NetApp Blitz: Vindication Or Pre-Emptive Strike?

NetApp is celebrating the shipment of more than 150,000 unified storage systems, and some analysts are pushing the company whose stock has risen 5 percent in the last few days. However an alternative view is that this press and blog blitz might have more to do with an anticipated unified storage announcement from the storage industry’s 800-pound gorilla, EMC.

Rumors have the launch of EMC’s V-CX line happening sometime this month, combining elements of EMC’s midrange CLARiiON (SAN) and Celerra (NAS) lines.

According to NetApp’s Patrick Rogers, vice president of products, alliances and solutions marketing, unified storage is the wave of the future and the distinction between SAN and NAS is disappearing. “If you look at IDC data, the prior categories of SAN and NAS are merging into FAS, or fabric storage.”

Based on this data, a new company blog states NetApp leads in delivering more storage capacity per revenue recognized than any other vendor for all tracked protocols (FAS = SAN, NAS + iSCSI).

NetApp debuted its unified storage offering, the FAS900 series, on Oct. 1, 2002, going beyond traditional file-serving capabilities by serving up blocks over Fibre Channel. Rogers says the company initially backed into unified storage, developing it to solve specific midmarket customers’ problems with multiple architectures.

“That’s kind of how NetApp got into unified storage,” he said. The company had customers — developers — running Unix, Linux and Windows workstations and they couldn’t afford to have multiple architectures. “That’s where NetApp started to realize need for unified storage.”

More than 150,000 systems and eight years later, unified storage is becoming more common, says Rogers. Nearly 75% of all of NetApp’s shipments do both SAN and NAS. This trend is supported by data from analyst firm Enterprise Strategy Group (ESG) which shows that more than two-thirds of the organizations surveyed are in the process of implementing or evaluating a unified storage infrastructure that consolidates NAS and SAN systems.

Rogers says unified storage has moved from the early adopter phase to a tornado. “The market mindshare has shifted in a very important way. Customers now get it. Virtualization has really cemented that, made it so much more real and necessary, Now it’s become an imperative.”

Which is good news for the channel, he adds. “They’ve been one of the most aggressive adopters of this concept of unified storage (complete infrastructure solutions).” Those channel partners that have realized and acted upon the evolution have been the most successful. It’s all about being the trusted advisor to the customer, rather than hawking a particular vendor’s wares, says Rogers.

The channel has been very embracing of our whole storage efficiency theme, he says. “For them, if they can deliver greater efficiencies to their customers, that allows them to realize greater margins,” both in product and services.

Accounting for more than 70 percent its revenues, the channel is critical to NetApp. For its most recent fiscal quarter NetApp reported a 35 percent surge in GAAP revenue. Product revenue was $619 million, accounting for 61 percent of total revenue, and up 17 percent year over year. Software  was up 9 percent to $171 million, while services also grew 17 percent to $222 million. The channel did the bulk of the heavy lifting, growing its 70 percent share 15 percent sequentially, and 16 percent year over year.

Looking ahead, Rogers says storage virtualization and the ability to move data around, although harder than server virtualization, will be critical. People have been talking about the utility model, but you can’t have on-demand computing until you have a unified model, he says.

Cloud computing is just IT service on demand, he adds. “But you’re not going to get to cloud computing unless you unify and virtualize and allow transparent data movement.”