Billion Dollar Unicorns: Nutanix Gives VMWare Tough Competition

Today, most IT functions of organizations are moving away from siloed service providers to a consolidated services provider. This has led to the evolution of the hyperconverged infrastructure where compute and storage capabilities are integrated so that they can run adjacent to each other on the same physical hardware. Billion Dollar Unicorn club member Nutanix is giving bigger vendors a tough fight in this space.

Nutanix’s Offerings

San Jose-based Nutanix was founded in 2009 by Dheeraj Pandey, Ajeet Singh, and Mohit Aron – all technology experts who had built scalable systems such as Google File System and Oracle Exadata. They set up Nutanix to deliver invisible infrastructure for enterprise computing. Their proprietary software-driven Xtreme Computing Platform converges compute, virtualization, and storage into a single solution to provide a simpler solution to the datacenter. They were among the pioneers to offer a simple compute and storage infrastructure that could implement enterprise-class virtualization without involving the investments in expensive network storage. They claim that their solution is so simple that it can be deployed within an hour and is able to run any application at any scale.

Nutanix’s offerings include two key suites. The Nutanix Prism is a comprehensive management solution designed to simplify datacenter storage and virtualization operations and the Nutanix Acropolis is a turnkey infrastructure platform that converges compute, storage, and virtualization resources to run any application, at any scale.

Nutanix’s Financials

Nutanix has seen a rapid adoption of its products since launch. They released their first product in the first quarter of 2011. Within a year and a half, the company was operating at revenues of more than $80 million and by 2014, they were operating at annual revenues of over $200 million. The company does not disclose detailed financials, hence profitability figures are unknown. As of February 2015, Nutanix had recorded over $300 million in bookings from 1,200 customers across the globe.

They are venture funded with investments of $312.2 million received from investors including Riverwood Capital, Sapphire Ventures, Battery Ventures, Greenspring Associates, Khosla Ventures, Lightspeed Venture Partners, Morgan Stanley, Goldman Sachs, and Blumberg Capital. Their last round of funding was held in August 2014 when they raised $140 million. Nutanix is expected to be valued at $2.2 billion last year. They are rumored to be preparing for an IPO soon.

Nutanix and VMWare

Nutanix is participating in two industry disruptions simultaneously- software-defined infrastructure and convergence/integration of compute, networking, storage and management. Both VMWare and Nutanix are competing in the software-defined data center market that is projected to grow from $22 billion this year to $77 billion within the next five years. According to recent market reports, Nutanix is developing a product that will enable organizations to easily move away from VMWare’s flagship hypervisor offering. Most organizations don’t necessarily like to change their infrastructure software and end up giving into any additional premium and fees that the software vendor begins to charge post implementation. But Nutanix is developing a new hypervisor competitor that will simplify the process of replacing VMWare’s hypervisor.

VMWare has a tough battle ahead given that a IDC report revealed that Nutanix was the market leader with 52% market share in terms of revenues for the hyperconverged infrastructure industry.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns