Nimble Has the Storage Industry Hopping

 | Dec 17, 2013 | 11:15 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

ntap

,

emc

,

vmw

,

hpq

,

dell

,

FIO

,

vmem

,

nmbl

Nimble Storage (NMBL) came public on Monday at $21 and quickly popped 69% to end the first day at $35.50. Nimble makes something known as a "flash-optimized hybrid storage platform" and tech investors can't get enough of it. Many tech investors see Nimble's solution as extremely disruptive to the storage industry.

Founded in 2007, Nimble's products allow IT administrators to keep "hot data" in fast, but expensive flash memory while keeping ordinary data on inexpensive disk drives. Other solution providers like NetApp (NTAP) and EMC (EMC) traditionally have stored everything on large arrays of disk drives.

While NTAP's solution worked for a while, Nimble's solution is better suited to large storage area networks that use lots of virtual servers. For IT shops with large installations of virtual machines from VMware (VMW), Nimble is a perfect place to store all that data.

For a little under $110,000, customers can purchase Nimble's CS240, with either 12 or 24 TB of hard disk storage and up to 640 GB of flash storage.

Data centers are consolidating tremendous amounts of data about their products and customers. For example, data from e-commerce transactions, social media data and financial markets data need to be consolidated and analyzed live in order to make better business decisions. Customers in industries like cloud services, financial institutions and healthcare providers are natural customers for Nimble's products.

Nimble's customers need cost-effective, large capacity and high performance storage solutions. For a long time, other vendors have just sold more capacity. As organizations add more storage capacity, performance declines. As performance declines, customers need to scale performance by adding additional compute power. Nimble's products scale out, by adding both performance and capacity.

 It's Nimble's hybrid solution that provides the right mix between capacity, performance and cost. That's why Nimble's products are disruptive to the existing storage vendors.

How hot is Nimble? At the end of October the company had 2,100 end users with 600 value-added resellers hawking their products worldwide. The company ended fiscal 2011 with just $1.6 million in revenue. But, by the end of 2013, Nimble posted $53.8 million in revenue. For the quarter ending October, the company posted revenue of $84 million, up 150% from the year earlier period. The Street hasn't published estimates yet, but the company should be able to grow its sales to $100 million this fiscal year.

The storage vendor most threatened by Nimble's success is NetApp. In fact, according to a lawsuit, NetApp alleges 15% of Nimble's workforce (55 employees) and half of its executive staff is from NetApp. At the end of October, the company had 528 employees.

 Besides NetApp and EMC, other competitors include Dell's (DELL) EqualLogic, Fusion I/On (FIO), Tintri, Nutanix, Compellent, Hitachi (HTHIY), Hewlett-Packard's (HPQ) 3PAR and Violin Memory (VMEM).

According to my analysis, most IT departments that are considering Nimble are looking to replace NTAP in their environment. Heavy VMware users are the most likely buyers of Nimble's storage solutions.

I see Nimble as a great acquisition for EMC or VMware. Until then, I think the excitement from the IPO will keep the stock going higher for the next 18 months, or so.

Columnist Conversations

TrueCar, Inc. (TrueCar) is a data-driven online platform operating a technology infrastructure, powered by dat...
Financial Planning magazine reports that... The Internal Revenue Service is considering regulations to limit t...
MMM is rolling over. Early last week the stock began to fall out of a steep bull channel before retestin...
Higher tariffs are a sign of increased floating inventories that will be available for immediate withdrawal on...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.