Chris Mellor recently posted an interesting review of NetApp’s financial position, following on from the release of their latest financial figures for the period 3Q/2014.  The comments posted to the article show a pretty polarised view; 50% of the commenters believe NetApp is in a strong position with good technology, 50% believe NetApp is rapidly turning into an industry dinosaur.  So who is right?

NetApp’s accounts paint a pretty clear picture; the company is not growing its business and hasn’t done so for some time.  CEO Tom Georgens blames “execution” and there’s some attribution to currency fluctuations too.  However neither of these answer what is a major problem for the company and that is attracting and growing new business segments.

I touched on some of the issues in a blog post last April (almost 10 months ago now) and I don’t really see any change in NetApp’s strategy.  The company is still obsessed with Data ONTAP despite having all-flash products (EF550/560 & FlashRay), scale-out (EF series) and object storage (StorageGRID).  Looking at the summary of the financial announcement, excluding financial highlights, 80% of the comments refer specifically to Data ONTAP.

Data ONTAP is showing its age.  Startups like Nimble Storage have come along and taken some of the core qualities of ONTAP and vastly improved on them, using technologies like NAND flash that simply weren’t available when Data ONTAP was conceived.  New players are coming to the market year on year, including Tegile, Coho Data, NexGen (newly spun out of SanDisk), Tintri and X-IO.  The existing players are upping their game; HP 3PAR StoreServ now supports object, file and block connectivity.  There are new market solutions to move data to the cloud and reduce expense from the likes of Avere Systems, Nasuni and StorSimple (now part of Microsoft).  There’s a move away from separate storage altogether with hyper-converged solutions from Nutanix, SimpliVity Scale Computing and VMware with EVO:RAIL.  Finally there’s nascent buildup of open source and software-only solutions (Ceph, ScaleIO, GlusterFS, StorMagic) and object storage (Cleversafe, Scality).

All of this highlights how the storage market is fragmenting as data is placed in the most appropriate place for processing.  The days of centralised storage are coming to an end.  One platform will not provide the needs of all users, irrespective of how many features it offers.

Diversification

I’ve said it before and I will re-emphasise it here – NetApp needs to diversify and gain credibility in other markets.  Users are too clever to be fooled by lazy repackaging of solutions to call them “cloud ready” or to jump onto the latest bandwagon.  This means moving into markets like cloud have to be done with genuine commitment, not just as an excuse to sell more Data ONTAP licences.  Being a storage company is no longer good enough for NetApp. They need to evolve into a data company, because the future is based on how we use and exploit our data, not how we store it.  Sadly changing the course of a big ship takes time and before long, NetApp as a company could be a shadow of its former self as existing customers see the light and move to other more flexible solutions.

 

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