Can NetApp be saved?

by Robin Harris on Wednesday, 17 June, 2015

If NetApp is going to save itself – see How doomed is NetApp? – it needs to change the way it’s doing business and how it thinks about its customers. Or it can continue as it is and accelerate into oblivion.

NetApp’s problem
NetApp is essentially a single-product line company, and that product line is less and less relevant to customer needs. There’s faster block and SAN storage and much cheaper object storage in the cloud and on-prem. NetApp is in a sour spot, not a sweet one.

Here’s what NetApp needs to do to regain momentum.

Embrace multiple product lines. OnTap, while competitive in no growth legacy applications, is not competitive with modern scale out object storage systems. NetApp needs more arrows in its quiver.

NetApp could learn from EMC, a company that has developed almost no products – Atmos is the exception that comes to mind – itself in the last 20 years. Instead, EMC buys sector leaders and pushes them through its enterprise sales channel. Both Isilon and Data Domain have major architectural flaws compared to more modern products, but EMC’s sales clout wins the day.

Embrace scale out storage. NetApp made a brilliant move when they purchased object storage pioneer Bycast. The Canadian company suffered from timid marketing thanks to a traditional Canadian reluctance to toot one’s own horn. Overcommitment to CDMI hasn’t helped either.

But Bycast had a strong foothold in medical imaging and a great story: a Bycast installation survived Hurricane Katrina in New Orleans without any data loss. Haven’t heard that story? You, and everyone else.

Buy Avere. Avere’s product is an intelligent front end cache for multiple NetApp filers. It simplifies filer management by keeping hot data local and eliminating the need to balance hot files across multiple filers.

But when you buy it, don’t try to integrate it with OnTap. It is a network device, and needs to be sold as such.

Pump up the channel. Easier said than done, but NetApp has to get ready for a lower margin future, and embracing the channel is the easiest way to start. More will need to be done – products that need less support thanks to automated support for instance – but getting lean and mean is table stakes for our brave new storage world.

The StorageMojo take
Despite the fact that NetApp stopped talking to me several years ago – except for a recent briefing invite – I still like them and wish them well. Thus this advice.

With a well-regarded global brand and a broad enterprise presence, NetApp has assets that startups can only dream of. But so did DEC, Sun and Kodak, and bad management frittered those assets away.

NetApp’s urgently needs a strategy reboot. Whether the new management team is up to the task remains to be seen. I hope they are.

Comments welcome, as always.

{ 7 comments… read them below or add one }

Paul June 18, 2015 at 4:13 am

I completely agree. I’ve been a Netapp customer in various times of my career, dating back to 98/99. They were too late with scale out, their dedupe, while early by market standards, was quickly outdated. Over the last 5 years as my needs changed and I needed far more insight into my private cloud environment Netapp couldn’t deliver what I needed and I moved on. It’s a shame, I miss the “toaster” days and the company that proved file storage was production grade.

Acquisitions, not integrations are what is needed. There are a raft of acquisition targets, but they better move fast.

Howard Marks June 18, 2015 at 7:30 am

Robin,
Re: NetApp buying Avere, Ron Biancini Avere’s founder/CEO already sold a company to NetApp, Spinnaker. Given how well that turned out I doubt he’s looking to repeat.

– Howard

David Magda June 18, 2015 at 1:51 pm

Both Isilon and Data Domain have major architectural flaws compared to more modern products, but EMC’s sales clout wins the day.

Out of curiosity: What do you see as their architectural flaws? What are ‘more modern’ than them?

DB June 20, 2015 at 6:33 am

I couldn’t disagree more. This is Wall Street talk. NetApp has never been and will never become EMC or HP. It’s has been bullied into benchmarking itself (by market share/top line mostly) against EMC, a company which has always been servicing a much larger part of the total storage market by its various product lines. This stressed out NetApp, then confused it, and then broke it – we now simply see the fallout of the early 2010s.

I still remember that analyst day a few years ago when Georgens spent probably 10 minutes analyzing and explaining NetApp’s performance relative to EMC. That’s just wrong on any level.

The problem is not too much ONTAP, but too little: the company has diverted focus, money and people to other initiatives, such as Engenio integration and Flashray. Instead, it could have and should have doubled down on ONTAP, flash integration, cluster mode, storage system virtualization and then hyperconvergence as an endgame – NetApp could have built its own converged stack, a thing EMC got right.

And AFA is not a product or technology, mind you, whatever all those startups are saying, it’s a configuration, or more likely, a feature of a product, low latency and high IOPS that is. Application acceleration is configuration issue, not a product need…..

A single scalable storage pool (NetApp’s original end-game with ONTAP) simply makes sense from any angle: capacity utilization, data reduction, data protection, management overhead, data availability. These far outweigh any downsides of the legacy baggage of ONTAP, including lower raw performance due to software overhead. And as processing cycles and in-memory operations are ever cheaper, that extra overhead to map back and forth wouldn’t have meant a thing. No one cares if its not ‘elegant’ in the background.

I agree on the channel, but with a global view: NetApp, and everyone else, has been trailing EMC for the lack of proper coverage in many many international markets. A more aggressive international channel expansion could have averted the crisis we see unfolding today. Also, NetApp should have honored its partnership with Fujitsu much more and might have been able to avoid Fujitsu’s refocus on its own storage and keep them pushing NetApp – Fujitsu has for long been one of the largest resellers of NetApp FAS.

Robin Harris June 21, 2015 at 8:24 pm

DB,

NetApp’s problem isn’t how to become EMC. The problem is survival.

Five years ago Jay Kidd persuaded me that NetApp was ready to leave the other storage “dwarfs” behind. OK, that didn’t happen. What is plan B?

I suspect your theory of “doubling down” on ONTAP is the current thinking of the NetApp exec suite. If it is, they’re truly doomed. That ship has sailed. NetApp is not a vendor of leading-edge tech – and they haven’t been for years.

WAFL was a brilliant foreshadowing of modern file systems, 20 years ago. The problem now is to find the next wave and get in front of it. The easiest – and fastest, given that time is of the essence – is acquisition. If a $5B company can’t sustain two product lines, they deserve to die.

Robin

Robin Harris June 21, 2015 at 8:27 pm

Howard,

There are multiple ways to assess success. NetApp’s buy worked out well for Ron. The technology, not so much. But Ron, not the technology, gets to decide.

Robin

DB June 22, 2015 at 6:01 am

I have no clue what the solution to their problem is. But I’m pretty sure it’s not the solution they have repeatedly been recommended over the last 3-4 years – ‘learn from EMC, EMC EMC EMC. In fairness, the responses that I believe would have worked over the last 3-4 years are not good enough today either. But at least it could have avoided all the organizational and perceived damage, and the confusion.

I’m being redundant, but the legacy of WAFL is irrelevant in the grand scheme of things. Any technology spanning two decades of continuity is a hack on top of hack. However, history also tells us that (the value of) continuity is quite a strong force, and hardware resources are getting cheap at the rate of which such inefficiencies are fast becoming marginal compared to continuity and value add of accumulated R&D efforts. NetApp has always been in a strong position to keep expanding its sales (it was primarily a matter of geographical market coverage and execution, not technology; I know it as a fact, as I was a market data analyst) to please WS, while keeping track of the shift towards SDS and scale-out in messaging, feature set, and product packaging. After all, ONTAP is a piece of x86 code with scale-out cluster mode. A loss of 10-20% of performance due to WAFL is not material enough to break this and can be overcome with added raw HW power plus engineering.

If NetApp’s ONTAP is hopelessly out of date you think, than EMC has not 1, but maybe 5 doomed storage product lines to deal with.

Leave a Comment

Previous post:

Next post: