Text/ Yang Qingqing
In October 2016, the enterprise cloud computing company Nutanix (NTNX.US) landed on the Nasdaq, and it soared by 131.25% on the first day of its listing, from the IPO issue price of US$16 to US$37.
The pursuit of capital comes from optimism about the hyper-converged market represented by Nutanix. In 2018, Gartner named Nutanix as the leader in HCI (Hyper-Converged Infrastructure) Magic Quadrant . The company can reduce enterprise IT costs by up to 60%, and the payback period is only 7 months. Gartner predicts that the global hyperconverged market will reach US$12.6 billion by 2022.
However, more than two years after it was listed, "loss" seems to have become a lingering tag for Nutanix. According to a reporter from 21st Century Business Herald, Nutanix lost US$93.212 million in the first quarter after its listing. From then on April 30, 2019, the company suffered losses in the quarter, with the lowest loss in a single quarter of US$61.487 million and the highest loss was US$210 million.
's transformation to software has become one of the directions that Nutanix is trying to turn the situation around. "At present, our Greater China region is undergoing software transformation along the direction of its headquarters. In the past, we had hardware products with independent brands, but now we will cooperate with local hardware manufacturers to graft our software value to their hardware." On June 12, in an interview with a reporter from 21st Century Business Herald, Ma Li, managing director of Nutanix China, said. In her opinion, under such a transformation direction, the company's profit margin performance will improve in the future.
Loss hat that cannot be removed
hyperconvergence is a market that is favored by most investors.
The so-called hyper-converged architecture is to deeply integrate computing, network and storage into a standard x86 server to form a standard hyper-converged unit. Multiple hyperconverged units are converged into data centers through the network to form an IT infrastructure, and a new architecture of visual centralized operation and maintenance management is realized through a unified WEB management platform.
"Hyper-convergence is a revolutionary technology in the IT infrastructure industry, far exceeding traditional architectures in terms of cost-effectiveness and ease of use." The team of the Industrial Research Center of Guotai Junan Securities Research Institute pointed out that hyper-convergence in the United States has developed from a niche market to a mainstream choice for enterprises to build data centers. Whether in the private cloud market or similar technology markets, its penetration rate is continuing to increase.
As the world's first company to enter the hyper-converged market, Nutanix is also highly expected, but at least in terms of performance, it is still in a state of continuous burning of money. On May 30, Nutanix released its financial report for the third quarter of fiscal year 2019 ended April 30, 2019. According to the financial report, the net loss attributable to ordinary shareholders in the third quarter was US$210 million, an increase of approximately 144.8% year-on-year.
not only increased its losses by 1 times year-on-year, but also attracted more attention. Nutanix's operating income in the quarter was US$288 million, down 0.62% year-on-year. Before this, the company's revenue maintained a rapid growth of almost 50%, and the maximum growth rate could reach 77.41%.
This means that while the loss hat cannot be removed for a long time, the revenue growth rate of Nutanix has also become "silent". The reason why
is related to the current transformation pain of Nutanix. In the past, Nutanix was more of an integrated solution for customer software + hardware, but now it is transforming towards the software direction of subscription model.
"The sales method of software is to conduct subscription sales according to customers' usage habits, rather than one-time delivery of a hardware item." Ma Li told the 21st Century Business Herald reporter, "When selling hardware, we talk to customers about price, configuration, supply speed, after-sales service, etc., while software sales are to jointly provide an overall solution with the hardware cooperation platform." The original intention of
's transformation to software comes from its own cost, capability considerations and customer experience. "If we make our own overall hardware, it will be difficult for us to set up local support and local production bases all over the world. After transforming into a software enterprise, we can cooperate with local hardware manufacturers."Mali said, "Nutanix has more software value, while local partners can provide solid, reliable and secure services to customers. Our transformation is actually taking into account customer experience. "
Once the transformation is successful, it will improve the company's overall performance. "The software profit margin is relatively high because it does not involve too many costs such as physical goods, logistics, inventory, spare parts procurement, etc. "Ma Li analyzed. According to her estimates, the software transformation cycle of Nutanix in the Greater China region will be about three years, and the transformation time cycles around the world will vary in length.
A software industry practitioner analyzed to a reporter from 21st Century Business Herald that the transition from enterprises to the subscription revenue model will indeed be accompanied by a decline in revenue in the early stage. "In the past, one-time sales could increase revenue immediately, but now it has been delayed for a longer time. "However, the person pointed out that despite the decline in customer prepayment, customers will continue to invest more over time," the person said. "
has many external competitors, and the market for hyperconvergence is optimistic, while entrants are also increasing.
Currently, from a global perspective, including Dell EMC, HPE and Cisco have their own hyperconvergence "abbreviation". In August 2014, VMware released its first hyperconvergence infrastructure EVO:RAIL. In October of the same year, HPE launched the entry-level hyperconvergence product HP CS200. In 2017, HPE and Cisco acquired hyperconverged enterprises Simplivity and Springpath respectively to further strengthen their layout.
Domestic manufacturers have also made moves. In September 2012, Huawei launched the hyperconverged infrastructure FusionCube 9000, becoming one of the first manufacturers to enter the hyperconverged market. In October 2013, Huasan Communications released the unified infrastructure system UIS. In July 2015, Shenxinshui released aSV, network virtualization aNet and storage virtualization of hyperconverged architectures including aSAN.
What is the strategy and direction of Nutanix? One of the great value of
"The software is that it is multi-platform. "Mali said bluntly, "Customers use Nutanix and can choose different hardware platforms because we are certified and compatible with many brands. "In her opinion, the purpose of many hardware manufacturers entering the hyper-converged software system is more to ensure the sales share of hardware. Usually such a solution is to use its own hardware as an important goal of software compatibility.
In addition, Nutanix will focus a major future strategy on the Chinese market. "Nutanix has great expectations for the Chinese market, and the speed and number of traditional IT architectures transforming into cloud computing among Chinese customers are very large. "Mali said, "So we hope to enter customers in core industries including finance, energy, medical care, manufacturing, etc. to help them transform their business. At the same time, we will cooperate more widely with local Chinese companies. ”
Source: 21st Century Business Herald
