October 3, 2017
In the first quarter of the Hewlett Packard Enterprise (HPE) fiscal year, HPE posted a 12% decrease in storage sales. As a response, they soon announced the acquisition of mid-market flash and hybrid storage developer, Nimble Storage, for the hefty sum of $1.2 Billion. The acquisition of the 1,300 employee company finished not long after. With the dust now settled, we can observe how Nimble has been integrated into the existing product line and what new opportunities the Nimble acquisition has provided for HPE.
Aftermath of the HPE Nimble Acquisition
The CEO of Nimble wrote in a letter to customers their reasoning for the sale of the business. It read,
“We are confident that by combining Nimble Storage’s technology leadership with HPE’s global distribution strength, strong brand, and enterprise relationships, we’re creating expansion opportunities for the combined company. Our mission of enabling applications to perform without disruption will continue as we move forward. Our technology innovation can accelerate with the increased investment.”
CEO, Nimble Storage
As many technologists have pointed out, Nimble has for years operated at a loss as they tried to increase revenue growth, expand their infrastructure, and ultimately shrink and eliminate this deficit. But, along the way, the flash market matured and other developers arose to rival Nimble. Furthermore, hyperconverged technologies and the public cloud continue to serve as attractive alternatives. Nimble, it seems, decided to join with HPE to preserve the longevity of the technology and the brand.
HPE on the other hand comes away with a few important technologies to round out their offering, and the flash storage market still represents a significant amount of potential revenue. It is projected that the flash market will swell to $20 Billion by 2020. The problem for HPE was their gap in solution sets. The MSA Storage arrays were ideal for small businesses and serve as a great entry point into the flash storage arena for clients. Meanwhile, their high-end 3PAR arrays are fit for enterprise solutions. They were missing a definitive solution for midmarket clients. Nimble storage fills that role quite nicely.
Bump in Stock Value
Early September 2017 saw a significant rise in HPE stock value after posting some impressive numbers for its third quarter of the fiscal year. The company’s largest segment in this report was its enterprise group, including data center infrastructure products. Though server revenue took a one percent dip year over year, it was more than made up for by their storage revenue. Storage sales rose 11% year over year and 21% compared to their Q2 earnings.
A Wise Decision Paying Off
The clever HPE Nimble acquisition early in the year is literally paying dividends for Hewlett Packard Enterprise. As they anticipated, HPE now has a line of flash and hybrid storage solutions that can address the challenges of the entire market. From the SMB to the enterprise, there is an HPE flash or hybrid solution that will align with their needs. Furthermore, the added insight and capabilities of the newly rebranded HPE InfoSight provides new opportunities for existing and future HPE clients alike.
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For Further Reading
Case Study: Eliminating the Storage Bottleneck with a Flash Array