Why Nutanix is in the sweet spot

Company riding high on the zeitgeist

Nutanix, by good fortune or by good judgement, currently finds itself sitting pretty, seemingly in the right place at the right time.

The cloud infrastructure company must have thanked its lucky stars when Broadcom took over VMware in 2023 and proceeded to prune its product range, doing away with perpetual licences in a way that was highly advantageous to Broadcom but less so to many of its customers.

More than half of the attendees at Nutanix’s standing-room-only .NEXT event in London event on Wednesday were not currently Nutanix customers. It would be reasonable to assume that many of those were there looking for an escape route from the world’s most widely used (85% of virtualised enterprise workloads run on VMware), but increasingly expensive and restrictive virtualisation software.

That could be the case, acknowledged chief revenue officer Andrew Brinded at a press briefing, although he insisted that the company’s current pulling power is down to more than being a VMware alternative. Rather, it is the broader interest in containerised applications and public cloud that is providing much of the draw. Nutanix provides a reasonably vendor agnostic connective tissue between cloud, datacentre and edge.

In another bit of fortunate timing, hyperconverged infrastructure (HCI), which Nutanix pioneered, has now traversed Gartner’s Hype Cycle and emerged onto the “plateau of productivity”, implying it’s a well-understood commodity with plenty of room for future growth.

“It’s opening the doors to new technology that can be managed by the same teams,” said Lee Caswell, SVP product and solutions marketing.

Technological advances, particularly Flash storage, mean that most of what once required three layers of infrastructure can now be done efficiently using commodity servers. This means that, with the exception of some specialised networking tasks, the same team can operate the whole stack. Plus, if these servers are suitably equipped, they can from the basis for AI tasks.

That, plus the steadily rising popularity of the hybrid and multi cloud models again plays into Nutanix’s hands. You can add regulatory requirements for resilience and data portability from DORA, the EU Cyber Resilience Act into the mix too.

But Nutanix also makes its own luck by being engineering rather than sales led and by focussing strongly on customer satisfaction. Brinded boasted that customers get straight through to third line support rather than being triaged and kept waiting. More than once during the event, executives mentioned the company’s sector-beating Net Promoter Score (NPS) approval rating, and there were plenty of customers on hand to testify to the quality of service.

This combination of factors has led to a strong second quarter, with revenues up 16% year on year.

Certainly it was refreshing to see a company lead on concrete positives rather than nebulous AI promises (although there were a few of those too, needless to say). All in all, Nutanix seems to be enjoying its time in the sweet spot.