Expanding The Hyperconvergence Base

VMware seeded its market for hyperconverged storage and virtual server clusters based on its Virtual SAN (VSAN) with an open and very popular beta program ahead of its commercial launch, and rival Nutanix, wanting to aggressively expanding its own customer base, is hoping to crank up its sales through the launch of a freebie Community Edition of its Virtual Computing Platform.

Nutanix is arguably the first mover and thus far the biggest player in this rapidly expanding market for converged server-storage hybrids, but its position is by no means guaranteed with EMC pushing its ScaleIO platform and VMware ramping up its VSAN platform, not to mention rivals like SimpliVity, Scale Computing, Pivot3, Atlantis Computing, and Maxta all chasing customers who want to get rid of SANs and virtualize their storage on the same clusters where they do their virtual computing.

Nutanix was founded in 2009 by Mohit Aron, one of the software engineers who worked on the Google File System that underpinned the original MapReduce and that inspired the Hadoop Distribute File System, and Dheeraj Pandey, who worked with Aron at Aster Data Systems on its massively parallel database, and it got out in front on the idea that adoption of virtual server clusters as being slowed by the necessity of using centralized (and expensive) SAN storage to deploy the most useful features of server virtualization such as live migration. The Nutanix Distributed File System at the heart of the Nutanix server-storage platform leverages some open source software but is decidedly not open source.

Sales of the Nutanix hyperconvergence platform are tied to appliances, either those that come from Nutanix itself or from Dell, which has a partnership to resell Nutanix on some of its PowerEdge XC custom servers. These appliances are not cheap – a typical configuration of a 32-node cluster costs around $800,000 at list price, or about $25,000 per node, and can go as high as $3.52 million for an all-flash configuration, or about $110,000 per node, including the full set of Nutanix software, including data compression and data de-duplication. And those price tags are a serious inhibitor to customer and partner experimentation.

Hence, the launch of the Community Edition of the Nutanix stack. As Greg Smith, senior director of product and technical marketing at the company explains, by having a relatively small set of server configurations on which the Nutanix platform is certified to run on production, the company can tune its performance precisely on all-flash or hybrid flash-disk setups.

Allowing Nutanix to run on clusters with any old server customers have laying around would put a tremendous burden on the Nutanix tech support and engineering teams, but setting free a Community Edition with most of the key features of The Next Platform activated allows customers and partners to experiment and, to our way of thinking, also allows Nutanix to work on expanding its hardware compatibility list for the day when it might provide the Nutanix stack as a software-only offering. (Community Edition has a phone home support function called Pulse that has to be turned on and that will give Nutanix telemetry about what kinds of configurations customers are playing with, so it can see what iron works well and what does not.) Smith tells The Next Platform that Nutanix remains committed to the appliance as the way to deliver production systems, and that people should not jump to the wrong conclusion about Community Edition being a precursor to a move into software-only distribution.

Customers who might be tempted to try to run Community Edition in production are being told not to do so. The hyperconverged stack will run on a single server node or on clusters with three or four nodes; because of the way Nutanix does replication of data for durability, it cannot run on a two-node cluster. The recommended minimum configurations are as follows: Intel Xeon processors with at least four cores per socket and support for VT-x hardware-assisted virtualization, which includes the past several years of Xeon chips. The nodes have to be set up with at least 16 GB of main memory and a RAID controller for mirroring (RAID 0) is also recommended, specifically ones made by LSI. The server will need at least one flash-based SSD with at least 200 GB of capacity for caching hot data in the Nutanix Distributed File System and at least one disk drive for cold data that has to have at least 500 GB of capacity. Intel Ethernet network interface cards are supported. Incidentally, if you try to plug more than four nodes in the Nutanix cluster, the user interface for controlling the cluster shuts down. While Nutanix supports the running of its file system inside of virtual machines atop VMware’s ESXi hypervisor as well as Red Hat’s KVM and Citrix Systems’ Xen, the Community Edition is only able to run atop KVM. The software runs inside of one virtual machine on each node, and uses a relatively small portion of the memory and compute capacity.

Community Edition has been in a private beta for a while, says Smith, and at its user conference in June the beta will be thrown open to the public. For now, Nutanix has a sign up list to get Community Edition in the interim.

Why Growth Is Important

While Nutanix is the leader in the hyperconverged appliance market, it wants to grow a lot faster than it has been doing, and Community Edition is all about fostering that growth. Nutanix started selling its appliances in late 2011, and at this time two years ago it had 200 employees, double what it was in May 2012, and had just attained an annualized run rate of $80 million. It had sold around 3,000 hyperconverged appliances to several hundred customers.

Back in February, Nutanix revealed that it had attained a $300 million annualized bookings run rate through its second quarter of fiscal 2015 year ended in January. Nutanix now has over 1,200 customers and many of them are in the Global 2000 and it has 50 customers who have shelled out over $1 million for systems and services. (Of course, considering the price of the Nutanix appliances, it is not hard to get up to $1 million.) Some of these production Nutanix setups are quite large, says Smith, with hundreds of nodes clustered together. Technically speaking, there is no scaling limit on a Nutanix cluster, but a 32-node setup is a popular pod size among large enterprises. (The scale limits are set by the scalability of the hypervisors and their clustering, not by the Nutanix Distributed File System.)

The question now is whether IT shops will want to run Community Edition in production, regardless of what Nutanix says it is used for, rather than buying an appliance with the Starter Edition of its real software stack. Smith says that Nutanix will not offer tech support for Community Edition, and that customers will have to rely on community, web-based support if they get in over their heads. There is no upgrade path from the free versions to the paid versions, either, so don’t think that you can get an upgrade key and suddenly Nutanix will support its code running on your hardware. This is not going to happen, and Nutanix is up front about it.

It will be interesting to see what affect this has on the overall market for hyperconverged systems and on the other players in the market. VMware has already given away VSAN to seed the market with 12,000 potential customers with the beta program for VSAN two years ago, ahead of the VSAN 6 launch in February that is arguably the first enterprise-grade version of VSAN. (VMware has over 1,000 paying customers for VSAN already.) SimpliVity uses a field programmable gate array (FPGA) to accelerate the storage in its hyperconverged platform, so it is probably not going to be releasing a community edition of its software any time soon. Scale Computing is focused mostly at small and medium businesses, but could counter with its own freebie edition of its HyperCore3 platform.

There seems little question that the Community Edition of the Nutanix stack will seed the market for potential paying customers, and it seems likely that the conversion rate will be much better than that for open source software, which usually has a free-to-pay conversion rate of maybe 5 percent. And that could propel the overall hyperconvergence market.

As it turns out, the analysts at IDC just two weeks ago updated their forecasts for sales of hyperconverged server-storage hybrids. The market researcher now reckons that $373 million in hyperconverged systems were sold in 2014, a 162.3 percent increase over the $142 million in systems that were sold in 2013. As last year came to an end, there were over two dozen companies that were in or were planning to enter the hyperconverged market (some directly, some through partnerships) and now IDC has upped its forecast for 2015, saying it expects the market to grow by 116.2 percent to $807 million. Owing to the limits of markets, that curve would suggest that hyperconverged systems could account for maybe $3 billion to $4 billion a year in sales worldwide when it settles down to normal (rather than hyper) growth. (That latter bit is our estimate, not IDC’s.)

Nutanix wants to have the lion’s share of that, of course, particularly because its investors have pumped a whopping $312.2 million into the company in five rounds of funding. Nutanix may be one of the fastest-growing companies in the history of Silicon Valley, but it has also raised a tremendous amount of money to get there and with a valuation of around $2 billion it may be too large now to be acquired by Hewlett-Packard or Dell. Nutanix might have such a high valuation that it can only go public, and hence the desire to boost the size of its customer base quickly.