Nutanix Investors See War Clouds On The Horizon As Competition Intensifies
BTIG analyst Edward Parker believes the acquisition of Nutanix Inc (NASDAQ: NTNX)-rival SimpliVity by Hewlett Packard Enterprise Co (NYSE: HPE) would intensify competition in the hyper-converged space.
Privately-held SimpliVity, second only to Nutanix in the pure-play hyper-converged market, has agreed to be acquired by HP Enterprise for $650 million in cash. Parker said the lower takeout price suggests that SimpliVity’s rapid growth rate may have slowed dramatically, which may have made its expected IPO a less viable option.
Nutanix Amid HP Enterprise's SimpliVity Deal
“While this move further validates HCI as a powerful growth trend, it also signals the likelihood of increasing competition in the field — one of the key issues behind our Neutral rating (on Nutanix),” Parker wrote in a note.
The big server vendors partner with HCI vendors like SimpliVity and Nutanix to get products to market quickly and capitalize on a high growth trend.
Though Nutanix maintains product and market leadership, the analyst noted that it would find itself in a two-front war with much larger competitors such as HPE and Dell. Since, both firms now directly own leading hyper-converged offerings, differentiation is the only option to survive in the market.
“As we have argued, core HCI will likely see commoditizing pressures, so differentiation through value-added software will be crucial in order to drive a large, high-margin business in a sustainable way,” Parker highlighted.
Meanwhile, the debate will continue over Dell’s partnership with Nutanix despite it has strong offerings via its acquisition of EMC (Private)/VMware, Inc. (NYSE: VMW).
At last check, shares of Nutanix fell 3.73 percent to $28.93.
Latest Ratings for HPE
Date | Firm | Action | From | To |
---|---|---|---|---|
Mar 2022 | Bernstein | Upgrades | Market Perform | Outperform |
Jan 2022 | Morgan Stanley | Maintains | Equal-Weight | |
Jan 2022 | Barclays | Upgrades | Equal-Weight | Overweight |
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