lot of inertia among the traditional technology providers who are trying to hold onto the past,” comments Ron Dupler, CEO at systems integrator GreenPages Technology Solutions. “We are looking for leading-edge innovation and disruption.”

So is the market really this two-dimensional? Tim Stammers, senior analyst at 451 Research, says that we’ve already seen some “ambiguous moves” by the big storage vendors, and yes, it is as it seems.

“Last year there were some strange half-in, half-out commitments to VMware’s VSAN product by major vendors, who recognised that it was a threat, but couldn’t decide whether to embrace it or run from it,” says Stammers.

The word ‘threat’ comes up quite a bit with Kempel and in conversations about SimpliVity. Just to drive home the point Kempel claimed that hyperconvergence is actually an “existential threat to EMC, Dell and HP” and “a tactical risk to Cisco, IBM and Oracle.”

Stammers is not sure.

“Existential threat? Quite possibly, but over the long term, and in the ever-changing IT industry, the long term can never be fully predicted,” he says. “But 451 Research knows of one major storage supplier whose executive management last year identified hyperconverged storage as a bigger threat to it than the transition to Flash, or public cloud.”

So what does SimpliVity’s rival Nutanix think?

“The fact that EMC, HP and Cisco are responding – albeit belatedly – to the inarguable success of hyperconvergence does indeed signal an existential threat to their core business,” writes Greg Smith, senior director, product and technical marketing at Nutanix, in an email.

“Unlike other vendors still working to build a sustainable business, Nutanix is already innovating beyond hyper convergence to deliver enterprise cloud solutions that bring the agility and economics of public cloud services, with the control and security of on-premises infrastructure.”

Kempel is clearly onto something. His public talking up of Nutanix is clearly not benevolence. He understands that a strong competitor can help to legitimise a market and he doffs his cap regularly to the company that launched at exactly the same time as SimpliVity.

Basically he believes he has plenty to gain built on a notion that if you are nice to your competitors they will be nice to you. But there is more to it than that. It comes down to Kempel’s insistence that his company is the most advanced iteration of hyperconvergence to date, Convergence 3.0. While Nutanix essentially helped to create the market, SimpliVity, he feels, is ripe for dominating it but it still needs a healthy Nutanix as a sort of foil.

“This is exactly how it’s going to play out this year,” says Kempel. “The first half of the year there will be a lot of noise and posturing. In the second half of the year, everyone is going to be looking for dancing partners and there are not a lot of those.”

Does he mean partners or acquisitions?

“The large incumbents - Dell, EMC and VMWare - do they have M&A reserves to do an acquisition right now? If someone wants to buy Nutanix today it’s going to be very expensive.”

Of course you can never rule out an acquisition of SimpliVity or Nutanix for that matter, even though it’s heading for an IPO. Kempel has made his move. Now everyone is waiting to see how the others respond and whether we are heading for some serious consolidation in the summer.


Related reading:

Datacentre revolution not IPO on Kempel’s agenda

SimpliVity joins the unicorns

SimpliVty aims high with hyperconvergence

Dell leads as giants cosy up to datacentre upstarts