Does NetApp’s purchase of LSI’s storage business – not known as Engenio – portend a fundamental change in NetApp’s business model? No and yes. Here’s why.
NetApp has often contrasted their single focus on Data ONTAP with EMC’s confederation of businesses. NetApp may be much smaller than EMC, but their focus on a single software stack has given them an R&D and marketing advantage over EMC.
If that is changing, customers are right to be concerned. If NetApp is backing away from DOT after a painful and lengthy rewrite, that would suggest that all is not well.
The LSI buy does not represent a major strategic shift. Why? Because there is little overlap between the NetApp and LSI product sets. The new product line is additive, not cannibalization.
The LSI product line is focused on fast direct-attached storage. The controllers are popular in video and HPC. NetApp, of course, is big on SAN and NAS.
While it isn’t a major strategic shift, the LSI buy is a shift: they are adding to their product portfolio to win incremental customer dollars. They are also adding an OEM business to their already healthy reseller channel.
The StorageMojo take
New CEO Tom Georgens continues to push overdue changes. The LSI buy is an easy win for NetApp: they already have a storage sales force and a wide enterprise footprint.
Adding fast DAS to the portfolio is smart: the sales and support teams can easily train-up on the LSI kit without losing focus on their bread and butter. With direct sales NetApp can apply proven end-user Margin Enhancement Technology to Engenio’s anemic OEM margins.
The more interesting test is seeing how Georgens integrates Bycast into the product portfolio. Will it be positioned to serve a new market, or will it be blended with existing products?
The bottom line is that NetApp hasn’t had many – any? – successful acquisitions. It is a skill they need to learn.
They needn’t imitate EMC’s technology publishing model – of which Documentum and RSA are unneeded distractions – using their financial clout to purchase brands that have crossed the chasm. EMC’s world-wide sales coverage allows them to pay top dollar and then rapidly pump up sales.
NetApp isn’t in that league – yet. Baby steps now will pay off in the long run.
Courteous comments welcome, of course. I was impressed Tuesday night by NetApp employee support for the St. Baldrick’s Foundation benefit for pediatric cancer research.