NetApp ran its annual industry analyst event last week at its HQ, and in this piece we look at its main messages and how it articulates its growth plans. Although the NetApp analyst events have evolved over the years, the company fortunately sticks to a tried and tested formula which blends general sessions with good access to its executives. It is also smart of the company to maintain its open approach encouraging staff to engage in frank exchanges with 3rd parties.
The spectre of Wall Street
In its opening plenary sessions founder Dave Hitz and CEO Tom Georgens served different roles. Mr Hitz reflected on the 20 year anniversary and its growth from manufacturing NAS appliances (affectionately known as toasters) to being a broad storage supplier. And of course, the evolution to 12,000 employees and annual revenues of $6.23B did not happen by accident, but rather by good strategy, good products and customer loyalty which Mr Hitz wrote about in 2009. Meanwhile Mr Georgens set out to explain why we should anticipate more growth from the company. In fact, although he was addressing a group of industry analysts, it was clear that his messages were honed at the financial analysts of Wall Street which he would be addressing less than a week later. The CEO came prepared with numerous sets of numbers demonstrating why Wall Street is not giving NTAP enough credit and that its share price ought to be significantly higher.
To be or not to be a system vendor
At this year’s event the CEO made it very clear that the company focus is to be a storage vendor. Ie. not a system vendor or a vendor with ambitions to behave like one. This means that NetApp will partner with other vendors and it chooses strategic partners like it has with Cisco on FlexPod and VMware on virtualisation. Dave Hitz even claimed that NetApp have made better progress as VMware partner than EMC has. There are many more partnerships at NetApp such as with Fujitsu where NetApp supplies it with file based storage.
It is good that NetApp gives a clear message about its ambitions and the role customers should expect the company to play. Pretending to be something you are not, is confusing and diverts staff energy from core activities.
NetApp past the teens
Mr Hitz joked that 20 translates into 140 in Silicon Valley years. It is fair to state that NetApp is no startup, but also that the company has been redefined itself about twice a decade and it deserves credit for its innovation as a company. Competitively, there are numerous small startups ginning for NetApp and EMC clearly remained a target at this year’s event. The small competitors cite high NetApp prices compared to their alternatives. However, NetApp has a growing customer base with willing references articulating the value NetApp adds to their IT provision. So NetApp has earned its spurs in the IT departments who rely on a broad set of storage functions.
NetApp at the analyst event set out to continue to embed its arrays at customer sites to make those users ever more dependent on the NetApp functions. The two products which forms the basis for growth is the Data ONTAP 8 OS, and E-Series which came from the LSI Engenio acquisition. Founder Dave Hitz, emphasised that the focus on Cluster Mode with ONTAP 8 is ‘the big bet’ of the company. And that may well be one reason why Wall Street is un-persuaded by this so-called bet. The E-Series is NetApp’s high performance storage aimed at HPC, full motion video etc.
The banner defining NetApp’s approach is an agile data infrastructure under which 3 Is reside: Intelligent, Immortal and Infinite. Intelligent refers to data management, meaning more of what NetApp is known for. Immortal is a funny label, referring to customers’ applications ie. non-disruptive operations. And infinite refers to scalability which can mean many different things.
We have written about storage hypervisors, and NetApp has an implementation called V-Series. And NetApp claims that its V-Series, which incidentally is enabled by the ONTAP OS, eventually drives customers into becoming native NetApp users ie. they turn off their non-NetApp arrays at the time of a refresh. Assuming that the numbers add up then this may well justify the V-series development in its own right.
NetApp has been acquisitive in the past but not aggressively so. It has both bought IP as well as bolstered its portfolio. The current plans spells out that NetApp is growing its engagements with new customers as well as expanding customer spend. Big Data got a fair amount of attention and the NetApp message was thankfully short on the hype we otherwise come across, and rather focused on what NetApp as a storage company can provide to analytics. The NetApp organisation has always suffered from a case of enterprise envy, meaning that its arrays are not hosting as much mission critical data as the company would like. With its E-Series it has plugged a performance gap, and with its arrays which can stand up perfectly well in terms of tier-1 workload comparisons, the company will have to keep working away at its perception as an enterprise player.
Picture credit: 20/365 by Alexa Rae