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.
