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As if the hyper-converged infrastructure (HCI) market weren’t hot enough, VMware just posted stunning vSAN market adoption rates showing that a torrent of 7,000 customers have now adopted vSAN, confirming its position as the leading product in the category by any account.

Along with this rapid growth, the HCI market is continuing to evolve into a truly powerful wave within the datacenter, much like virtualization did 10 years ago. If you haven’t looked at HCI closely over the past year, then here are 7 major changes happening that will continue to change the IT landscape throughout 2017:

  1. vSAN now has more customers than Nutanix and SimpliVity combined: The 7,000 vSAN customer count is now larger than Nutanix and SimpliVity combined, according to their latest public disclosures. With these two competitors valued at over $5B, it’s clear that vSAN is tapping into a raw customer need that transcends mere startup marketing glitz. Mainstream, conservative customers are seeing that the time for HCI is now.
  1. vSAN Grew 2x Faster Than the HCI Market: The supercharged HCI market grew 100% in 2016 while enterprise storage companies stumbled as customers quickly discovered the cloud-like flexibility and economics that HCI products deliver.  But what would cause vSAN to grow at 2x that torrid rate?  Simply no other HCI product offers native vSAN integration with vSphere, vCenter and vMotion.  That unique vSAN value powers a natural evolution from virtual compute to virtual storage and eventually to the full software-defined data center for the more than 500,000 active vSphere customers.
  1. HCI is Increasingly a Software Market: HCI started out as an appliance market because integrated solutions simplified deployments and offered a common support path for customers and partners.  But customers and partners quickly discerned that vSAN brought the flexibility, choice and affordability of the white box server model to storage buyers.  Customers and partners now have the choice of integrated appliances, through the Dell EMC VxRail appliance, or build-to-order servers through vSAN Ready Nodes.
  1. SimpliVity and Nutanix increasingly look like Software Companies: HCI appliances, like Dell EMC VxRail, include server hardware by definition.  However, HCI appliance value is increasingly in the storage and management software rather than in the industry-standard server hardware that is often swapped to match customer choice.  This flexibility is evident in how HPE will port the SimpliVity solution to HPE servers just like Dell brought PowerEdge hardware to VxRail.
  1. HCI Valuations Carry a 20x Software Multiple: While the general consensus has been that SimpliVity settled for a low-ball offer, their valuation actually looks impressive when the transaction is assessed as a software deal.  HCI software drives 4-5x ancillary hardware value for server partners and an additional 1-2x in partner services as HCI moves into core data center environments running business critical applications.
  1. vSAN Offers 5x More Hardware Options to Customers: The vSAN partner ecosystem is made up of 15 server partners offering over 160 qualified Ready Nodes.  That’s 5x more platforms than our closest competitors with HPE topping the list with over 50 vSAN Ready Nodes.  HCI introduces hardware choice to storage buyers and who increasingly exercise that freedom as partner or platform preferences change over time. 
  2. Industry Analysts are Struggling to Keep Up: Early analyst coverage favored appliance business models that were easy to understand and simple to consume. The software model has now been adopted by forward-looking technical analysts who see that the long-term position in this market will favor hypervisor owners VMware and Microsoft. We will see how long it takes traditional industry analysts to adapt.

 

Thanks to our loyal customers!  For vSAN customers who have been with us since the first release in 2013, thank you! We are thrilled to bring differentiated capabilities to all of our customers, and we look forward to bringing new features matched with the latest server hardware and supporting software workloads across the hybrid cloud.  For customers looking to be competitive in the multi-cloud era, hyper-convergence offers an important new tool and we are pleased to deliver the leading solution in this most exciting infrastructure market.