Nutanix CEO Rajiv Ramaswami: Faster rate of VMware converts a ‘very strategic opportunity’ for partners

“If you’re a channel partner today, I think you should look at this as a very strategic opportunity for yourself because your customer is naturally inclined to come to Nutanix, and we at Nutanix work exclusively through partners,” Nutanix CEO Rajiv Ramaswami tells CRN.

Nutanix CEO Rajiv Ramaswami is converting VMware customers and driving that revenue through the channel as it announced 700 new logos last quarter, up 50 percent from the year before.

Three years ago in May, Broadcom unveiled its plan to buy VMware for US$69 billion. That deal closed 18 months later in November 2023. Partners have told CRN that in those 18 months many customers renewed their VMware licenses to lock in prices and waited to see what might happen once Broadcom took over.

As those deals mature, so does the opportunity for the channel, Ramaswami said.

“I think what you’re starting to see is, OK, so the cohort of people who signed, for example, three-year deals in 2022 that will be coming up in 2025,” he told CRN. “But there’s renewals coming up in 2026 and 2027. So it’s not like there is a point in time. And I would not necessarily think of this that way, but I think what it is is a multiyear sort of impetus for customers to look at, ‘Where do I go to long term? Where should I be?’”

Ramaswami aims to capture a bigger share of the estimated US$78 billion it sees as Nutanix’s total addressable market this year, and it needs partners to make that happen.

“The partner has a role to play and money to be made at every step in this journey—landing a new customer, expansion within that customer and then renewing the opportunities, which leads to further expansion so in that whole cycle of land, adopt, expand, renew the partner is an integral part of the entire cycle as far as we are concerned,” he said. “And so there’s an opportunity for partners to have a very profitable relationship there with us, and at the same time, help the customer move to a better state.”

The “better state” is a modern HCI platform that can run virtual machines using its own hypervisor and can manage advanced Kubernetes workloads, Ramaswami said.

Those capabilities make it an optimal platform for AI inferencing and fine-tuning, he said. Nutanix Enterprise AI is the company’s infrastructure AI product, which provides an “out-of-the-box” experience for companies to build AI apps and run the model of their choice on an open, compatible API provided by the Nutanix platform, he said.

“This is what partners should be focused on,” he told CRN. “How do they get trained on these newer capabilities? They should become cloud-native experts. They should become AI experts and be able to help their customers adopt these new technologies.”

Here is more of CRN’s conversation with Ramaswami.

Partners say, ‘Look, three years ago, VMware customers kicked the can down the road, and now that bill is coming due.’ And so when you talk about a 50 percent increase in new logos, is that where the urgency is coming from?

The deal closed in 2023. We do still expect that. It’s not like all the renewals are going to show up at the same time, but as time passes, we said this: It is a multiyear cycle.

But as time passes and more of the renewals are going to come on board, and more of these customers are going to reduce their risk and dependence, I think what you’re starting to see is, ‘OK, so the cohort of people who signed, for example, three-year deals in 2022 that will be coming up in 2025, right? But there’s renewals coming up in 2026 and 2027.

So it's not like there is a point in time. And I would not necessarily think of this that way, but I think what it is is a multiyear sort of impetus for customers to look at, ‘Where do I go to long term? Where should I be?’

So today, customers are thinking about, ‘OK, I’ve got to get out of, potentially VMware. But I also need to think through what my end-state architecture is.’ And if you look at that, they want to work with somebody, first of all, who is going to be a trusted partner, committed to innovation and continue innovating over the next several years. That’s No. 1.

And when they talk about that innovation, what they want to be able to do is they want to, of course, migrate VM workloads, but beyond that they also want a platform that can support cloud-native applications and container workloads. That can run these AI applications, that can run in a multi-cloud environment. All of this is part of adopting this modern cloud stack.

Those are all the factors that are starting to come to bear. We talked on the call about how we’ve been focusing on this effort for quite a while and we are now starting to see some of the longer deals starting to close. We are seeing the efforts that we put into our customers, our channel partners, starting to bear fruit. And so that’s what led to the result.

What does progress look like to you when it comes to shortening those sales cycles?

I think that we track every stage of the sales cycle. And we have a multistage pipeline when we look at the sales cycle, but a lot of it is also gated by the customer. Of course, we will do everything we can on our end, and the partners definitely help in that process as well.

But at the end of the day, some of this is gated by if you’re looking at a migration, when does my VMware license renew? I just bought hardware? Well, what’s the depreciation cycle of the hardware? And when does that come to bear?

Do I have budget available? These are all the factors that come into play in terms of trying to figure this out. And then also, when you’re in a more demanding macro environment, they’re scrutinizing everything. So approvals go up a cycle, right? So up a notch. So they’re looking at the ROI and TCO models.

In fact, we have now, with all these larger deals, we attach what we call ‘cloud economists. These are accountants right there. Their own thing is about creating the business value proposition and helping our customers come to that business case justification and be able to present to their leadership so that they can approve these. So those are all things that we have actually gotten better at over time and incorporate now into our selling site.

The Dell PowerStore partnership, I know it’s not out in the market yet and you talked a little bit about it on the call. How should the channel be looking at this?

I think we should be looking at every PowerFlex customer out there and future PowerFlex customer out there and saying, ‘OK, here’s now a hypervisor solution from a trusted partner that’s going to support them for over time, that they can work seamlessly with PowerFlex. It works with their existing environments. They don’t have to go replace their hardware. And here it is. And that’s the value proposition that we bring to the table there.

It seems like a huge opportunity for partners here in the back half of the year, right?

Expect the solution to be generally available in the second calendar quarter this year. And then, of course, the people will go through the usual cycle of qualifying, testing, validating, all of that. And then we expect to start contributing that to our next fiscal year.

Thinking about market conditions, you have a Net Promoter Score in the 90s so if partners land a new logo, it seems possible to expand. There are the renewals. And you talked about going after that total addressable market this year. How big is that push, and how much money do you plan to put behind the channel?

If you’re a channel partner today, I think you should look at this as a very strategic opportunity for yourself because your customer is naturally inclined to come to Nutanix, and we at Nutanix work exclusively through partners.

The partner has a role to play and money to be made at every step in this journey—landing a new customer, expansion within that customer, and then renewing the opportunities, which leads to further expansion so in that whole cycle of land, adopt, expand and renew the partner is an integral part of the entire cycle as far as we are concerned.

And so there’s an opportunity for partners to have a very profitable relationship there with us and, at the same time, help the customer move to a better state.

Around Deepseek, you touched on it on the call, this does seem like LLMs and AI kind of coming down to where channel partners can play and be involved in those deals. Is that how you’re looking at it?

I think again, like I said, they’re already involved in all these deals because we go through the channel partner, but I would urge them to become proficient at helping companies deploy these things.

The opportunity for them is also in terms of helping provide professional services to help adopt some of these newer technologies, whether it’s the cloud-native Kubernetes platform that we have and, by the way, all these AI applications are built on top of a Kubernetes platform. They all use Kubernetes. So it’s not just that they’re buying an AI stack.

As part of the AI stack, they have the AI piece that we do, then they have the underlying Kubernetes layer, and then they typically end up buying the full Nutanix cloud platform. And this is what partners should be focused on. How do they get trained on these newer capabilities? They should become cloud-native experts. They should become AI experts and be able to help their customers adopt these new technologies.