The combination of the two companies give them what they believe are enormous synergies that can propel them to a leadership role in the hyperconverged space that neither company remotely aspired to when they were separate.

“This will allow us to crush Nutanix in the marketplace,” said John Spiers, the new Executive Vice President and Chief Strategic Officer at Pivot3, who had been founder and CEO of NexGen.

This buoyant sense of optimism comes from Pivot3’s announcement that it will acquire NexGen in what is formally an acquisition, but which the principals in the deal feel seems more like a merger of two synergetic companies in a deal designed to propel market expansion rather than cost reduction. They believe the addition of NexGen’s technology and product portfolio will give Pivot3 the most dynamic set of hyperconverged solutions on the market, and lead to a significant increase in market share. The transaction, which was unanimously approved by the boards of both companies, is expected to close in February 2016.

“Pivot3 and NexGen both were in the same area, with similar architectures, using software defined technology on top of commodity servers to bring new capabilities to datacentres,” said  Ron Nash, Pivot3’s CEO. “We decided we would bring these two companies together to give customers a broader solution, and give us a much better capability.

“Pivot3 is the surviving company, so financially, this is an acquisition,” Nash added. “But from a product sense, it’s a merger. It’s completely additive. There is nothing we want to eliminate in either company. We are keeping all the products, all the people and all the customers.”  The new company now has 2000 customers and 16,000 installed appliances in 53 countries.

For NexGen, this move caps an eventful three years. Initially a separate company, NexGen was acquired by Fusion-io in 2013. It then became part of SanDisk when SanDisk acquired Fusion-io in 2014. However, some significant conflicts with SanDisk’s core portfolio ultimately led to the decision to spin off NexGen in early 2015. Spiers said that the decision only a year later to become part of Pivot3 was not motivated by weakness, but by the realization of the potential strength in combination.

“It actually came about when we received a term sheet from S3 Ventures,” he said. “The venture capitalists realized how much synergy there was between the two companies, and brought us together.”

“This is a strategic move for both of us,” Nash said. “We we want to be the broadest hyperconverged provider, and that’s an aspiration neither of us had before.”

The key to the transaction is the new company’s belief that the synergies between the two old ones really does mean the equivalent of 1+1=11.

“Pivot3 started out doing software-defined storage and it took us five years to get that down,” Nash said. “Once we got that working, we decided to do the processing side as well, which took us a year. Our advantage over the other hyperconverged vendors, who started out on the processing side, was that starting out on the software defined side made us very efficient in processing power, because we spent five hard years getting the storage side right. We have a 94 per cent storage efficiency [from patented Scalar Erasure Coding] that can be used for unique data, and that’s our main claim to fame.”

Nash said that NexGen’s technology parallels theirs own to a high degree.

“Hyperconverged only extends so far into the high end of processing,” he said. “That’s what NexGen pioneered using PCIe cards, and this extends our range in a number of use cases. They also have a layer that does Quality of Service (QoS) dynamic provisioning that lets you designate a priority to each workload. We will now be able to use these across our hyperconverged storage and cloud storage and legacy storage.”

Spiers said the companies’ combination of skills make them superior to anything else in the hyperconverged marketplace.

“We can scale better, and we have Erasure encoding, which Nutanix’s architecture isn’t suited for,” he said. “Nutanix doesn’t have QoS, which is a huge issue in the market today. NexGen was a pioneer in PCIe flash, which the whole market is moving toward. We will lead the  hyperconverged market in performance and efficiency. It’s a huge leap forward.”

While there was some overlap on the separate product road maps, the companies played in largely separate markets, and had few common partners, even though both sell entirely through the channel. The net result is a broad expansion of both addressable market and the channel sales force.

“We have never competed,” Spiers said. “Even in VDI, where both companies worked, NexGen sells into VDI where there are multiple applications running and is more OLTP-oriented, whereas Pivot3 typically goes after the  greenfield market with separate VDI installations. We looked at how much channel overlap there was and there was hardly any, so we are effectively doubling our channel. NexGen was going to hire an a bunch of salespeople and quadruple our marketing team, and now we don’t have to. In addition, NexGen was basically only in North America, and with Pivot3, we now have a broader presence globally.”

The expectation is that both companies’ partners will be excited about being able to sell a much broader portfolio.

“Each of our partners should expect that we will be coming back to you soon about products from this other company,” Nash said.

The enlarged company should also be in a position to expand its vendor partnerships, Nash added.

“Pivot3 has an OEM relationship with Lenovo, and we are looking to expand that now,” he said. “We have also been negotiating with another large OEM to OEM our software, and that deal would also be expanded as well.”