Exclusive Four independent sources say hyper-converged poster child Nutanix is buying hypervisor flash-cacher PernixData, thus gaining crucial technology to speed up its appliances.

A Nutanix spokesman told us: "No comment." A PernixData spokesperson added: "We are not commenting at this time." A PernixData insider told The Register: "Everything is in a state of flux right now."

That's the scoop. Here's the background information.

PernixData was founded by CEO Poojan Kumar and CTO Satyam Vaghani in 2012. It received a $7 million A‑round that year, $20 million in a 2013 B‑round, and $35 million in a C‑round in 2014, giving it $62 million in total.

The main product is FVP, with a recent Architect product providing infrastructure analytics in virtual environments. The company has had some employee attrition, and here is a 2015 round-up of some of that.

Kirk Arrowood, director of northeast sales until November when he left and went to Zerto as regional sales manager, northeast.

Michael Foy, ex-channel sales manager who left in August to be director of partner sales at DataCore and is now channel account manager at Silver Peak.

Brian Gagnon, ex-channel and technology evangelist who left in August to join HGST as a principal engineer.

James White, ex-A/C exec who left in October to join Sentieo as head of enterprise growth.

Cory Barnard, currently in sales at Interana, who left his director of corporate sales post at PernixData in September.

David Schneider, now systems engineering manager at Veeam, who left a systems engineer post at PernixData in October.

Taka Yamada, who left his regional sales manager position in October and is now a regional director at Silver Peak.

Jeff Germscheid, middle Atlantic regional sales manager who left in May and is now sales director at DataCore.

Rob Bergin, system engineer, who left in October and is now at Springpath.

Kiet Duong, currently director of customer success at Netskope, who left his post as director of support in November.

Todd Mace, FVP product manager, now tech evangelist at DataCore.

There were rumours that the entire US east coast sales team left in November last year and also that PernixData was considering building an all-flash array.

Asked about these points at the time, Poojan Kumar replied: "We are building a long-term company here. And you can see that in the way we are executing. We just released our Act II (Architect) and it has been getting tremendous traction with our customers and partners, as PernixData Architect provides unprecedented infrastructure analytics in virtual environments, thereby providing huge OPEX and CAPEX (storage) benefits.

"We have customers now standardizing with PernixData FVP, our flagship product, and PernixData Architect across their entire virtual datacenters with investment in millions of dollars in both of our software platforms. THIS is what we are focused on as a company. Beyond that, I have no interest in addressing your rumors, many of which are factually incorrect and is REPEAT libel."

That's Kumar's capitalization. That's telling us.

Ownership by Nutanix might relax a somewhat frenetic atmosphere inside PernixData. The future roles of Kumar and Vaghani in any Nutanix acquisition of Pernixdata will be interesting to see.

Nutanix is three years older than PernixData, starting up in 2009, and richer, with $312.6 million in total funding – $13.3 million A‑round in 2010, $25.3 million B‑round in 2011, $33 million C‑round in 2012 and then, in a massive expansion of its cash resources, $101 million and $140 million in D- and E‑rounds in 2014. The cofounders were chief products officer Ajeet Singh and CTO Mohit Aron, who left in January 2013. Dheeraj Pandey is the CEO.

Its systems support VMware's ESXi, Microsoft's Hyper-V and the KVM hypervisor, with Nutanix developing its own Acropolis hypervisor on the KVM base. The company is the acknowledged leader in the hyper-converged infrastructure appliance (HCIA) market, with SimpliVity the second-placed (and hardware-accelerated) startup. Pivot3 is a third HCIA startup.

After a tentative and poorly-received EVO:Rail entry into the hyper-converged market, VMware and EMC are trying again with VSAN 6 software and VxRail appliances. These have been much better received by the market. HPE has a strong set of HCIA products, as does Cisco with its recently announced, and Springpath software-powered, HyperFlex. Cisco has numerous meet-in-the-channel HCIA software providers, as does Lenovo.

Dell OEMs Nutanix kit, and this arrangement is potentially threatened by Dell's looming acquisition of EMC. Atlantis Computing has recently withdrawn from the general HCIA software market in a sign of the rampant competition in the area.

The number of software hyper-converged vendors is legion, including DataCore, Maxta, Scale Computing and Gridstore.

Nutanix has been involved in Storage Review performance spats with VMware. If there are concerns about its performance capabilities, a PernixData purchase could lay them to rest.

For PernixData itself, access to Nutanix's channel should increase sales nicely, and there are engineering development avenues opening up for wider Nutanix hypervisor support plus the insertion of PernixData analytics into Nutanix's environment.

How might PernixData be managed inside Nutanix? That's another mighty interesting question.

We don't know the price Nutanix might pay for PernixData, with its $62 million in funding and, we expect – as is normal in startups at this stage – loss-making business. Nutanix has filed for an IPO, which has been delayed. It recently took out a $75 million loan from Goldman Sachs, which was viewed as a consequence of its IPO being delayed.

PernixData background

There are several existing connections between Nutanix and PernixData:

Nutanix CEO Dheeraj Pandey and PernixData CEO Poojan Kumar were both at Oracle in the 2003-2007 period; Pandey as a senior manager in SW development and Kumar as a cofounder of the Exadata product.

Bipul Sinha, cofounder and CEO of Rubrik and a venture partner at Lightspeed Venture Partners, is on the PernixData and Nutanix boards, and Lightspeed is a Nutanix investor.

Mark Leslie is on the PernixData board and a senior advisor to Nutanix.

We have been told on background that, up to two weeks ago, PernixData thought it could get more funding; you'll recall its last round was in 2014. Apparently Nimble made an acquisition approach a few months ago, but no deal materialized. Our information is that a while ago it undertook to develop an all-flash array (AFA) in a move away from software. This increased its cash burn rate and the business' revenues couldn't grow enough to cover this.

Eventually that meant the AFA effort had no route to becoming a viable business, and the leadership team couldn't pivot the company back to being a viable SW business. Hence the board and the execs looked for an exit that would at least cover the venture capitalists' investments, which total $62 million.

Firesale is too exaggerated a term, but the sense of it is that they sold the company to cover their venture capital investors.

We have been told that PernixData employees, particular the early ones, have bought stock in the company, writing their own checks for this, and that stock is now essentially worthless; they get the short end of a nasty stick while the VCs get their dollars back.

To make this pill more bitter, substantial layoffs are expected, with relatively few employees transitioning over to Nutanix. We ran all this information by PernixData but, at this time, as its spokesperson said, it's making no comment.

Reg comment

A deal like this would strengthen Nutanix's technology prowess, give it an additional revenue stream, and open up product strengthening developments that could widen the distance between it and its competitors. The hyper-converged area could just be about to become a lot more exciting. Bring it on. ®