Cisco Systems says it has been a fan of Springpath, the hyper-convergence startup it's partnering with on its new HyperFlex offering, since the startup's early days in 2012.
Yet during the first half of 2015, Cisco unsuccessfully tried to acquire both Nutanix and SimpliVity, the No. 1 and No. 2 startups in the hyper-convergence market, multiple sources with knowledge of the matter told CRN US recently.
Now, Cisco is competing with them with HyperFlex Systems, a new product line it launched this week that marries its Unified Computing System (UCS) servers with Springpath's software-defined storage technology. Cisco has invested in Springpath and also has the option of acquiring it based on revenue results, according to CRN US's sources.
The sources said Cisco mounted an especially dogged pursuit of Nutanix, which has raised more than US$312 million and has a valuation north of US$2 billion, making two separate bids to acquire the startup.
Cisco's best offer was around US$4 billion, but Nutanix's asking price was between US$6 billion and US$7 billion, according to the sources, who didn't want to be named.
After Nutanix declined the offer, Cisco cut off related talks about doing an OEM agreement with the startup, the sources said.
Cisco, which formed a UCS partnership with SimpliVity in 2014, also made an acquisition offer to SimpliVity sometime around the time of the startup's US$175 million Series D funding round in March 2015, sources said. It's not clear how much Cisco offered for the startup.
Spokespeople from Cisco, Nutanix and SimpliVity all declined comment. Springpath didn't respond to a request for comment.
Cisco CEO Chuck Robbins, in a Q&A with press Tuesday during the vendor's Partner Summit in San Diego, said Cisco "actually looked at all our options" in the hyper-convergence space before deciding to invest in Springpath.
Robbins also described Springpath's technology as "next-generation thinking" and said when the vendor shared early builds of HyperFlex with a select group of partners, "the feedback I got was, 'Wow, you guys are on to something.' "
Cisco is a late arrival to the hyper-convergence market, where Nutanix and SimpliVity have collectively raised close to US$590 million over the past several years.
But the hyper-convergence startups have taken "some real architectural shortcuts" that have slowed mainstream adoption of the technology, said Todd Brannon, Cisco's director of product marketing for UCS, in an interview with CRN US. "That's what we're fixing with HyperFlex," Brannon told CRN US.
Brannon said while hyper-convergence startups like to tout their offerings as being quick to set up, they're typically combinations of compute and storage that don't account for networking. As a result, customers have to figure out how to connect all the different parts together, and getting a system up and running can take days or weeks, he said.
While Cisco doesn't intend to walk away from its existing UCS partnership with SimpliVity, it does view Springpath's technology as superior and plans to lead with it in sales discussions with customers, said Brannon.
"This is definitely not aimed at SimpliVity," he said. "This technology is going to leapfrog a lot of the incumbent players, but I think Nutanix has a lot more to be worried about here than SimpliVity does."
Nutanix, for all the buzz around it, still wasn't profitable when it filed for its IPO in December. The startup had a loss of US$126.1 million in its fiscal 2015 and an accumulated a deficit of US$312 million as of the end of October, according to its S-1 filing with the Securities and Exchange Commission in December.
Last week, CNBC reported that Nutanix had put off its IPO, originally planned for this month, until stock market conditions improve.
But at least one Cisco partner -- who also works with the hyper-convergence startups – said Cisco's marketing for HyperFlex sounds a lot like its marketing for Application Centric Infrastructure (ACI), its existing offering in the software-defined networking space.
After VMware beat Cisco to the punch by acquiring prized SDN startup Nicira, Cisco developed its own technology through its Insieme "spin-in" and declared that superior to everything else on the market, the partner said.
"Now they say HyperFlex is the best, even though they tried to buy something else first? I'm seeing a pattern here," said the partner, who didn't want to be identified.