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Why HPE Is Buying Zerto and What MSPs, VARs Can Expect

The $374 million deal contributes to HPE’s as-a-service strategy and helps customers juggling growing data sources.

Kelly Teal

July 1, 2021

4 Min Read
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Hewlett-Packard Enterprise (HPE) said on Thursday it is buying Zerto, citing data as organizations’ “most critical asset.” The platform and infrastructure giant announced the $374 million purchase just days after its channel-centric Discover event. For resellers, managed service providers, system integrators and other partners, the question becomes, what’s next?

A Good Fit?

Zerto specializes in cloud data protection and management, with a primary focus on storage. Its platform helps users recover (in minutes, the company says) from ransomware, cyberattacks and other unplanned downtime. The technology restores data to the state it was in seconds before the attack or disruption. Zerto also replicates and migrates data between VMware vSphere and Microsoft Hyper-V environments, as well as natively to Amazon Web Services and Microsoft Azure.

Meanwhile, recall that HPE intends, by next year, to transform into an “everything as a service” vendor. Zerto provisions its portfolio in just that manner. Given Zerto’s expertise in data protection delivered through the cloud, the combination makes sense. Add to that — HPE sees its GreenLake platform as “the North Star of everything” the company does, as President and CEO Antonio Nero put it earlier this month. Attaching Zerto’s tools to GreenLake cloud data services will hand customers a range of resources to “protect their data and rapidly act on insights, from edge to cloud,” Neri said on Thursday.

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HPE’s Antonio Neri

“With the explosive growth of data at the edge and across hybrid environments, organizations today face significant complexity in managing and protecting their data,” he noted.

It’s true. As more enterprises, SMBs and other entities undergo digital transformation – switching up the processes, technologies and strategies they use to do business – they are generating unprecedented amounts of information. Acting in a proactive and calculated manner requires visibility into patterns and trends. After all, with knowledge comes power — and competitive edge.

For both HPE and Zerto, the move looks like a shrewd one. For one thing, Zerto builds out HPE’s as-a-service strategy. In fact, HPE expects one-third of Zerto’s revenue to contribute to its as-a-service annualized run rate. For another, last November, IDC predicted the data-protection-as-a-service market will hit $15.3 billion in 2024. That’s up from $7.7 billion this year. Combining Zerto with HPE comes amid growing demand that appears unlikely to relent.

Keep up with the latest channel-impacting mergers and acquisitions in our M&A roundup.

Zerto CEO Ziv Kedem agreed.

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Zerto’s Ziv Kedem

“We see this as a strategic development for the storage industry — and true recognition of the importance of our cloud data management and protection technology,” Kedem wrote in a July 1 blog.

Zerto joins HPE with more than 9,000 customers, including 350 MSPs. The company will benefit from HPE’s financial and global clout, and distribution reach. Zerto’s approximately 500 employees will join HPE once the transaction closes later this year. They will fall under the HPE Storage umbrella, reporting to Tom Black, senior vice president and general manager.

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HPE’s Tom Black

“Customers continue to face significant issues managing data complexity across hybrid and multicloud environments,” Black said in a press release. “Zerto further positions HPE to help solve these customer challenges and become the leader in data management and protection through HPE GreenLake cloud services.”

Channel Impact

Considering both HPE’s and Zerto’s activity within the channel, there is no reason to predict any significant change in their go-to-market strategies. The HPE channel team told Channel Futures it won’t have significant updates for its partner community until “we integrate the road map (post-close) and understand the product structures going forward.”

Zerto and HPE will continue to operate separately; thus, channel partners selling Zerto continue to sell as they have in the past,” the company said.

Zerto’s Kedem indicated that partners have nothing to fear from the HPE deal.

“To our customers, partners, and managed service providers — please know that Zerto remains committed to its mission to provide leading cloud data management and protection that you know and trust today,” Kedem wrote in his blog.

Daniel Newman, principal analyst at Futurum Research, also sees only positives, expecting that channel partners will remain integral to HPE’s success.

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Futurum Research’s Daniel Newman

“HPE really does understand this hybrid cloud world is the future,” Newman told Channel Futures. “This is an attractive thing for MSPs.”

That’s because, as HPE carries out the as-a-service model, it will keep enabling recurring revenue opportunities for MSPs, VARs and integrators.

“That’s the golden ticket partners are looking for,” Newman said.

With Zerto so bullish on its own partner ecosystem, bringing the company in line with HPE makes sense.

“HPE is saying, ‘We’re partner focused,’” Newman said. “It’s a company that already appreciate its partners going to a company that values its partners.”

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.

 

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About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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