Here’s Why HPE Just Paid $1 Billion for Nimble Storage

March 7, 2017, 2:43 PM UTC

Two weeks ago, Hewlett-Packard Enterprise announced dramatically lower storage sales for its first quarter.

Apparently, it’s not taking that lying down.

On Tuesday, the company said it’s buying Nimble Storage, a flash storage specialist, for just over $1 billion in cash or $12.50 a share. The move comes about a month and a half after HPE paid $650 million for Simplivity, which sells a data center appliance that combines storage, computing, and networking in one box.

To borrow a phrase often used by its CEO Meg Whitman, HPE(HPE) is “doubling down” in flash storage. It already offers high-end 3Par systems as well as mid-range MSA flash storage.

Flash storage, which uses very fast solid-state drives rather than slower magnetic “spinning disks” and still slower tape drives to preserve corporate data, has been gaining ground of late even though it remains pricier than the other options.

In this market, HPE faces off against long-time rival EMC (now part of Dell Technologies), IBM (IBM), and NetApp (NTAP) as well as startups like Pure Storage and Kaminario.

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Clearly, storage remains a key category for HPE, which took a stock hit after disclosing lower-than expected storage and server sales last quarter. During the recent earnings call, HPE attributed this glitch to less-than-anticipated demand from a single, large “service provider” customer. That customer is reportedly Microsoft (MSFT), a long-time HPE customer, partner, and sometimes competitor.

In a blog post discussing the deal, Antonio Neri, executive vice president and general manager of HPE’s Enterprise Group, said the acquisition—expected to close in April—fits in well with HPE’s overall goal of facilitating what it calls “hybrid IT.” That’s industry jargon for letting customers run some technology in their own data centers and other tech in a public cloud, like Amazon (AMZN)Web Services or Microsoft Azure.

Nimble’s CEO Suresh Vasudevan said in a statement that his company has more than 10,000 customers, and that its new “predictive cloud platform” will let customers put data in their cloud of choice and move it as needed with minimal fuss.

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