Implications of the Dell OEM Relationship for Nutanix Channel Partners

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In the technology industry, OEM means that a manufacturer purchases a product at a deep discount with carte blanche to package and sell it as desired. Nutanix, consistent with our corporate DNA for breaking the rules, is also changing the OEM game. We announced today an OEM relationship whereby Dell is going to manufacturer appliances built with Nutanix software. But Dell’s pricing is structured in such a way that the company will not have a price advantage over other partners selling Nutanix appliances.

The Dell OEM Agreement

Most younger manufacturers would likely, if approached by Dell, jump through any hoops necessary to partner with the Austin goliath. And while Nutanix is both excited about this agreement’s potential and impressed with the professionalism and responsiveness of the Dell teams we’ve met, we also are very appreciative of – and loyal to – our existing partners. These are the folks who have quickly made Nutanix an established brand across the globe.

This is why we structured the Dell OEM agreement in a manner that gives everyone a level playing field. Dell’s pricing is in parity with that of the rest of our channel. Dell will also be subject to the same stringent rules as all of Nutanix partners in terms of forecasting and registering opportunities.

The Real Competition? Datacenter Status Quo

Dell has a broad global reach which some partners consider to be a competitive threat. The difference is that the web-scale industry in which we’re competing is still at the nascent stage. The real competition for Nutanix partners is not Dell or any other Nutanix reseller – it’s the $50B+ servers and storage status quo.

I’ve written some blog posts about partners who have utilized Nutanix to transform their businesses. They proactively describe to their customers how web-scale converged infrastructure enables a more scalable, predictable, resilient and less complex platform for successfully implementing virtualization initiatives. These partners have enjoyed huge increases in sales, margin and in customer satisfaction.

But the entrenched three-tier infrastructure mentality is not easy to overcome. Partners often have to work hard to help customers understand the benefits of web-scale and why it is well worth going through the pain for them to transition to a new architecture.

When I ran a consultancy in the early days of VMware, we faced very similar challenges with promoting virtualization. Customers were often surprisingly resistant to virtualizing their production environments no matter how compelling a case we made around the economics and other benefits. VMware’s OEM agreement with Dell helped accelerate the acceptance of virtualization which in turn expanded the market for all of VMware’s partners.

Although Nutanix is growing at an unprecedented rate for an infrastructure company, most organizations still do not understand web-scale IT. Our relationship with Dell is an important step to help accelerate enterprise embracement of web-scale converged infrastructure. As was the case with virtualization, this will benefit all Nutanix partners.

Web-Scale Opportunities

The Challenger Sale by Matthew Dixon stresses that the most successful salespeople are the ones who challenge customers to consider different and more beneficial solutions. Web-scale, of course, is an ideal solution with which challenger salespeople can excel. By bringing their customers a superior platform for hosting a virtualized datacenter, they gain increased trust, respect and business.

As web-scale converged infrastructure becomes more widely adopted, the benefits for Nutanix partners extend beyond even the $50B server and storage business. Web-scale lends itself perfectly to use cases such as private and hybrid cloud, big data, superior disaster recovery and remote branch infrastructure simplification.

Nutanix partners are already seeing increased opportunities in all of these areas. And as Nutanix’s industry-leading features continue to expand, partners will be able to wrap more customized management solutions around our web-scale converged infrastructure.