Nutanix, a leading provider of HCI solutions is undergoing digital transformation from being an appliance company to becoming a software company. “Transitioning from a software company to a cloud company is the next level of digitization and it’s like the story of being invisible,” says Dheeraj Pandey, CEO, Founder and Chairman, Nutanix.
Here are some edited excerpts from an interview during a visit to India where he said, “We made storage invisible. We made VMs invisible. Now we want to make ourselves invisible. That reduces the friction of our customers with their IT infra to help them digitize faster and effectively.”
Cloud a decade back was pitched as cost-effective solution, then it was about agility and scalability, and the new mantra is innovation on cloud. What is its current value prop? Is going cloud the new sexy for businesses?
You could draw analogies with let’s say the hotel or lodging industry and auto industry or even HR industry. You would have your own homes or own cars and you have full-time employees. The other side of the equation being that you rent a hotel, rent an Uber, or you have contractors.
Computing is undergoing a very similar bifurcation into things (workloads) that you own (predictable workloads) and those that you will rent (like elastic workloads). And you adhere to laws of the land to ensure all is within the overall ambit of compliance and regulation. You have laws of physics like location of your data, where your applications are, how to move data to the large cloud or it says take the application to the data. And then importantly laws of economics on the need to rent for multiple years, the predictability of the model, and so on. The approach you actually end up owning versus renting defines what cloud really means.
IDC estimates the worldwide whole cloud revenues to reach $554 billion in 2021, more than double of 2016. Do you expect most to be hybrid or an acceleration towards the public cloud?
Most things in the world are a combination of owned and rented. Analysts in 2011/12 predicted virtual desktops to be a $65 billion industry in 2015 and it wasn’t to be. It’s not a simple math of 65 million PCs into $1000 becomes $65 billion. There was prediction about Windows mobile phone because of the reach of Windows mobile – which never happened.
The ground reality is, as I said laws of the land, laws of physics, laws of economics and finally change management. How do you manage and importantly move legacy is a massive problem statement that cannot be predicted. Your strategic calls over time that end in itself is actually a means to an end. We virtualized and abstracted it and MQ goes away. It happened to servers. Server virtualization was an MQ and they’ve all gone away.
Cloud is an MQ now but we will actually hide it in next five years. We will virtualize it because there are too many clouds as companies move apps /workloads from one to the other without that layer of virtualization. We will keep talking about cloud being a destination versus cloud being a journey which is a reality.
Change management is a crucial part of cloud journey. But organizations can’t dump their legacy infrastructure and they face the usual roadblocks of cloud being insecure and slower than on premise infra.
Basically it’s not just one cloud. There’s software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS). With SaaS for email and SharePoint people are unaware that their Outlook is talking to a back-end cloud. That’s much harder to do with PaaS and IaaS because you have to literally teleport apps from one side to the other.
More than 70% of all business software is custom software because every company is also a software company today. Software is what makes businesses competitive, efficient and they codify their business processes into a custom software. Custom software cannot be made in SaaS but you will have to build and figure out how to operate it. You operate it as an IaaS with the help of PaaS that is dictated by laws of economics, laws of physics and laws of the land.
How can CIOs and CTOs narrate an effective cloud story to their CFO or CEO?
The 80:20 rule comes into play as 80% of the stuff needs to be ‘lifted and shifted’. To provide the same abstractions in the rented model as on-prem – lies the set of technical difficulties. Lot of things have to be changed from OS in private cloud to go to public cloud server. It’s a challenge; but it’s also an opportunity for Nutanix as our technology makes ‘lift and shift’ amazingly simple. Sitting in the underbelly of the enterprise, we help CIOs and ITDMs understand the application and use one click ‘lift and shift’ feature.
For a couple of years we are working on our cloud services called Nutanix Xi, one of the biggest features of Xi Disaster Recovery. The one-click fail-over and companies can teleport their applications from the data center to rented public cloud model. This is a good step on the journey.
Multi cloud is the new jargon by tech vendors and analysts. Does multi-cloud mean different public clouds or otherwise because the term gets very confusing at times?
Honestly, it’s a combination of all plus the fact that even the owned private cloud is three different clouds – edge cloud, Remote Office Branch Office (ROBO) cloud, and core cloud server. The apps could be sitting in these three tiers within the walls of the enterprise or outside with one of these providers. But the real challenge is mobility and hence the need for a killer app to drag-and-drop apps in multi-cloud environment. You can have hybrid apps where the data moves from one destination to another and the kind of data to be processed at which location.
The customers don’t want to be hooked to a proprietary API of a cloud provider. They want to take their own licenses – proprietary or open-source – and move them everywhere for the destination to be not a lock-in. That’s the reason our multi-cloud blueprint exists. AWS, Azure, Google and Nutanix are talking on multi-cloud as there are now multiple places for the customers to run their apps.
In a recent use case, we deployed an image recognition software at a large healthcare organization to help them make decisions in real time. The cameras wouldn’t be able to ship every frame of a person’s picture to a large cloud. For image recognition in a public cloud there was need to deploy the models at the edge for real-time decisions. Once the decisions are made, the person’s name or his/her timestamp can be used for historical analysis. It thus becomes the architecture of what an app will look like, how a hybrid app will work, what pieces of hybrid app must be deployed at the edge, what micro services of app should lie at the core. This is basically the core of multi-cloud architecture or strategy.
What happens to your strategy with Dell Technologies after its recent announcement to buy shares in VMware and go public again? Will your competition landscape become fierce with Dell and VMware?
Dell will be an independent public company and while Dell owns economic interests in VMware, VMware will continue to stay independent. Nutanix’s relationship with Dell will continue as in the past three to four years. Dell has two competing goals – to make money on hypervisor and also make money on servers as a leading server vendor. VMware would be like Switzerland for all server vendors and Dell server would like to be Switzerland for all hypervisor vendors.
Having said that, we are aware that Nutanix or VMware can partner with hardware vendors like Dell. The competition landscape for us is like we have two children. The software child should be Switzerland for all server vendors to embrace and all software vendors can partner and embrace the hardware child.
IDC’s recent global HCI report places Dell and VMware at the top for branded box and software part respectively. There’s lot to catch-up for Nutanix especially with VMware.
Dell being number one in hardware counts Nutanix software as well, as we are a software company and appliance company. The analysts’ categorization are getting extremely squished. You can’t put someone at the top because their technology is available in every form factor. What is Microsoft today – a software company or a cloud company and they have Surface, Xbox? The best companies don’t go with any categorization because they can’t be classified as one and real numbers cannot be extracted because of different tentacles of business models.
I typically don’t look at IDC or other analysts numbers because we deliver our products without having to bundle as we don’t have ten other products. Our count at the customer is easy like all downloads of Nutanix community edition runs in tens of thousands. Just because something is downloadable and customers are actually using to build home labs doesn’t make the cut as the same customer as someone else who actually runs a mission-critical application.
Nutanix does HCI, automation, networking management – almost everything on the cloud platform. What’s the uptake of brand Nutanix versus a year ago?
Amazon built a cloud for developers, Microsoft is still a cloud for SaaS and Google is building a cloud for AI / ML. But nobody has built a cloud that works for the IT operator in a one-click. There’s an inside-out transformation happening and that’s what we hear from the market. Organizations have consumed our appliance as pure software; but now they want a way to do a one-click teleporting of Apps and Workloads into a rented model.
We are really focused on delivering this aspect which you can call as HCI-as-a- Service. Nobody thinks about it, like nobody thought HCI could be software-based. We changed that perception that it’s not about OS but the software; and we have to redefine HCI space one more time. In on-prem world too many boxes led to an opportunity to hyper converge them. Companies need to simplify ‘too many’ clouds and hyper-converge them to run an app anywhere.
What’s the next big bet for Nutanix? Does the roadmap have sale of hardware appliances?
We will let the market decide if we sell more appliances. We sell a lot of software today. Over time if the market prefers to rather rent from you we have no problem to cannibalize ourselves.
We have gone through the digital transformation from an appliance company to a software company. Software Company to a cloud company is the next level of digitization and it’s like the story of being invisible. We made storage invisible. We made VMs invisible. Now we want to make ourselves invisible. That reduces friction of our customers with their IT infra to help them digitize faster and effectively.
Who is your chief buyer or key influencer in the digital world – CIO or CFO or has the buying pattern changed too?
Our big influencers are the practitioners at the end customers. The executives with the pain points of operating complex datacenters in cloud era which could be all the way from VP of infrastructure to a datacenter architect.
They are techie guys who are the right of passage before the CIO takes a call on business software. Maybe email should go to the cloud quickly but for a very high level call around custom apps it is different. There are many business software apps built out of building blocks of Oracle and MySQL, Apache and Linux. Every application is different. Hence you need the practitioner to check if we can support their infra because it’s not the same as email. The technologists and architects will still remain extremely relevant in decision making.
IT infra is getting complex, business demand is changing, and there is constant pressure on cost in the digital world. Any other worry factors for companies?
You said it exactly in the same order. We have extremely fragmented IT with many specialists who don’t know how to come together and take fast decisions. Secondly the complexity resists them to move at the same pace as LOB. And thirdly, it is about not always buying tech upfront when they can buy as they grow. They start with small experiments and as they become big and successful, they can double down.
Nutanix’s core remains that it’s extremely simple and it works well. There was a whole froth working up within HCI world and we said it’s about the software that actually works. Nutanix solution can take the mission-critical workload with zero downtime and with highly secure infrastructure. The fact that it’s highly reliable and highly available is the differentiator for us.
How do you envision the market demand especially in heavily regulated sectors like BFSI, healthcare and their comfort with cloud? Will Nutanix trickle down to SMBs?
Obviously there’s a bell curve of verticals and even each vertical to the bell curve of company. And within a single company there is a bell curve of people and within them a certain team or a department. There will be workloads that are more cloud-ready. It will be 20-60-20 equation and depending on who is a leader, who is an early adapter, others will follow as per business demands. We have seen some surprises with Nutanix hyper-convergence adopted by US federal agencies. Financial services is another one and so is retail as early adopters of HCI.
Our sweet spot remains mostly the mid-market and large enterprises. We will not go down much but if we go deep into SMB it would be through our cloud services. Right now we have 10,000 plus customers; but for hundreds and thousands-plus customers, the long tail will be in our cloud services which is much easier to support them.
Dheeraj Pandey’s personal goal and professional goal for 2019?
My personal goal is to become a better father and a better husband and thus I need to really improve on the family front.
My professional goal is to transform Nutanix as the world’s first natively hybrid cloud company. At present, lot of talk around hybrid is just cheap talk alike hyper-convergence seven to eight years ago was cheap talk. And there was convergence infrastructure which has faded away because of the complexity and the big challenge to mix two different clouds.
The market eventually rewards things that work, that are reliable and those built organically with design in mind. Hybrid IT is still a journey but I do believe Nutanix will arrive strongly with hybrid in 2019.
Dheeraj Pandey’s 5 takeaways on tech landscape
- Computing is undergoing bifurcation of predictable workloads on prem versus elastic workloads on rent.
- We talk about cloud being a destination versus cloud being a journey which is the reality.
- Most talk on hybrid is just cheap talk like it was for hyper-convergence eight years ago.
- Convergence infra has faded away due to the big challenge to mix two different clouds.
- Nutanix is focused on delivering what can be called as HCI-as-a- Service.
It’s business as usual with Dell: Nutanix CEO
Dheeraj Pandey talks competitive landscape post Dell’s announcement to go public
– Nutanix relationship with Dell will continue as in the past three to four years.
– Dell aims to make money on hypervisor and also on servers as the leading server vendor.
– Nutanix or VMware will continue to partner with hardware vendors like Dell or others.
– For us, it’s like having two children: software child as Switzerland for all server vendors and all software vendors embracing the hardware child.