The Future of NetApp

As I was sitting in London’s Heathrow Airport this morning catching up on RSS feeds before boarding my plane back to the United States, an article headline caught my eye: Why NetApp Must Seek Acquisition.

I can’t tell you how glad I am to see this article published, because it gives me the opportunity to share something I’ve been thinking about for a while, even before I joined EMC. I’m sure that everything I have to say about NetApp will be colored by the fact that I now work for EMC, and—whether I like it or not—all comments about any other storage vendor or technology are immediately suspect. Recent comments to my VPLEX article proved that point; it will take time to re-establish objectivity and prove to my readers that I’m not an EMC shill.

But I digress; back to the article. In the article, the author (“secretcto”) states why he believes that NetApp must seek acquisition in order to survive. The crux of his article is this:

Now lets take a look at the market cap of each of these players. A company’s market cap is a good place start in order to identify which of these companies will have money to invest in tomorrow. I am not saying that ‘cloud’ is the IT of tomorrow, but if it is the direction of tomorrow, then one thing is certain, the folks in that list that have more of the necessary ‘cloud’ pieces (or the money to invest in building out a portfolio of integrated cloud components) will be the most successful competitors.

The author states that NetApp has a few key problems:

  • NetApp only owns one component (storage) of the multiple components (the others being servers, networking, software, and security) necessary to continue to be a key competitor moving forward.
  • NetApp doesn’t own any software that drives customers to its products.
  • NetApp lacks the bankroll to acquire the technologies necessary to build out their portfolio in order to compete with more “full-featured” competitors.
  • NetApp has a history of difficulty integrating their acquisitions. Even if the bankroll was present, there is no indication that additionsl to their portfolio could be successfully integrated into the company.

I would add an additional weakness. Being on the outside—and not only on the outside, but working for a competitor that NetApp fiercely detests—I lack any inside knowledge of what might be going on at NetApp. I know they have a ton of very smart, talented folks over there, and those smart folks have engineered the heck out of their WAFL and snapshot technologies. But the reality is that NetApp is a one-trick pony. Look at their products: every single one is in some way based on the same underlying technologies. Kudos to them for getting as much mileage about of these technologies as they have; that’s a huge testament to the skill of their engineering staff.

However, it appears to me (again, lacking any inside knowledge I could be completely wrong) that they have reached the end of the road. I get the feeling that NetApp has done everything they possibly could do with WAFL and snapshots, and now that they have no more mileage with this pony and no more ponies in the stable, where does that leave them?

Again, I’m sure that everyone will take these comments as me bashing NetApp. My intent here is most definitely not to bash NetApp, but to simply state my observations. I’d love to hear others’ thoughts on the matter; my only request is that you fully disclose your affiliations. Speak up in the comments and let me know what you think! All courteous comments are welcome.

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58 comments

  1. Craig’s avatar

    Some of your thought may be right and some may not. For technology perspective, I am not sure whether they had come to the end of the innovation they can do on the WAFL. If you seriously consider about what happen to the storage market now, most of their competitor are trying to produce similar functionality to match whatever Netapp had provided in their current or existing solution.

  2. VitaRedux’s avatar

    OMG. I can’t believe you commented on this. Only gonna stir things up.

    Anyway as a (reasonably) happy NetApp user and market watcher I’d add a couple of points.

    Firstly, you forgot to mention de-duplication which I know is not exclusively NetApp, but is certainly another great trick in their repertoire.

    Secondly, I agree an acquisition could be on the cards, but is there anything wrong with being awesomely good in your own field of expertise. I’m always suspicious of products that are not a companies core skill. Cisco UCS springs to mind but I am making no sleight on that product, only commenting that I have natural suspicions as this is a huge venture for them.

    Provided NetApp can maintain close relations with VMware, Microsoft and other partners and continue to integrate quickly and intelligently with their software technologies, I think they can hold their own.

  3. Glenn Sizemore’s avatar

    disappointed… really hoped you would stay out of the FUD… what’s worse I don’t agree with the premise.

    1. Since when is selling storage not enough. Personally I would like my vendors to stay in there collective lanes. I perfer to build best of breed solutions, vendor contracts sometimes preclude this…. i.e. I want a vBlock with HP Blades.

    2. As you know from years of working with them NetApp is Software company. They practically give you the storage it’s the software you have to pay for. And it’s the software you care about. Case in point SnapManager, this little application is a key critical component to many of my customers.

    3. When you have original IP you don’t need to buy everyone. I would argue that EMC/HP/IBM have spent billions, and still don’t have the functional equivalent of WAFL.

    4. Again when you invent ASIS you don’t need buy datadomain… There are numerous such examples, but you get the idea.

    Now we get to spend two months arguing about who should or shouldn’t be bought instead of solutions.

    Thanks, Next time how about we stick to Flex10 networking or maybe cover the debacle that is Update 2 in VDI environments.

    ~Glenn

    P.S. I think I hear Vaughn and Chuck loading the trebuchet.

  4. drakpz’s avatar

    Disclaimer: I never used NetApp products, and am a happy EMC customer/fan.

    I don’t agree about the fact that scaling through acquisition is “mandatory”. It may give you new weapons in the ever evolving IT market, but at the same time it can make you fall and fail hard (particularly if you don’t have the strenght/ability to provide a coherent offer in the long run). I’ve seen many big companies fail (or at least have failing products) just because they wanted to cover some market segment they were not in. Imho, if there’s one truth is that no one can be number one in everything. Quite the opposite, actually: uncontrolled growth often results in entropy, confusion, and ultimately crappy products/offerings.

    Believe me, while I admire the ability of some big companies of integrating products/services coming from acquisitions into their portfolio (EMC has done some excellent one (Recoverpoint/Kashya my preferred :-) ), I am always worried when the acquisition rythm is getting too fast or is driven by financial-only thoughts. plan/acquire/coordinate/consolidate should be the driving factor, but I’ve seen MANY times companies with big money expanding in every market segment “just because they can” (ORCL can you hear me? ;-) ).

    As a customer, again, I’m all excited about, e.g., Vmware expanding in the cloud-virtualisation ecosystem; or EMC in the storage/information management ecosystem. But I strongly hope that EMC doesn’t start selling mp3 players nor Vmware building the next Windows OS. “Thanx, but No Thanx”.

    Back to Netapp, I hope that they keep on being excellent at what they do, instead of becoming average in many market segments. I may never buy a NetApp product (who knows), but the fact that they’ll be there and keep being competitive… that’s a win for us, the customers.

    Maybe the “next wave” in IT will require more gigantic and “full featured” vendors, but for now the “full featured” have lots of “below average” products in their portfolio… and they should fix this situation before moving on (imho).

    My 2 cents.
    PJ

  5. Stu’s avatar

    I’m not so sure… I’m more inclined to think that enterprise storage as we know it is at the end of the road, and that applies to EMC as much as it does NetApp. By that I’m not talking about technology alone – I’m talking about technology and price. I’m not sure how many internet based companies are running on EMC hardware, but there are a crap load of big ones running on NetApp. I’m sure that has been a price decision more than anything, but it’s curious that such companies would go down that route as opposed to doing something like what BackBlaze did and build their own “storage pod”.

    EMC may have a few more ponies in the stable, but pretty much all the “new” stuff it is releasing is software related. I don’t think it’s reasonable to say that just because NetApp aren’t trying to do everything themselves, they somehow have a more limited future. In fact I would say letting either their partners or even customers build intelligence above the array is a better strategy than trying to do it all themselves (NetApp’s recent acquisition of Bycast aside)

    There’s a lot to be said for sticking with what you know and doing it very well. NetApp are in a position where they can do that and compete on price because they have much lower operating costs than EMC. And when I read articles like this one http://finance.yahoo.com/news/NetApp-Follows-zacks-369393560.html?x=0&.v=1 I don’t think NetApp’s future looks dim at all :)

  6. VirtualPro’s avatar

    Scott, you sure know how to light the blue touchpaper and wait for the fireworks.

    I didn’t read the initial article but based on your summary and my own knowledge of NetApp it isn’t hard to see that they can only take what they have so far before they run out of steam.

    I’ll state it now, I am an EMC customer. However that decision was based on weighing up the offering from a number of vendors, including NetApp. Since becoming an EMC customer I have found that more often than not EMC have something that fits into just about every space. Sometimes it’s not exactly what is required but at least it’s there as an offering for my consideration.

    NetApp have a good offering storage wise, it’s what they do and it is a good solid product. However in this day and age companies are looking for a little more, they want to reduce third party relationships, and work with key vendors that can offer multiple products. They don’t want to have 50 vendors each delivering a little bit of this and a little bit of that. That’s 50 relationships to manage, 50 support contracts to renew annually, etc.

    Companies want to consolidate down to key technology partners to reduce risk, concentrate staff on certain core skill sets and increase value add. I certainly know from my own experience that I class EMC as a partner and not a vendor. I trust our account management team to work with me to provide the value add I expect.

    It will be interesting to see where NetApp go from here and what options they have to explore. Partnerships is possibly one avenue that can be expanded on. They have one with Microsoft already I believe.

    The Market Cap element is an interesting one as HP and IBM have a much higher Market Cap than EMC. Can we discount one of them acquiring NetApp!?!?!

  7. Jeff O’s avatar

    Affiliations: Former NetApp partner, ASAP certified, VMware/Citrix Solutions Engineer, no EMC affiliation.

    It is funny that I stumble upon this today as I was just thinking about this yesterday while going over my certs and seeing what is coming up to be renewed. I came across my NetApp cert and starting thinking of the company, solutions and where they may be going down the road. I haven’t heard much come out of them in a while nor are they on the top of my list when designing the storage back-end for solutions.

    Looking at where the storage world is going and with this onset of cloud this and that, NetApp seems to be falling behind with an old song and dance. There were talks of “convergence” where they would bring together their lines of ONTAP with the GX and 7G line of OSes. I guess it was harder than they thought. Still the same old model, big powerful heads to drive a bunch of disk, for redundancy you need that license and another unit. I dont think thats going to be a viable solution going forward into the future. Customers want scalable, reliable storage and not a 10 line item quote for additional licenses to effectively use their new storage platform.

    As for acquisition, my bet would be IBM considering they already rebrand NTAP in their N-Series line of storage. Especially after loosing the SUN deal. But they already bought another storage company not to long ago, XIV, not to mention their line of DS and SVC storage which would make a considerable overlap in technologies. What doesn’t overlap is the technology that ONTAP could provide should IBM integrate WAFL and other technologies like dedup, Multi-protocol (FC, FCoE, iSCSI, NFS, CIFS) and NetApp instant snapshots. Still IBM is a software company and if anyone could bring the convergence and development arm to fix up the NetApp inefficiencies it may be them.

    All and all I’m in agreement with you and I don’t think your EMC bias reflects the facts.

  8. brandon’s avatar

    Scott you’re one of the best bloggers out in this online wilderness, and your Mastering vSphere 4 book was a great read. While I admire you stating your opinions and even recognizing the fact people are going to see bias if it is there or not — perhaps you should just be more reserved about competitors. Sure it creates discussion, but obviously another article already is asking the questions, so why get involved anymore than just posting an interesting link?

    I do not work for a storage vendor; I’m a customer using HP EVA arrays. When I read this though all I saw was EMC talking about NetApp. One trick ponies and other commentary doesn’t lend anyone to think you’re not bias. I believe you’re not, but it did appear very contradictory.

    Perception is truth when someone is as popular as you are.

  9. ChrisBboth a company and a product.’s avatar

    As a newer EMC employee, I feel like I still have some objectivity left as well. I also highly respect NTAP as both a company and a product.

    I agree that in the long term they will need to either seek acquisition by a stack player or they will need to more tightly partner with one of the stack vendors in the space. However, I do not think it will happen. I believe their strategy is to partner with as many of the stack vendors as possible and also to increase their OEM presence in the marketplace. After hearing Vaughn speak at the Charlotte VMUG, I am convinced that they feel there is strength in being one of (or the only) “stack-independent” major player in the market. If the market continues to stay relatively competitive, then they will have been correct. However if the market consolidates to be 3-4 major stack players holding the lions-share of the business, then someone will be able to pick up NTAP for a steal in a few years. Only time will tell who is correct.

  10. Geoff Hughes’s avatar

    Scott-

    I work for Cisco. My opinions are my own and not that of Cisco.

    You raise some very interesting points.

    If you make an assumption that large enterprises today are 50/50 SAN and NAS (regardless of tier, vendor, etc) the future will bring a significant shift towards cloud storage. The impact of cloud storage could be that SAN may represent 10-20% for environments needing high performance, NAS 40-50% (vast majority of applications running either on NAS behind a VM farm or otherwise), and the concept of cheap and deep cloud storage for the remaining 40%.

    How quickly companies can make this shift remains to be seen, but even for the most aggressive, this is probably a 3-5 year journey minimum just based on financial impact.

    What I think you have articulated here (and I agree) is that NetApp is now “caught in the middle”. The one size fits all strategy that NetApp has executed so well is what NetApp needs to consider how to adapt for the future. The acquistion of Bycast shows NetApp understands the need for cheap cloud storage. The subsequent decision to bundle Bycast with NetApp hardware and no longer support Bycast as a software service offering shows that NetApp does not understand the cloud price point and market dynamics I described above.

    NetApp in the SAN space can compete with mid-tier, like Clariion, but cannot compete performance wise against Symmetrix. NetApp (with Bycast) can compete feature-wise with Atmos, but possibly not on price point.

    NetApp’s challenge will be to make decisions on whether or not to compete in the “big iron” array market against the Symmetrix, and determine what the Bycast acquistion really means for NetApp long term. If NetApp’s market opportunity for large enterprises is today 75% of the addressable market (the entire 50% NAS as well as an assumed half of the 50% SAN as mid-tier), if NetApp cannot sort out high end and low end competitive offerings, the NetApp addressable market will shrink to that 40-50% NAS slice and 5-10% SAN slice (again, half of the SAN market as an assumed mid-tier distribution). That’s a 15-30% decrease in market opportunity. Cloud storage becomes a question mark, as there are benefits to NetApp hardware for sure, but if the focal point for cloud is security and price point, more expensive hardware will be a deal breaker. NetApp’s cloud strategy will be the linchpin in how successful NetApp can defend or extend market share.

    Now, for NetApp’s upside. NetApp’s software (be it OnTap, Operations Manager, or the Onaro acquisition SanScreen) are in my opinion pretty much in every case superior to other vendor market offerings. No one I know would prefer to manage a Celerra over a NetApp filer. EMC is certainly catching up in the feature/functionality department for NAS, but EMC is not there yet. EMC is working at making their IONIX tool suite more integrated and user friendly, but scalability of EMC software (4 arrays for SMC? tens if not hundreds of servers to run ECC in a large enterprise, and no single pane of glass/federated software view today?) remains EMC’s achilles heel in the storage market. EMC has made some significant software acquisitions that may change the landscape of storage software tools, but that needs to be proven.

    I don’t think you can underestimate the impact of innovation, and this is where both NetApp and EMC shine. I think NetApp’s star has shone a little more brightly in the past, but EMC’s reaction to that has been to fight fire with fire and increase EMC’s innovative offerings.

    As the larger company with the better history of integrating acquisitions, the acquisitions arms race goes to EMC.

    The other wild card while we are prognosticating about the future with cloudy crystal balls, is the future of storage hardware in general. EMC already offers an Atmos virtual appliance. How long before (again with the possible exception of large arrays, like the Symmetrix) we see the storage industry shift towards commodity compute running a virtual appliance of a NetApp FAS, Clariion or Celerra supporting generic arrays?

    In summary, its far too early to ring the death knell for NetApp. My advice to all storage vendors would be to run your own race. Focusing on competitors is a losing strategy long term. Imitation may be the sincerest form of flattery, but innovation and solving customer issues are the way to be successful long term.

  11. Steve Kaplan’s avatar

    Scott,

    While I have tremendous respect for what EMC has been doing in the industry with products such vblock and Vplex and with tactics such as hiring so many vExperts – a trend I believe that started with you, I also continue to be very impressed by NetApp’s innovativeness around all things virtual. Customers appear to get the story very quickly and are driven to NetApp without the necessity of additional vDC components, software or acquisitions. NetApp’s recent financial statements dramatically validate its strategy.

  12. David Strebel’s avatar

    Scott
    Could you provide some of your thoughts on why you think “Netapp has done all they can with with WAFL and snapshots”?

  13. Vaughn’s avatar

    Scott,

    your view seems to stand in stark contrast with reality.

    In the past year NetApp has surged from the 5th largest storage vendor to the 2nd.

    http://economictimes.indiatimes.com/infotech/ites/NetApp-overtakes-HP-Dell-Hitachi-in-storageIDC/articleshow/6010085.cms

    Your premise (that NetApp is dead) does call your credibility into question. If the premise was accurate, why would you make the investment to communicate this point?

    Funny enough the NetApp dead claim was made by EMC leadership in late 2000 or early 2001 at the launch of the IP4700.

    I’d suggest you stick to technical discussion versus the dissemination Fear Uncertanty and Doubt. Your comments seem to fly in the face of previous statements you have published advocating for promotion of what one does well and avoiding negative campaigns.

    I’d suggest you know very well what NetApp does best; serve the data running virtual infrasturctures!

  14. Daniel’s avatar

    I don want to blame EMC but…
    1. EMC storage solutions don’t fit together, see Clariion and Symmetrix. You need at least 3 administrators and EMC support to barely manage them. VMware SRM and Symmetrix is a pain in the a….
    2. EMC and VMware don’t fit together. Nether the companies nor the solutions or employees. Ask yourself (or Diane) why ?
    3.Enything EMC wants (like Netapp solutions) or owns (like M$ [ and EMC loves M$! ] ) is “knowhow” from acquisitions
    4. …endless…

    EMC want to be like … Netapp!

    Daniel
    P.S. where is the headline?

  15. Mauro Ayala’s avatar

    Thanks for your post, I work for EMC and I compete with Netapp Channels every day, in fact I was working time ago as Netapp support in a channel partner.

    They are a really good competitor and I need to do my best effort to show our difference in font of our customers, but ….. you are complete right! When we start talking about future, solution and road map, we are far away better and have a lot more to say about it.

    I hope Netapp have something to say about it.

  16. Christopher Kusek’s avatar

    I heard a lot of talk about this in the Tweetosphere… but interestingly, I see there are no comments here at all! oh my!

    Alright, as someone who has been on both sides of the coin (and is on the other side of things, and I’m obviously a biased shill as well, so it’s not possible for me to be agnostic as I proclaim to be)

    Let me just say, “Wow”, Yea I can say wow, right?

    The content in this article and your post here… is actually fairly resonate of something I’ve been writing but have not published yet (and as a result… may not even publish, this covers things pretty extensively :))

    But let’s take things a step further.

    Dan Warmenhoven (The great champion and leader that he is and was) was a staunch supporter of NetApp remaining isolated, separate, a company on it’s own, something as an employee on the inside is certainly nice to know (safety, comfort, culture, etc) But then Tom Georgens takes over the role, an equally strong and powerful character and shortly after starting his reign had gone so far as to say he was open to an acquisition at the right price; well that frankly takes a trend of 10+ years and turns it on its head!

    So at this point, as a former NetAppian and current overly biased EMC’er, I’m not even sure what to think! Looking at it as a further biased industry analyst all of the signs are there, it’s just a matter of who, when and for how much!

    I’m gonna go back to my shilling things now because that’s what we do… :)

    Thanks for addressing the 4K elephant in the room Scott. :)

  17. Michael Keen’s avatar

    Scott

    You are right on and so is the author of this article. NTAP has achieved the limited success they have so far because of a very compelling marketing story and some innovations on top of what I would consider commoditized technology. Storage just by itself is a commodity and in order for companies in this space to remain viable let alone competitive they need to create new marketspaces organically or by acquisitions. They do have, at least the last time I looked at my annual report from the company, about 3+ billion in cash. Does that equal enough to acquire the necessary technologies to make them more competitive beyond just plain storage? If it’s done right sure. It doesn’t have be just cash anyway.

    You are dead on Scott..great article.

    Cheers

  18. Calvin Zito’s avatar

    Hey Scott,

    I for one was majorly disappointed when I learned you were going to EMC. Prior to going to EMC, you were seen as a – if not the – leading independent virtualization voice. You may not like it but the fact is, you aren’t any more. You are a leading EMC vBlock blogger.

    I’m sure you’ve put far more thought into this than I have but the fact is you do work for EMC. That results in you being biased – hard to dispute who is paying you and how that affects your opinions but then again, even independent bloggers are biased.

    That said, that doesn’t mean your opinions can’t still be based on your own opinions and understanding – and knowing your character, you aren’t a paid hack as some other vendor bloggers are (and they know who they are).

    All that to say – I’m guessing there will be a big outcry over your article. People need to consider your EMC-bias and decide for themselves if they agree or disagree with your views.

    Calvin Zito, http://twitter.com/HPStorageGuy

  19. Erick Moore’s avatar

    The fact is Scott you do work for EMC, and articles like this become completely invalidated for that reason alone. The underlying message is NetApp is dead buy EMC. You even state in your post that “I’m sure that everyone will take these comments as me bashing NetApp”, and yet you decided to hit submit and put it up here anyway. Are you blogging for the right reasons Scott?

    NetApp seems to be pretty good at driving customers to their products contrary to what you and secretcto believe. A quick glance in the money section of any recent paper would tell you that. People have been saying NetApp is at the end of the road with WAFL for years, but they keep adding features and it keeps getting better. Who knows what they will come up with next? I find it shocking that your crystal ball shows they are done innovating. Without knowing your employer I would say this post is just completely off base, but since we all know who signs your paycheck all I see here is FUD.

  20. Scott B. Drummonds’s avatar

    In 1998 I was an intern at Intel. At the end of my summer stint the interns were gathered for a one hour Q&A with Andy Grove. Someone asked him what he would give to put AMD out of business. Andy’s answer has stuck with me to this day.

    He said that every company needs someone holding a “silver dart”. The dart is something hurled at your butt when you get slow and lazy. When it hits, you kick into gear and start to run again. Andy said that AMD held Intel’s dart, which, thrown at Intel every now and again, kept it lean, smart, and fast. (Parenthetically, he said that the problem with Microsoft was that that no one held a dart with their name on it.) Andy Grove was saying that Intel was a better company with AMD on its heels.

    NetApp holds the dart on EMC. Our job at EMC is to make sure that NetApp gets nothing more than a dart. But the industry will be better served if NetApp maintains its possession.

  21. Brent’s avatar

    I would add that there is a very fine line between keeping things simple and thus easier and more efficient to manage, and providing preceived needed features and functionality to sell products. I believe Apple is the best example of how things can be designed very simple and clean, but yet appeal to customers.

    To avoid speaking overly negative or positive about specific storage companies, I would take this thought to a higher level and focus on IT in general. I personally feel that right now we are in a time where customers are starting to place more importance on getting the job done rather that buying a fancy solution. I also feel that as complexity of solutions increase the overall cost increases at some greater rate.

    In addition as dangerious as it can be to stay focused on what you do well as a IT business, it can certainly be even more dangerous to broaden the business.

    As a final thought I think the right decesion for NetApp is really more of what customers over the next 5 years or so are going to demand. Do customers what to go to one company that sells everything and does each component ok, or do they want to work with 10 companies that do each component very well. Frankly this same question should be high on the list of any IT company. I’ll personaly put my money on the companies that focus on doing a handful of things well.

  22. Chris Waltham’s avatar

    First things first: I’m a NetApp customer in a small organization (perhaps 50TB across 3 filers) which has 0 EMC products, and a handful of other products from other storage vendors.

    I guess I have two comments to make after reading this article. The first is, yes, WAFL may at this point contain (almost?) all the engineering it ever will. And snapshots may contain the same amount of engineering they will, too. At any rate, I think where the benefits — the marginal benefits, to use economicspeak — will come in to play is in terms of manageability and flexibility. And from my experience, most of that comes out via software. Small stuff like SnapManager for VI, Rapid Cloning Utility etc. add more value to the platform than you would initially think.

    That said, though, having never used EMC’s stuff before, I may personally benefit (as would others of your readers) by exploring — or even just giving a quick, sales-less overview — what EMC does offer to enhance the VMware environment. It may help others, more thin-skinned than I, from thinking you’re bashing NTAP (which I didn’t think you were doing, at all!)

  23. avanspronsen’s avatar

    And that “one trick pony”, if you believe that which I don’t, is the best virtualization storage platform on the market. We moved off block based storage for virtualization 2 years ago to NetApp NFS and couldn’t be happier.

    EMC, where is large file deduplication? do you know how much cost, power and cooling savings go with a 70-75% dedupe rate on over 6000 VMs?

  24. Chris Waltham’s avatar

    Another thing I would add is that there are two types of companies: leaders and followers. If you develop things like dedup internally, you don’t need to buy someone else’s solution and mold it to fit your own.

    Arguably Microsoft’s biggest problem is that they stopped innovating and, instead, started simply acquiring or developing based on whatever they thought the market wanted. Xbox, Zune, whatever. Eventually, this culture of acquisition and reactionary development has pushed them to where they are today — a behemoth that doesn’t seem to be gaining any market share, and instead just holding on to the (admittedly huge) share it already has.

    I am neither an EMC customer nor an EMC employee so I don’t know how their internal culture works, but it does often happen with larger companies that they become so focused on being everything to everyone in the market that they forget what customers truly want — and, instead, simply buy whatever solutions they *think* customers think they want. This almost never works to satisfaction, and you end up diluting your brand. My employer has a Cisco VoIP solution and it the software is everything that their switches & routers are not — buggy, complex and fragile. I wouldn’t want to see EMC end up like that.

  25. StorageAnalyst’s avatar

    The end of an era – confirmed.

    Scott, you’ve worked hard over the years to build a reputation for objectivity and technical excellence.

    Sadly, with one highly misinformed blog (business-wise and technically RE: WAFL) you’ve managed to destroy both.

    The EMC kool-aid has saturated your DNA and therefore I can no longer trust your words in the same manner as before.

    Farewell my once-objective VMware mentor!

  26. Chuck Hollis’s avatar

    FWIW, I’d encourage everyone to consider this as an IT industry discussion, rather than the pros and cons of any one vendor.

    Sure, everyone’s picking on NetApp here, but consider them one of many in the same general strategic position; albeit with some advantages as has been pointed out here.

    General consensus:

    IT industry is maturing.
    Fewer players required.
    Integrated stacks becoming more valuable than isolated best-of-breed.
    IT delived as a service (cloud), rather than a hunk of technology.

    If you accept this as generally true, ask yourself — who’s going to do well in this context, and who’s going to have challenges?

    I would make a case that success has less to do with traditional categories and unique IP, and has more to do with business model and ecosystem going forward.

    Please don’t pick on Scott, I actually blogged about this shortly after EMC acquired DataDomain, where I put the exact same controversial thought forward — and drew similar reactions.

    http://chucksblog.emc.com/chucks_blog/2009/07/data-domain-netapp-and-the-it-industry.html

    Going back and reading it, I’m somewhat impressed on how much of this has come true.

    – Chuck

    (disclosure: work for EMC etc.)

  27. dlovely’s avatar

    take it from an ex-customer who dumped our prod emc array for another “one trick pony”…

    WE DON’T WANT AIO COMPANIES who do so many things, but do so many things, not so well… i’d rather pick technologies from different vendors and not be stuck with one for everything. the whole notion of “one throat to choke” is a ridiculous fallacy and is merely a marketing/sales term. if i had only recorded the conversations i’ve had with your celerra and clariion “support specialists”, you’d be in for a real treat.

    we recently left emc for compellent and couldn’t be happier. emc support has reached the end of the road, their US support is terrible at best and is “foreign” to our needs. it’s nice to leave the world of active/passive clariion arrays at a fraction of the price to renew terrible support with emc.

  28. Chuck Hollis’s avatar

    Scott — please don’t take the personal attacks seriously. Dare to discuss NetApp in anything other than the most praiseworthy and congratulatory manner, and you’ll get all sorts of emotional and unprofessional responses.

    And the ones who aren’t even willing to share a name or an affiliation (like “storageanalyst”, well — they’re better off deleted IMHO. If these people aren’t confident enough to share who they are, why should we be listening?

    Being unbiased means just that — stating your case regardless of affiliations. Sometimes that works for your employer, sometimes it doesn’t.

    Enjoy the toasty flames!

    – Chuck

  29. slowe’s avatar

    All,

    I appreciate everyone who added to the discussion here. I especially appreciate those who kept their responses professional and courteous, and those who provided full disclosure as to their affiliations.

    I’d like to clarify a couple of things:

    1. I was not saying and I am not saying that NetApp is dead. Far from it, as supported by their recent financial gains. Thank you to those who provided links with additional information on NetApp’s recent financial performance. Rather, I’m looking at this from a longer-term perspective: can they sustain this growth with their current staple of products and technologies? I don’t know.

    2. I was not bashing and I am not bashing NetApp. I respect NetApp, their engineering prowess, and their status as a competitor. They would not have been as successful as they are if they weren’t doing a good job. As Scott Drummonds pointed out, it is because of NetApp that EMC and other storage vendors have been forced to innovate. A bit of healthy competition is good for everyone. Again, my focus is more long-term: as other competitors add these types of functionality to their arrays, how does NetApp continue to distinguish itself?

    To the commenter who mentioned deduplication: you are correct, I neglected to mention that functionality in the NetApp arrays. Thank you for that correction.

    Once again, thank you for the discussion. Keep the thoughts flowing!

  30. Mike Shea’s avatar

    Wow. I am kind of surprised at this post.

    When you are talking tech, you are in your element, but you are punching _way_ above your weight class when attempting to analyze parts of a business model you don’t understand.

  31. Craig’s avatar

    Beside block level dedupe, SMVI, Dataontap 8, Multistore an many others solutions that offer by the box itself you can’t even get it from others storage vendor today. Some of the previous comment is true as the fact for EMC, your upgrade path are not well integrate when you need to upgrade the storage from cx4 to VMAX or symmetrix.

    Again, as a blogger should always stick unique and do not over bias to 1 site of story when come to solution competition. None of the solution or brand are the best in the world. I am still wondering about your big picture in long term which you estimate the company performance of Netapp, which I have no clue as well. I will urge you to ask for a demo unit of netapp with data ontap 8, and spend more time to understand what had been newly enhance in the solution.

    Competition in the market are always there, when your competitor does produce or provide the same solution as you have today in the next 24 months, you should already leading the competition to another new trend – as an example.

  32. Duncan’s avatar

    I’m not an analyst, and that’s why I stay away from articles like these. Also chances of getting severely bruised by one of your competitors who is more focussed on the business model are pretty big.

    Anyway, in terms of the one trick pony comment… I personally don’t care if a customer buys NetApp, EMC, HP or EQL. Whatever works for them and meets the requirements. If it’s a one trick pony like NetApp, as you call it, that’s fine. As long as the master that trick I can only see benefits. I’d rather be a one trick pony and be the best, than a “jack of all trades, master of none”. Before anyone starts jumping around, I am not saying that any of the other before mentioned vendors fall in that category.

    EMC, NetApp, HP… In the end it is just a bunch of disks :-) (love saying that with a storage team in the room)

  33. Greg Knieriemen’s avatar

    Scott:

    As someone who has publicly praised your technical knowledge, I’m disappointed by this post.

    1) You are essentially responding to an anonymous blog post – and a pretty poor one. This wasn’t the Wall Street Journal or even a reputable trade magazine.

    2) Both you and the anonymous blog poster are wondering into business analysis which neither of you know much about. You should have focused on the technical argument.

    3) You and the blog poster are wrong to focus on Market Cap. EMC’s market cap is larger… and it should be – it’s a much bigger company. But NetApp’s stock price performance is actually better than EMC’s (look at P/E ratio). You are also wrong to relate market cap to cash on hand – it is only one of many factors that relates to cash.

    4) Why state “NetApp lacks the bankroll to acquire the technologies necessary to build out their portfolio…” and then not provide any information to support that statement. How much cash should they have? What types of acquisitions? This is a really weak and unsupported statement.

    I’m not going to pile on other than to say I’m disappointed – I just don’t think this blog post has the depth of knowledge you are normally exhibit. That said, I believe you posted this with honest intentions.

  34. Taylor’s avatar

    A Cisco purchase of NetApp would be a huge game changer. I will keep praying that this happens.

  35. Glenn Sizemore’s avatar

    Scott,

    I re-read your post this morning, and noticed something. I owe you an apology, I took issue with the article you quoted. All you said was that NetApp appears to have reached the end of the line with WALF. That is an interesting point, albeit one I’m not qualified to comment on, but I do find it interesting none the less. With my limited understanding of WALF there are some serious limitations, example I believe bi-directional snapmirror is just too hard. NetApp does have some cool stuff on the road map with 8.1 and the GX OnTap code merge, but that’s all outside of WALF.

    WALF is both NetApp’s greatest strength, and their Achilles heel at the same time. It enables stuff like production snapshots, block replication, and de-duplication. All three technologies that are driving there rapid growth in the market right now. Snapshots, and Dedupe make NetApp the premier VMware storage vendor IMO. That being said WALF is holding them down in other markets.

    Vendors like Compellent, and EMC offer real on the fly storage tiering. PAM is amazing, but it does top out, FAST II is promising, and Compellent works today. NetApp would have to redo volumes from the ground up to span aggregates to use a similar technology.

    Xiotech, 3PAR, EqualLogic… their scale out approach is very sexy. These guys may end up winning the field before it’s all said and done. Again, NetApp would need a fundamental rewrite to compete, but so would EMC.

    Unfortunately this was not the conversation we had… we all drew a non existent line between NetApp and you’re new employer. I would like to apologizes for that. I would instead offer that you don’t need to quote some random blog. Just say what was on your mind. Had you omitted the first four paragraphs and just posted your point… Vaughn would have gotten out of shape, but no one would have flamed you personally. It’s a good question and as a NetApp Fan/customer I like to keep them on their toes.

    Keep your head up Scott your still on top of my vList!
    ~Glenn

    P.S. Has anyone considered that perhaps the EMC-NetApp comparison isn’t Intel-AMD, but instead is YaHoo-Google…. just saying #5 to #2 was a huge jump.

  36. slowe’s avatar

    Greg,

    Thanks for pointing out my deficiency in business matters—clearly I have a lot to learn! You’re right, market cap is not necessarily a good indicator of a corporation’s ability to acquire; there are other factors as well. And thanks as well for the vote of confidence regarding my intentions. Truly there was no malice in this post, just a (poor) effort at starting a conversation.

    Glenn,

    You’re right on the money—every storage vendor has their strengths and their weaknesses. That would include EMC, who has to spend additional money on research and development and support to maintain multiple code bases. As I’ve said so many times before, every technology decision has its advantages and disadvantages.

    Taylor,

    You are correct about that—a Cisco acquisition of NetApp would indeed be a game changer.

    Thanks to everyone who has submitted a comment! I appreciate the ongoing discussion.

  37. Andrew Miller’s avatar

    @Duncan – your comment just made me laugh….way to tweak just about everyone. :-P

    Completely aside from anything technical (mildly ironic given I work as a pre-sales and post-sales engineer for a NetApp and EMC partner and have experience with both and LOTS of technical thoughts/comments here), the most interesting thing to me was a comment on the originally referenced post concerning market cap.

    I’m used to thinking of EMC as a much bigger company (looking at the product portfolio definitely gives that impression) but if you subtract VMware’s market cap from EMC’s market cap (or even just 80% of the VMW market cap), suddenly EMC’s and NetApp’s market cap is just about the same (with NetApp even potentially larger….not sure exactly how much of VMW EMC owns….the only number I found was “above 80%”)….something I found quite surprising.

    Regardless of the size of EMC’s warchest/bankroll/# of employees/# of acquisitions/etc., the market right now values EMC and NetApp to be about the same….meaning that somebody out there (or a lot of somebodies) see a lot of potential growth in just the storage market (given that NetApp is basically a storage pure-play whereas EMC is quite diversified).

    I’d be quite curious for anyone else’s thoughts/comments there….

  38. jlchannel’s avatar

    Yeah! Agreed, Cisco buy over NetApp would be great.

  39. matt’s avatar

    Cisco+NetApp = instant death and will forever be banned from my vendor list.

    EMC gear is IMO grotesquely overpriced and feature poor. Their Linux multipathing software sucks hard. It’s really quite a shame VMware sold out to EMC. Why be saddled with EMC’s less than great reputation, customer unfriendliness, and “the world revolves around us” pricing?

    Netapp too is seriously overpriced. There is no value add in storage enclosures, disks, and interconnects yet they think they should be able to charge multiples of commodity pricing.

    The head unit and the on-board software is what matters. We went BluArc on DDN because those guys aren’t ass-hats about customers using whatever storage they want.

  40. Stephen Prohasca’s avatar

    Maybe EMC can buy Netapp, that’s one way to innovate…

    I See posts like this one or from SiliconAngle (guy who runs that blog was responsible for the live vblogging at EMC World 2010) and it makes you wonder under how much pressure has EMC been to have affiliates and employees posting things like this…

    I bet you didn’t know the affiliation of the person at SiliconAngle and Mr. Lowe did not bother telling you either nor did the author…

    Credibility = ZERO

  41. slowe’s avatar

    Stephen,

    I don’t know the affiliation of the author (“secretcto”) of the SiliconANGLE site that prompted this post. Had I known the affiliation, I would have been sure to disclose it here, just as I disclose my own affiliations (and ask others to do the same as well). In retrospect, it probably would have been a good idea for me to investigate the original author’s affiliations. Live and learn.

  42. Niall’s avatar

    Scott,

    Like many, I’m disappointed by your partisan approach.

    I have a bet going back about 7 years (with a Cisco employee) that Cisco will buy NetApp … it made sense before UCS, and makes so much more sense now.

    Rgds,
    Niall.

    PS – In terms of affiliation, I work for a company that uses both EMC and NetApp storage products, as well as Cisco stuff.

    PPS – Chuck has long demonstrated through his postings that he runs scared of NetApp, and focussed on FUD – aside EMC fanbois he has no credibility anyway. @Chuck – you can see that as a “personal attack” if you want … your view of reality is far removed from mine!

  43. Christopher Kusek’s avatar

    I think you’ve been pretty forward about things Scott, just as I have.

    I find that people don’t question who I work for, or the fact that I am agnostic, they more question wondering whether CXI is my real name, and whether I actually HAVE a real name; otherwise though… the sheer volume of full-disclosure I happen to have out there would make it fruitless to try to state that I am not up-front in who I happen to work for, and that my judgement and decisions are my own.

    Though I’m curious what Stephen is talking about when he says ‘pressure EMC has been on affiliates or employees’

    I’m not sure about you Scott, but blogging, tweeting, etc is NOT my job, nor am I judged or receive benefit as a result of that; fortunately.. EMC does not get in the way of me having my voice and saying what I will, when I will (which is nice :))

    Do I have good things to say about the company? Absolutely, as I’m always looking for good material to discuss.. and when you do something of a specific type.. you find it to be more topical to discuss (which is why I’ll tend to discuss EMC more lately, than say.. when I’d cover NetApp exclusive things, because.. it’s what I’m seeing more of :))

    You’re doing great Scott, but you know that :)

    On a separate note, I wanted to discuss the comments Matt had made.

    Hi Matt! It’s unfortunate that you feel the way you do about both NetApp and EMC, but I am very glad to see that your unique needs were able to be fulfilled by BlueARC – If you’d like, I can make sure that your kind words reach the appropriate folks over there as I know them quite well :)

    I’d be curious to hear more about your particular distaste for both EMC and NetApp as well, as I had similar impressions over the years (Infact, much of what you mentioned I heavily and openly discussed during my Interviewing at EMC, so I know where you’re coming from :))

    If you’re interested, feel free to get in touch with me!
    [email protected]

    And thanks again Scott!

    Christopher

  44. Daniel’s avatar

    Read the VCDX answers… it is a shame for title.
    We do not know it, we do not love it!

  45. NetApp_Employee’s avatar

    Scott,

    I used to come to your site for NetApp/VMware information before you started working for EMC. As others have expressed I always enjoyed your technical deep dives into NetApp Technology and VMware. Obviously your focus has changed now that you work for EMC but I really do feel that this site has just become another marketing extension for EMC and the separation from Technology to FUD is very thin. I am sure the volume of comments from NetApp customers is not because they are irrational and overemotional as Chuck stated but more likely because you used to be a prominent NetApp/VMware blogger before joining EMC ( I could not find any of your old NetApp articles in the archive though) .

    As far as why NetApp is receiving so much attention from EMC, my guess is because they spent 2 days of this year’s kick off meeting concentrating on competing with NetApp.

    ( NetApp employee )

  46. slowe’s avatar

    Dear NetApp_Employee,

    Thanks for taking the time to comment. BTW, you can find all NetApp-related articles here:

    http://blog.scottlowe.org/tag/netapp

    Despite the veiled suggestion that I have removed them from my site, you’ll find that they remain fully intact. I have no intention of ever removing them or making them otherwise inaccessible.

    I wish that you’d taken the time to consider my post from the perspective of someone who once discussed NetApp quite extensively instead of only looking at the letters on my badge. Still, I suppose that this is the new reality to which I must grow accustomed. I have great respect for NetApp and what they (you) have accomplished.

    Best of luck to you,
    Scott

    P.S. – Why hide your identity?

  47. Tim Davoren’s avatar

    Guys, just a quick thought on these observations…if Scott’s take on NetApp is correct then surely the same applies to HDS? They are apparently releasing a server line themselves (great another fly for the ointment), but in essence they are the storage person’s storage company right? They will even rebuild microcode for customer’s if you have a particularly pressing requirement? I think enterprise storage requirements are breaking out into those demanded by true commercial enterprises (with governance and high uptime needs) and enterprise, as-in-as masses of storage and huge data rates, enterprises (scientific, research, university, aerospace, engineering, Tv and other media). Storage vendor’s cost models vs feature sets will determine their value in either market.

  48. Craig’s avatar

    VCE vblock apply with EMC only today from Cisco & VMware. Why dont’t they launch another vblock to go with VCN, with that , we will able to see more competition from both solution and even for a side by side comparison.

  49. Aaron Skogsberg’s avatar

    Scott,

    Tough post given your history but glad to have you part of the EMC family. With that said, I don’t think your observation should be met with such haste. I think it is a fair and viable post prompting a good debate. I was a NetApp customer, reseller, and now work with EMC. I carry a lot of respect for NetApp as does the rest of the EMC community (NetApp might be surprised by this but it is true). I would expect none the less from the NetApp community in return. I have seen a few unimpressive posts which is probably unavoidable with such passionate competitive camps :)

    Back to the debate.. Long term viability for NetApp is not a new topic but there is some weight to the debate as it relates to its “next move”. With only approx 8 acquisitions, VTL, Topio abandoned… Decru – abismal… and Spinnaker still trying to grow wings after 5 years, this does spark questions.

    EMC and NetApp will continue to highlight their value and bring technologies to market that further differentiate one another. How did you like that objective response :)

    I still believe whether through innovation or through M&A, EMC has the best choice for customer challenges than any other competitor. That is just my opinion……

    Good post and great responses from all. I enjoyed the read….

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