Nutanix: A billion dollar company in Southeast Asia’s backyard

• Growth in Asia outperformed that in North America in the last year
• Aims to be a US$3 billion company by 2021

WHEN a company with an annualised run rate of over a billion US dollars opens a new regional office in Asia, you sit up and pay attention.

"Singapore has played a significant role in the overall growth in Nutanix," said Nutanix chief financial officer Duston Williams, who was in Singapore to officiate the opening of its new Singapore-based Asia Regional Office in Suntec Tower 1.  "The growth here in this region last year actually exceeded our growth in North America."

This growth naturally made a significant impact on the bottom line of the cloud-computing giant. "Over the last twelve months the company billed almost a billion dollars in software," continued Williams.

The value proposition made by Nutanix to potential customers is to transfer their server room to the cloud. "Simply take their old three-tier infrastructure that they've done... and just spend it more efficiently," said Williams.

Continued growth in Singapore expected

Optimism continues to run high that this growth can be sustained despite regional issues such as the trade war between the US and China.

"Asia Pacific's a pretty volatile region, whether it's North Korea or earthquakes in Japan and tsunamis and typhoons and SARS or bird flu; we're always dealing with  something out here," said Nutanix vice president Asia Pacific & Japan Matt Young. "It's just another path that we have to cross and get through."

Certainly, the indications for continued growth look good. The Nutanix Enterprise Cloud index carried out by Vanson Bourne among 2,300 senior IT decision makers found that Singapore respondents intended to increase hybrid cloud adoption from 18% to 46% over the next 12-24 months. This is 5% higher than the global average.

"The market is massive and we're just at the infant stage of that so the opportunity is tremendous," pointed out Williams.

Nutanix managing director Asean Pun Kok Lim (PK), is spearheading the drive for the regional market, and he observes that there is greater growth in Thailand and Singapore in the region, as compared to the other countries.

"Customers in Singapore and in Thailand are going ahead with their five-year plans," explained PK, "but in Malaysia because of some unforeseen uncertainty, people may want to hold back," possibly alluding to the recent change in government there.

However, this is less true for the larger customers like banks who feel the need to keep up the pace to counter the threat from fintech startups.

PK also believes educating the customer is part of his mandate. "A lot of business owners may not understand what the public cloud is but they know this is something to move into."

He believes CIOs also need to be asked to look at the big picture. "A lot of the time, they just drill down to the cost...  but sometimes you forget to look at the business risk, how about the downtime, etc."

"We are not selling the point solution," he concluded. "We are looking at a total business solution."

A modest billion dollar company

With this success looming on the horizon, it's incongruent to hear Nutanix executives continue to downplay the company's status.

"We've been an underdog for a long time and we continue even (until) today," said Young.

"Think about who we are competing against, think of the resources that they have, think of all the marketing that they have," agreed WIlliams. (Gartner identifies Nutanix's competitors in the Hyperconverged Infrastructure Systems space as VMWare, Dell EMC, and HPE, while Microsoft and Cisco are among those close behind.)

This modesty is finally put aside when Williams shares the company’s ambition to be a US$3 billion company by FY21.  This is powered in large part to the company's decision to pivot from selling hardware to selling software.

In FY17 almost all the sales on their books were due to appliances, but in FY18, they brought that down to only 10%. In contrast, 51% of billings in 1Q was on a subscription basis, and they intend to raise it to 70% in four to six quarters.

Williams says it is this ability to reinvent themselves that sets them apart from their peers. "From a vision and execution (perspective)... I don't think anybody ultimately can match what we've done and what we can do in the future," said Williams "We have to focus on what we're doing and the rest will take care of itself.”