+Comment Jared Rinderer, a senior research analyst at Equity Capital Research Group, has claimed Cisco is about to buy converged infrastructure enfant terrible Nutanix.
Rinderer reckons Nutanix is the dominant player in the industry, so is therefore the most likely acquisition for Cisco as it looks to make sure the EMC Federation doesn't squeeze it out of the software-defined data centre.
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"Cisco would gain the most strategic value and long-term accretive revenue contribution with the acquisition of privately-held Nutanix, which is the clear market leader thus far," the analyst wrote.
He said with Cisco sitting on $3.2 billion of cash as of January, it will issue debt to complete the acquisition, "which may be announced during Nutanix's user/partner conference in Miami from 8-10 June".
No sources were quoted in Rinderer's notes but he said his prediction was based on industry research and conversations with people in the know.
The logic for the buy is sound. But the target may not be. Here's why.
Nutanix is hell-bent on using commodity hardware. Indeed, its whole schtick is that it is the software layer that matters and everything beneath it is just about irrelevant. If Cisco was to acquire Nutanix it would, therefore, have to swallow its pride and keep buying Supermicro servers. Either that or put UCS servers into the mix. A third option would be to develop its own commodity servers.
We know, however, that Cisco is not minded to build bland boxes because VCE has had to go to Quanta for such products for its new VxRacks. VCE and Cisco have chatted about collaborating on such a server, but those chats reportedly haven't gone far.
What about Nutanix-on-UCS? It's doable: a server is a server is a server these days. But why would Cisco make the effort when another hyperconverged player, SimpliVity, already runs on UCS?
Cisco does have an out: Nutanix has a deal with Dell, so the Borg could knock Supermicro out of the mix. However, with Cisco and Dell now going head to head in networks, and The Borg clearly not enjoying the competition with the EMC Federation, such a restructuring for Nutanix looks like an escape route of last resort.
Rinderer's reasoning regarding Cisco's need for a broader compute portfolio is sound. But even the Borg could not assimilate Nutanix neatly.
Another potential dampener on any buy is industry talk from last month that Nutanix is to hire underwriters for an IPO later this year that could value the business at more than $2.5 billion.
We have asked Cisco and Nutanix for comment and will update the article when they reply. ®