HPE Buys Hyper-Converger Simplivity
Making use of the "dry powder" accumulated via the spin off of its software business last year, Hewlett Packard Enterprise is acquiring hyper-converged infrastructure specialist Simplivity Corp. to expand its hybrid IT offerings.
The buyer (NYSE: HPE) said Tuesday (Jan. 17) said it would pay $650 million in cash for the converged systems vendor based in Westborough, Mass. Rumors swirled in 2014 that the former HP was attempting to acquire Simplivity, reports the latter initially shot down.
The deal gives HPE a software-defined data management platform it can integrate with its infrastructure and cloud management software to deliver unified IT services to enterprises. "This transaction expands HPE’s software-defined capability and fits squarely within our strategy to make hybrid IT simple for customers,” HPE CEO Meg Whitman noted in a statement.
The deal also affirms HPE's strategy of leveraging its cash stash to compete in the hyper-converged IT market that is expected to hit $6 billion by 2020. Whitman pledged last September after HPE spun out its software unit to application software vendor Micro Focus (LSE: MCRO.L) the company would focus on "system software that powers the infrastructure."
As datacenter and cloud infrastructure converge, so too does the vendor landscape as HPE and rivals Cisco Systems (NASDAQ: CSCO) and Dell Technologies (NYSE: DVMT) eye acquisitions that can augment their existing converged infrastructure offerings in the high-margin hyper-converged IT market.
HPE said it expects to close the Simplivity deal in the spring. It initially expects to offer the company's Omni Stack software running on its ProLiant DL380 servers 60 days after the transaction is completed. It will roll out a range of hyper-converged platforms running Simplivity software on other HPE servers by the end of this year, the company said.
The combination of software-defined infrastructure with HPE's existing servers and other platforms is touted as expanding enterprise data services across the parent company's 3PAR storage and multi-cloud offerings. Among the anticipated benefits are improved storage utilization and virtual machine efficiency along with data compression and de-duplication features that serve as selling points for adopting hyper-converged infrastructure.
Founded in 2009, Simplivity's converged systems platform pulls together servers, storage, networking along with wide-area network optimization, backup, recovery, and data tiering software into a single appliance designed to be scaled out for performance.
The acquisition underscores HPE's bet that enterprise customers will accelerate their shift to hybrid cloud services that allow them to speed development and deployment of distributed applications. "Essentially, companies want the cloud experience—faster speed, better economics and ease of use—without sacrificing control and security," explained Antonio Neri, general manager of the HPE's Enterprise Group. "Hyper-converged infrastructure can do that."
With industry consolidation expected to continue, other players in the market to unify datacenter computing, storage and networking resources continue to attract venture funding. For example, converged services specialist Pivot3 has so far raised about $247 million, including a $55 million funding round last year.