Innovation and the Channel

In 2005, my partner and I started a VMware consultancy. Our business plan was simple: Gain a national reputation for virtualization expertise, and then sell to a big solution provider wanting to acquire a VMware practice. We cashed out just over three years later for $6.2M. Some might feel that we were foolish to sell, and I would agree – but that’s not the point of this article. The reason we were able to execute as planned was due to two blatantly obvious industry phenomenon: 1) Virtualization would inevitably become the datacenter standard; and 2) Most large channel partners would nevertheless be slow to invest in virtualization.

The S**t’s about to Hit the SAN

When the leading channel magazine, CRN, hands out awards for innovation – they always go to manufacturers. Solution providers instead are recognized for the size of their revenues or for how many certifications they hold from the leading datacenter manufacturers. The resellers’ allegiance to the giant incumbents pays off in terms of leads and back-end marketing dollars. And the model works quite effectively even when incorporating smaller technology disruptions such as disk-based backup or flash. But it breaks down in the face of a tectonic shift.

We are facing a tectonic shift.

From outside the datacenter, AWS is committed to decimating infrastructure sales by moving workloads to the cloud. Jeff Bezos famously warned equipment manufacturers, “Your margin is my opportunity”. AWS does billions of dollars in business – and it’s just getting started. Storage manufacturers, server manufactures and VARs will increasingly feel the pain.

And from inside the datacenter, Nutanix and VMware are revolutionizing the infrastructure for virtualized workloads by eliminating the need to purchase and manage SANs entirely. Nutanix also eliminates servers while VMware VSAN commoditizes them. VARs will struggle to differentiate, for example, HP servers that share the same Ready Node certification as low cost Super Micros. Without the supplementary margin from servers and storage, many VMware partners will struggle to make a living off just software.

Strapping on Wings is not the Way to Fly

Clay Christenson, author of The Innovator’s Dilemma, talks about how mankind unsuccessfully tried to fly for hundreds of years by strapping on wings. Various configurations of feathers, after all, are best practices by the most successful fliers in nature. It was only once fluid mechanics and lift were understood that the basis for modern flight developed.

Early last decade, VMware changed IT by bringing the same type of virtualization that IBM pioneered in mainframes to the X86 world. Yet other than the partial exception of Cisco UCS, all of the leading hardware manufacturers continue to approach virtualized infrastructure with the same old disparate tiers of compute and storage that Google long ago recognized as being highly inefficient.

As organizations increasingly virtualize, they encounter problems from deploying separate compute and storage tiers such as complexity, performance, troubleshooting and collaboration. The datacenter incumbents have all responded with their “converged infrastructure” offerings that provide faster deployment and one number to call for support.

UCS, which was the first purpose-built server for hosting virtual infrastructure, features in the “converged storage” solutions of EMC, NetApp, Hitachi and Nimble. But juxtaposing storage arrays with UCS, or with any other server for that matter, is the equivalent to trying to fly by strapping on wings.


When Google debuted in 1998, the founders did not want to simply adopt the same type of SAN infrastructures utilized by Yahoo and the other Internet leaders of the day. The company instead hired a team of scientists from prestigious universities to create an entirely new approach to infrastructure.

The scientists developed Google File System (GFS), along with MapReduce and No SQL, running on hundreds of thousands of commodity servers with local storage – and no SANs. The result was massive parallel computing, exceptional fault tolerance and linear scalability. Google rocketed past Yahoo to become the dominant leader in search. The Google infrastructure model was eventually adopted by Yahoo and all the other leading cloud providers.

A couple of the developers of GFS, including the lead scientist, saw an opportunity to bring the advantages of this web-scale architecture to commercial and government enterprises by leveraging the hypervisor. They, along with engineers from companies such as Oracle, VMware, Microsoft and Facebook, spent four years developing the Nutanix Distributed File System.

Nutanix refers to its architecture as web-scale; it incorporates the same scalability, simplicity, resiliency, and lower cost that have already won in the very demanding cloud provider environment. It will inevitably win in the enterprise as well.

Web-scale additionally provides a foundation for still more exceptional things to come including advanced analytics, automated workflows and hybrid cloud enablement among other capabilities. @AndreLeibovici discusses some of these advantages in his recent blog post.

While it is far too early to say that Nutanix specifically is going to be the winner in this space – the company is certainly off to a good start. With $100M in total revenues after only 2 years of selling, Nutanix is by far and away the fastest-growing infrastructure company of the past decade.

The disruptive nature of web-scale puts channel partners in a dilemma that they didn’t face when VMware ESX first came on the scene. ESX, after all, vastly increased storage sales along with fiber channel switches and powerful servers. Nutanix’s web-scale architecture, on the other hand, competes with every leading server and storage manufacturer.

Time to Innovate

It is misleading to say that channel partners don’t innovate. Savvy players identify which new technologies are important and help their clients justify and implement them. Large and even multi-billion dollar channel organizations have been built by partners early to market with manufacturers such as Cisco, NetApp, Palo Alto Networks, Splunk, Riverbed, VMware and Citrix.

For some time now many VARs, particularly the larger ones, have become complacent. Though they may have been able to slowly embrace virtualization without negative consequences, the datacenter infrastructure revolution is not likely to be so forgiving. VMware’s introduction of VSAN validates software-defined storage and web-scale architecture. It forces a choice between loyalty to vendors peddling outdated architecture, and to doing what’s right for customers.

Increasingly, channel partners are reshaping divisions, or even their entire businesses, around Nutanix. These partners radiate the excitement that comes from changing the dynamics of the datacenter. Their commitment to web-scale is paying off it terms of recognition as thought-leaders, from increased customer loyalty and from escalating sales.

Thanks to @sudheenair for his many contributions to this article.

See Also:

Nutanix Joins the $1 Billion Valuation Club as It Takes On Tech Giants. 01/14/2014. Deborah Gage and Shira Ovide. The Wall Street Journal

CRN Tech Elite 250. 01/14/2014. Rick Whiting. CRN.

Not Just Datacenter Transformation, Nutanix is also Transforming Partner Businesses. 01/13/2014. Steve Kaplan. Nutanix Web site.

2013 Solution Provider 500. 10/18/2013. Kristin Bent. CRN.

The 20 Smartest Things Jeff Bezos Has Ever Said. 09/09/2013. Morgan House. The Motley Fool.

VMware VSAN Validates an Increasing Shift to Software-Defined Storage. 09/06/2013. Anjan Srivinas. Nutanix Web site.

How Will You Measure Your Life? 05/15/2012. Clayton M. Christiansen