By Charles King, Pund-IT, Inc. November 4, 2015
Most IT vendors are in pretty good shape when it comes to their traditional focus areas and core customers. That’s partly due to experience—the more you gain, the better you become at expanding those skills—and partly because of the more or less linear evolution of technology. Scalability and performance tend to improve over time, allowing old skills to be adapted to new scenarios and use cases.
But sometimes vendors face a dilemma in how to pursue and exploit market opportunities that lie outside their expertise or product portfolios. When that occurs, further questions arise over developing a new solution or service in-house. The benefits of that approach can be considerable in that the vendor accrues all the returns from its efforts and investments. But there can also be considerable financial risks in this course, along with losing the time required to bring a new solution to market.
Alternatively, vendors can pursue these opportunities via collaborative partnerships or through outright acquisitions. Two such efforts occurred this week – Lenovo partnering with Nutanix to develop new hyperconverged solutions, and IBM’s planned purchase of Gravitant, a provider of hybrid cloud management solutions. Both warrant further consideration.
Lenovo and Nutanix
Lenovo and Nutanix’s deal centers on the development of a Lenovo-branded family of integrated hyperconverged appliances using Nutaxix’s software that will be sold and supported by Lenovo’s sales and technical teams. The hyperconverged space is one where Nutanix has enjoyed notable success. In fact, the company was named a leader (for its vision and execution) in a July 2015 Gartner Magic Quadrant. Nutanix’s solutions have also fared well in IDC reports comparing vendors in the hyperconverged and software-defined solutions markets.
These are areas where Lenovo also competes, largely by virtue of its acquisition last year of IBM’s System x group. That purchase included significant system assets that should help Lenovo craft powerful new integrated and hyperconverged solutions. But the market and demand for such solutions is evolving rapidly, particularly in terms of management and integration software. Demand is also shifting rapidly, with IDC estimating that sales of hyperconverged solutions will quadruple from their current levels to $4B by 2019.
For those reasons, the Lenovo/Nutanix partnership makes good sense for both companies. For Lenovo, the deal should provide software assets and experience that will help the company quickly push its hyperconverged solutions to the next level, a critical point in so dynamic a market. Nutanix should benefit from working with a vendor whose deep Intel-based systems experience aligns well with its own, and whose high profile in China and other global markets could prove beneficial further down the road.
IBM and Gravitant
The issues driving IBM’s decision to purchase Gravitant are somewhat different. For some time now, it has been increasingly apparent that enterprises prefer to move toward hybrid cloud deployments, but barriers impede businesses from fully using those services. Among the challenges that organizations face are effectively comparing the highly variable services and value of cloud suppliers, purchasing and managing complex cloud offerings and monitoring how those services are being used internally.
IBM’s acquisition is designed to help its customers address just those points with relevant solutions, including Gravitant’s cloudMatrix architecture, Cloud Compare tool and Cloud ROI calculator. The company also provides business customers a single console that offers clear visibility into assets populating virtually every kind of hybrid cloud environment and transaction, including deployments involving multiple cloud service providers.
Gravitant’s longevity (it was founded 2004) and track record of success was also likely an attractant, since it implies stable solutions with a sizable base of satisfied customers. Those points, along with Gravitant’s innovative technologies, make it highly complementary to IBM’s hybrid cloud strategy, and the company should be a valuable addition IBM Cloud portfolio.
So, partner or purchase? As is clear in Lenovo’s alliance with Nutanix and IBM’s planned acquisition of Gravitant, both courses can lead vendors to better, stronger positions than they once inhabited. This does not denigrate the value that internal research and product development investments can offer forward-thinking companies. But in many cases, finding innovative companies to partner with or acquire can provide a quicker way to similarly beneficial ends.
© 2015 Pund-IT, Inc. All rights reserved.