Nutanix CEO Rajiv Ramaswami talks about driving VMware migrations for the long term, embracing public clouds, hardware shortages continuing for years, and so much more during an onstage interview at CRN’s XChange Best of Breed conference.
Nutanix CEO Rajiv Ramaswami says VMware migrations are a 10-year opportunity for channel partners, wants partners to embrace Nutanix on public clouds, and is “surprised” that VMware deauthorized solution provider powerhouse Insight Enterprises.
“From a business perspective why do you want to alienate your big partners? It just doesn’t make sense from my perspective,” said Ramaswami onstage during CRN’s XChange Best of Breed conference Tuesday, regarding VMware deauthorizing Insight in North America.
“We’ve been adding about 500 to 1,000 new customers every quarter for the last couple of years. All of these are customers migrating away from VMware,” Ramaswami said.
Ramaswami said there’s still “anywhere from 100,000 to 200,000” VMware by Broadcom customer opportunities out there for Nutanix to attack as partners will have a decade to win over concerned VMware clients.
[Related: VMware Star 11:11 Acquires ‘Hundreds’ Of IBM Customers In Blockbuster VCF Push]
“This is a 10-year transformation for the industry. It’s not an immediate transformation,” Ramaswami said. “There’s plenty of customers out there who are still unhappy, facing the increased price points, who haven’t even gotten started yet. So there’s going to be many innings of this ahead of us.”
Hardware Shortages Will Remain For Years; Nutanix Public Cloud Push
In terms of the industry’s compute, memory and overall hardware shortages, Nutanix sees the shortages continuing for upwards of two years.
“A server has gone up by about 4X to 5X extra costs over the last year,” he said. “There’s no hiding from that. It’s going to remain that way for the next year or two, at least.”
Furthermore, Ramaswami is telling partners to “start embracing public cloud.”
“This is a time in the industry where public cloud bare metal may be actually more easily available than waiting for an on-prem server to be delivered. And Nutanix software runs through the public cloud. In fact, we’ve seen more recently customers turn into the public cloud as they do some of these migrations. They were migrating from VMware on-premises to Nutanix in the public cloud on bare metal,” Nutanix CEO said. “You can actually deploy Nutanix on those bare metal instances in the public cloud, and you can do the VMware migration just as seamlessly into the public cloud as you can do on-prem to on-prem.”
From Nutanix’s acquisition of Ryax Technologies to its AI hopes, Ramaswami takes a deep dive with CRN about his vision, strategy and so much more.
Where does the Broadcom-VMware opportunity sit for the Nutanix partners, and why should a customer and a partner choose Nutanix right now?
We still have a long runway. People ask me which innings are we in. If this were a baseball game, I’d probably say maybe we are [in] the second or third innings at this point. The first couple of innings, we’ve seen a lot of customers actually already do migrations.
We’ve been adding about 500 to 1,000 new customers every quarter for the last couple of years. All of these are customers migrating away from VMware. When it comes to Nutanix, this is the easiest platform, by and large, for customers who are using VMware to migrate.
First of all, VMware is being used today to run mission-critical workflows in the enterprise. When somebody migrates to Nutanix, it’s a very seamless migration.
The applications don’t have to be touched; they run seamlessly on the Nutanix platform just the way they were running—in fact, better in terms of better performance and better capabilities—than they were on the VMware platform.
Migrations, a lot of them are automated. We’ve done many of these migrations.
Now, that said, this is a 10-year transformation for the industry. It’s not an immediate transformation. So there’s many customers who are still yet to migrate out there.
Can you put that into perspective?
Nutanix has roughly about 30,000 customers today.
VMware has anywhere from 100,000 to 200,000 customers out there. So there’s plenty of customers out there who are still unhappy, facing the increased price points, who haven’t even gotten started yet. So there’s going to be many innings of this ahead of us.
What [partners] need to do collectively is get in front of those migrations.
What happens a lot is customers realize there’s a problem. They can’t even get a price until it’s too late, a few months before your renewals come, at which point there is not enough time to go migration.
So what we have to do collectively together is to get in front of these customers way ahead of time—two years before their renewals are coming up, and ensure that we are actually able to plan and deliver migration so that they can be out before their next renewal.
So there’s still huge amounts of opportunity here.
We have a number of programs to make it easier for them in terms of trying to avoid double carry costs for both VMware and us when they’re doing the migration; enabling them with some free service capabilities as well, which we expect partners to deliver fully.
We’re not in the services business, very clearly. We expect you guys to do that. Work together to go prospect and go convert a lot of these customers over.
What do you see as the key differences in the partner philosophy between what they’re doing at Broadcom-VMware and what you’re doing at Nutanix?
I’ll be pretty direct about this. It’s very clear that Broadcom takes their largest customer direct.
They don’t necessarily have a partner-first model, but they are investing in the partner community in at least with a select subset [of partners].
It’s not everybody. It’s not a broad partner program. From what I understand, it’s a much more narrow program.
In fact, we’ve seen people, big names, that were in the program at one point, and are no longer in the program at this point. So they’re very selective about who they work with.
We, on the other hand, are partner-first. Everything goes through our partners. We work with our partners. We expect our partners to be the front line for us, giving us a leverage.
The other thing that we expect is that our partners take on more of the high-margin services from their side of it.
For us, we’re a product company. We make money when we sell our software licenses.
Yes, you make money when you resell our software, but you make even more money when you actually get the opportunity to sell high-value services.
We are completely fine with you folks taking on all the services that you can deliver on top of the platform: the consulting services, the migration planning services, the execution of the migration, all of that.
We will certainly work with you as managed service providers as well. So that opportunity is very much in front of us. So together, we believe strongly that we should be going to market together with you all and win together.
Many VMware partners have been deauthorized, products have been removed and prices have changed. But one of the more recent surprises was the deauthorization of Insight Enterprises in North America. Did that catch you off guard?
I was surprised to be honest.
Because I mean, from a business perspective, why do you want to alienate your big partners?
It just doesn’t make sense from my perspective.
But again, as Broadcom, they do what they need to do. This is sort of just a symptom of what we are encountering.
What I can tell you is, with us, we have a long-term relationship that we build with you all. We want to be partner-first.
We continue to invest in the partner community and we continue to increase that investment every year, including this year. And we’re going to be with you for the long term.
What percentage of VMware customers do you think are ready to make the move now and what might that timeline look like?
It’s hard to give a number. But at any point in time, here’s what we see: the vast majority of customers want to get out of VMware.
Very few customers are saying, “I want to stay with VMware long term.” And nobody is looking at VMware as their long-term partner of choice.
They are in there. They are there for now.
But when it actually comes to make the move, it’s more mixed.
Because the VMware product works, it’s a great product. I was there for many years, and it’s a great platform, and it works well. So there’s inertia that has to be overcome.
There is a fear of moving away from something that works. So that’s something that we need to overcome.
There’s so many proof points of how we can help customers who migrated. We can actually show how applications run seamlessly on the Nutanix platform. We can do proof of concepts. We can do all of those things.
What types of VMware customers are you seeing?
There’s going to be a subset of customers who say, “Absolutely, I’m ready to migrate. Let’s go move.”
There’s another subset of customers that are saying, “Yeah, I want to move, but help me. Reduce the risk for me. Tell me how I can do this successfully.”
And then there’s a subset of customers who have so much inertia, and then they put off. They say, “OK, well I’ll get to it later. I’ve got other things to do now.” Then when they get to it, they don’t have time.
It’s even things like, what’s the average tenure of a CIO? Maybe three years. Sometimes the CIO will say, “Well, you know what? I’m going to leave this problem for my next guy.” They know it’s a problem.
So these are three categories that we have to work together to overcome.
You’re partnering now with Dell, Everpure and NetApp. Where are you seeing the greatest greenfield opportunity for partners?
All three are doing really well: Dell, NetApp, Everpure.
NetApp is going to be GA very soon. It’s already in early production with customers.
But Dell and Everpure—Dell PowerStore, Dell PowerFlex and Everpure—we are seeing a ton of opportunity there.
Because these are all existing environments that customers have and they are very comfortable with how it works. And now they can reuse their servers, they can reuse their storage, and deploy Nutanix in the cloud.
The migration can be done in place.
In fact, one of the cool things we showed recently is you don’t even have to move the data, right? If you’re using one of these storage platforms, the data remains where it is, and you can replace your server software, your virtualization software with Nutanix, and it all works very seamlessly.
So we’ve made it really easy for them.
All of these three companies have huge install bases out there. There’s massive customer base out there. It just makes it so much easier for them to adopt and for us to sell Nutanix into those environments.
Regarding the memory crunch and the hardware crisis that gets precipitated, what’s the advice that you have for partners on how to navigate that?
A server has gone up by about 4X to 5X extra costs over the last year. There’s no hiding from that.
It’s going to remain that way for the next year or two, at least.
I actually thought that spending might moderate this year, but I was totally wrong. Spend is increasing from the hyperscalers and the model companies. So they’re all projecting that they’ll spend more next year than they will spend this year.
The capacity that’s being built up is still going to take time to come. So we are going to be in this supply chain crunch for some period of time. Maybe at some point, the spend will come down, and at which point there’ll be more [supply]. But right now, I don’t see that happening.
How are you helping customers and partners navigate that?
Three things: the first is to the extent that we can help them achieve their goals: modernizing their infrastructure, running modern applications, try and do that as much as possible on existing hardware. Sell them software. Sell them services, but try to make it all work on the existing hardware.
We’ve done a lot of work to enable that with our partnerships with Dell, Everpure and NetApp and everybody else—all the server manufacturers. Also ensure that, if they do have to buy servers, they look at everybody in the industry.
[Secondly] very often, people have two server vendors and they go purchase from them.
I think that has changed now completely. You’ve got to look at everybody that’s out there. Look at who’s got supply available. Who’s got the best price?
What I see is quite a range of differences. Depending on this week, might be different from next week. So you just got to look at a broader palette as you look at options for the customer when it comes to server choices.
Then last, start embracing public cloud.
This is a time in the industry where public cloud bare metal may be actually more easily available than waiting for an on-prem server to be deliverable. And Nutanix software runs through the public cloud.
In fact, we’ve seen more recently customers turn to the public cloud as they do some of these migrations. They were migrating from VMware on-premises to Nutanix in the public cloud on bare metal. And many of these customers already have relationships with the public cloud providers.
Now you realize that you can actually deploy Nutanix on those bare metal instances in the public cloud, and you can do the VMware migration just as seamlessly into the public cloud as you can do on-prem to on-prem.
So these are all I think the three vectors available: modernize in place, get the broadest set of servers that you can actually out there, embrace public cloud.
Do you think this supply crisis is going to get worse before it gets better?
It’s going to get worse, no doubt about it.
Because the spending, it’s a function of two things: At what rate of people spending? And at what rate is capacity coming online?
The hyperscalers and the model companies all have indicated they continue to spend for next year, and increase the level of spend.
Every one of these major players are spending a couple hundred billion dollars a year. It’s big money being spent on building these AI platforms.
At the same time, there’s a lot of financing and capital available at this point to be able to finance all of this stuff to build out these data centers. So as long as that continues, the demand side of the house will be high.
Then on the supply side, yes, people are racing to build more capacity.
But the reality is [supply] is all sold out for the next several years.
Even if we have a new capacity coming on, it’s going to take time. So no instant fixes here.
So we’re going to be in this environment for a while until one of two things happens: the supply catches up perhaps, or if there is something that changes the demand picture.
Explain Nutanix’s transformation over the past several years from an HCI provider to now a platform provider?
We brought hyperconverged to the market and have always been a leader in it. That kept us going for the first 10 years of our existence. We’ve changed the company quite a bit now to make it a much broader platform.
And with a much broader platform comes a much bigger TAM market that we can all together go after. So if you look at what Nutanix can do today.
Yes, we are still the best to create HCI, but we go way beyond that. So we’ve got HCI, but today we work with all forms of external storage in a much broader cloud platform.
So we work with Dell storage, with NetApp, with Everpure.
What’s important about this is that there’s massive amounts of infrastructure deployed out there that can all be modernized with Nutanix software without requiring any hardware updates, which of course becomes very important in this time when we have these massive inflationary prices on hardware.
So that expands the market opportunity dramatically if you’re able to deploy Nutanix software with all the existing storage platforms that are out there. So that’s the next phase of the transformation.
Where are other key areas that Nutanix has transformed?
We are available in all the public cloud providers: Amazon, Azure, Google, and we have an increasing number of customers deploying us on bare metal on those public cloud platforms as they embrace hybrid cloud.
Beyond that, as customers are looking to build modern applications, we have a platform for them. We have a full-fledged Kubernetes platform.
One of the unique value propositions is that we help our customers together manage their modern applications and their existing applications in the same platform, using similar tooling, and give them the flexibility and choice of mixing and matching both legacy VM applications and modern containerized Kubernetes applications.
Last but not least, what’s most exciting to me today is that we have the real opportunity to be the platform for AI for enterprises.
That’s such a pivotal moment for enterprises as they all start adopting AI today. That’s so important that we get in front of our customers. I’ve talked to over 100 CIOs in the last three months, and every time they start thinking about us as okay, ‘We want to migrate away from VMware. Nutanix is a great option.’
When I talk about our AI platform, and then they realize that there’s a lot more to us than just a VMware alternative.
What’s the implication on the increased total addressable market, as you have this AI push and much bigger ecosystems that the partners can play in?
If you look at just the existing infrastructure out there today, about 20 percent of that is HCI, hyperconverged.
The remaining 80 percent is actually external storage.
So right there, we’ve expanded our TAM dramatically to be able to play in that 80 percent of the market.
In the past, we used to just have to work very hard to convert those over to HCI. Now we don’t. Now we can just go there and drop in and replace legacy with the Nutanix right there.
Now above that is modern applications as people are deploying Kubernetes-based applications, containerized.
That’s a whole new TAM, right? Tens of billions of dollars there.
Then on top of that, I really don’t even know how big this AI plan is going to be. We are in the early stages, but if you imagine everybody is starting to use AI in the enterprise, and increasingly AI is going to be consumed both in terms of frontier models, but also open weight models. People are going to be deploying agentic applications, and we have a platform for running agents.
We have the gateway for accessing the intelligence where you need to go to and managing token costs.
Then we have the ability to deliver intelligence on GPU clusters as well.
So a lot of this market opportunity is just way bigger than where we started out.
You recently acquired Ryax Technologies. Talk about the capabilities that it brings to the table and why that’s important for partners.
We’re continuing to make our platform better and better for AI.
So the Ryax team has a long history in high-performance computing and optimizing workloads for running on hardware infrastructure.
Over the last five years, they’ve been turning their expertise into optimizing workload performance on GPUs. The Ryax platform has a very talented team with a very good reputatio in the industry.
We are taking their technology and integrating it into our Kubernetes platform.
All AI applications are on Kubernetes. What we want to do is make sure our Kubernetes platform optimizes and gets the most out of the GPU investments that people make—whether it’s familiar GPUs, whether it’s AMD GPUs.
So by integrating the Ryax Technologies inside, we can now actually place workloads much more efficiently onto those GPUs and get the most out of those GPUs. So that’s what this investment is about.
