Cloud Bare Metal Is Now Undercutting On-Prem on Price and Availability, Says Nutanix CEO
Hyperscalers are quietly winning a fight most enterprise buyers didn't realise had started. According to Nutanix CEO Rajiv Ramaswami, the sheer purchasing muscle of major cloud providers means their bare metal server offerings are now frequently cheaper and faster to provision than equivalent on-premises hardware.
Speaking to The Register, Ramaswami pointed to bulk procurement as the key advantage. Hyperscalers can hoover up server capacity and memory at a scale no enterprise buyer can match, meaning they often have hardware available well before traditional vendors can deliver it. That's shifting purchasing decisions in ways that would have surprised people a few years ago.
Memory and SSD prices are expected to stay elevated into next year, which is making the problem worse. When enterprises go to budget for on-prem infrastructure, they're increasingly finding cloud options come out ahead on both cost and lead time. "They pick servers on price and lead time," Ramaswami said, and right now the clouds are winning that comparison.
None of this means on-prem is dying. Ramaswami also noted that customers are actively choosing on-premises infrastructure for AI workloads specifically because it makes costs more predictable. AI spending, he suggested, is driven more by fear of missing out than clear ROI. "People are seeing incremental benefits" is about as damning a summary of enterprise AI adoption as you'll find from a CEO whose products are supposed to benefit from it.
Nutanix's own internal numbers are more flattering: a ten percent improvement in service response times and developers shipping features 50 percent faster after adopting AI tooling. Document search and summarisation are the most common use cases Nutanix sees deployed on-prem, which won't shock anyone who's been paying attention.
On the hardware footprint question, Ramaswami acknowledged customers are increasingly asking about smaller hosts and non-x86 options. Arm servers aren't getting a native Nutanix port any time soon though. Demand simply isn't there yet. That said, he's not worried about the effort involved if it does materialise, since the key open-source components Nutanix builds on, including Kubernetes and KVM, already run on Arm.
The CEO's comments arrived alongside Nutanix's Q3 2026 results. The company added 730 new customers in the quarter, with Ramaswami noting most came from "legacy vendors" which is fairly transparent shorthand for VMware. Whether that constitutes genuine disruption to Broadcom's strategy is debatable. Broadcom has deliberately narrowed VMware's focus to its top 10,000 accounts, which leaves a lot of former customers effectively in the open market. Nutanix picking them up isn't so much poaching as it is collecting the ones Broadcom chose to release.
A notable shift in Nutanix's own product strategy is paying off too. The company previously insisted customers use its own software-defined storage, but relaxed that requirement and is now seeing the benefits. Two seven-figure deals were closed with customers who wanted to keep running external storage from Pure Storage and Dell respectively. Forcing people to rip out storage they were happy with was apparently not the winning strategy it once seemed.
Revenue for Q3 hit $703 million, up ten percent year on year. Annual recurring revenue climbed 15 percent to $2.43 billion. Shares nudged up a couple of points in after-hours trading. Investors, it seems, are not yet tired of the VMware refugee story.