Dell Dominates Hyper-Converged Market Share In Q1 As Nutanix Falls

‘Dell and VMware are playing a more and more important role in our company because of what they’re doing together with VxRail,’ says one solution provider CEO. ‘It’s going to be interesting to see if Nutanix can out-innovate and outpace Dell and VMware in the market.’

Dell Technologies is winning hyper-converged infrastructure market share at a blistering pace as the company captured a whopping 32.2 percent share while Nutanix’s market share dropped significantly, according to first-quarter 2019 data from market research firm IDC.

Round Rock, Texas-based Dell generated $587 million in hyper-converged infrastructure (HCI) revenue, up 64 percent year over year. Dell Technologies’ 32.2 percent market share was up from 28.8 percent in first- quarter 2018.

The No. 2 market share leader for the quarter was Nutanix with HCI sales of $256 million, up 2 percent year over year. However, due to Nutanix’s single-digit sales growth, the hyper-converged pioneer saw a significant market share drop from 20.2 percent share in first-quarter 2018 to 14 percent in first-quarter 2019, according to IDC.

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“Nutanix may be in some trouble,” said the CEO of a solution provider that sells Dell Technologies and Nutanix HCI solutions, who declined to be identified. “The big takeaway is the market on average grew a lot— almost 50 percent—but [Nutanix] was basically flat. … Their transition to software-only has been difficult for sure and the pressure from Dell is harder than they thought it would be.”

Worldwide sales from hyper-converged systems hit $1.8 billion, up 47 percent year over year, according to IDC.

The solution provider CEO said in terms of his company’s HCI revenue in the first quarter of 2019, Nutanix sales were up single digits year over year compared with double-digit growth from Dell Technologies, which includes VMware.

“The market has changed over the past maybe three or four quarters. Dell and VMware are playing a more and more important role in our company because of what they’re doing together with VxRail,” said the CEO. “It’s going to be interesting to see if Nutanix can out-innovate and outpace Dell and VMware in the market.”

San Jose, Calif.-based Nutanix recently reported flat third fiscal quarter revenue year over year of $287 million, which sent Nutanix stock plummeting. In an interview with CRN, Nutanix founder and CEO Dheeraj Pandey said the weak quarter was mainly due to the company’s transition from hardware to a software-only, subscription-based company.

“We decided to go through the transformation because when we come out of this on the other side, we’ll be a company that can call itself a true cloud operating system software company where you can have both on-premise and off-premise in subscription,” said Pandey, adding that he wasn’t worried about his company’s future. “Our transition to subscription is ahead of schedule. Our field execution is improving with lead generation and pipeline build and improving sales hiring.”

Nutanix and Dell have been successfully selling their joint XC Series of hyper-converged offerings together for years. Nutanix also recently formed its first HCI partnership with Hewlett Packard Enterprise.

Partners have told CRN that they believe the Dell and Nutanix partnership is fading while setting up a hyper-converged battle between Dell-VMware and HPE-Nutanix.

HPE is the No. 3 market share leader in HCI. The San Jose, Calif.-based infrastructure giant captured 4.6 percent share in first-quarter 2019, down from 4.9 percent share year over year, according to IDC. HPE hyper-converged sales hit $83.5 million, up 37 percent year over year.