SimpliVity CEO: Cisco-Springpath Won't Affect Our Hyper-Converged Partnership, Which Is Still Going Strong

As Cisco Systems prepares a new hyper-converged infrastructure appliance based on technology from startup Springpath, what does that mean for its relationship with SimpliVity?

Under a strategic partnership formed in September 2014, Cisco channel partners can add SimpliVity's software and proprietary hardware card -- which handles storage deduplication, compression and optimization -- to Cisco UCS servers.

The deal made SimpliVity's technology available to Cisco's UCS customer base, and at the time was seen as a potentially major coup for the startup, which develops software that enables compute, storage, networking and virtualization to run on x86 server hardware.

[Related: Sources: Cisco Inks OEM Deal With Startup Springpath, Preps UCS Hyper-Converged Appliance]

But as CRN first reported Monday, Cisco has made an undisclosed investment in Springpath and has the option of acquiring the Sunnyvale, Calif.-based startup, which competes with SimpliVity.

SimpliVity CEO Doron Kempel, who often touts the Cisco partnership as a major revenue generator for the Westborough, Mass.-based startup, told CRN on Tuesday that he doesn't see the Cisco-Springpath relationship as a problem.

"We don't think this changes our strategy with Cisco," Kempel said in an interview. "Cisco is a very important partner of ours, and they will continue to be a very important partner of ours."

However, sources told CRN that Cisco's relationship with Springpath could mean that the networking giant has decided to pursue a new approach to the hyper-converged market. A Cisco spokesman declined comment when asked for an update on the status of the SimpliVity partnership.

SimpliVity filed a storage-related patent infringement lawsuit against Springpath in September, but Kempel declined to comment on the status of the litigation.

Kempel described SimpliVity's relationship with Cisco as "very valuable" and said his startup has a "multimillion-dollar [sales] pipeline" with the networking giant, which includes several large global companies.

"We know the percentage of business we cover together with Cisco is growing significantly quarter over quarter, and the size of the deals is continuing to grow significantly," said Kempel.

Kempel told CRN in July that the Cisco partnership had fueled a fourfold increase in SimpliVity sales during the second quarter compared with the first quarter, and said he was expecting a "deluge" of Cisco-related sales in 2016.

Mark Galyardt, executive vice president of Xioss, an Atlanta-based SimpliVity partner, told CRN his customers have been showing more interest in hyper-converged infrastructure because it helps them consolidate their server and storage infrastructure.

Meanwhile, sources also told CRN this week that SimpliVity -- which has raised more than $276 million -- may seek additional funding to fuel its sales and marketing efforts.

Kempel said SimpliVity hasn't yet decided whether to seek additional funding. He also said SimpliVity isn't in a rush to join rival Nutanix by filing for an initial public offering.

"We're going very fast and have great opportunities for market expansion -- we're not in Japan or China yet, for example," Kempel said. "One thing that's common to all of our investors is the desire to build a $10 billion company, instead of rushing into an IPO. We're not making a decision on that right now."

PUBLISHED JAN. 6, 2015