Tuesday, February 27, 2007



Last week we learned that NetApp's executives consider IBM sales efforts incremental. If that is the case , then I suspect after looking up IBM sales numbers, that IBM management must consider their rebranded NetApp sales insignificant to their bottom line.

"IBM is very focused on what I call white space, which is where we are not covered," Mendoza said. "For example, state and local government, and retail. So it's largely incremental for us."

IBM Numbers for 2005


Revenue $91,134.000,000.00

Cost of Goods Sold $54,602,000,000.00
Gross Profit $36,532,000,000.00
Gross Profit Margin 40.1%
NetApp’s number for IBM’ sales = about $60,000,000
That means that IBM branded NetApp's unit sales
are much less than 1% of IBM’s sales. By the way, NetApp is reporting sales of $2,066,000,000.00 for 2006.

Would you consider that insignificant to IBM, or inc
remental as NetApp’s Mendoza states? It could be both. But I think the sales are probably much more important to NetApp than to IBM. I wonder how it makes IBM sales folks feel to know their efforts are merely incremental? Does IBM have a bonus plan and sales contest to help determine who is their most insignificant and incremental NetApp sales person of the year? : )

Friday, February 23, 2007

NetApp says that IBM's branded sales are just incremental.

Tom Mendoza, president of NetApp, said that improving sales through IBM is not affecting NetApp's solution providers. "IBM is very focused on what I call white space, which is where we are not covered," Mendoza said. "For example, state and local government, and retail. So it's largely incremental for us. They've done an excellent job of minimizing conflicts by focusing on where we are not."

The article linked below says that IBM is 3% 0f Netapp sales. 3% of sales seems like a big increment to me... Do the math $2,000,000,000.00 in NetApp Sales * 3% = $60,000,000.00

The OEM deal with IBM accounted for almost 3% of NetApp's revenue during the quarter, reflecting a relationship that NetApp claimed is going better than expected.

I have to wonder how much NetApp's big resellers are pushing out the door if IBM sales are only incremental? Could there be some perspective or marketing spin issues in play? How much longer will NetApp support this small incremental sales channel?

The word in the street since the announcement last spring by IBM that it would be reselling a portion of NetApp's product line has been at best hushed and at worst that it's a disaster. I heard that there were channel conflicts all over the place and that field compensation hadn't been worked out to a point where the two could work together.


I'll bet Larry King can find out the answers...

Talk-show host Larry King and his wife, Shawn Southwick, have agreed to buy a Beverly Hills home listed for just under $12 million.

The five-bedroom, Tuscan-style home was on the market less than two weeks before the couple agreed to buy it. The almost 10,000-square-foot house, built in 1989, has a skylit foyer and a master suite with a sitting room and twin bathrooms. There is also a two-bedroom guest house and a pool. Local agents identified Mr. King as the buyer. Listing agent Stephen Resnick of Westside Estate Agency confirmed that a contract has been signed, with the deal set to close later this month.

Mr. Resnick wouldn't name the sellers but said they spent two years renovating the house. Records show the sellers are Thomas and Kathy Mendoza, who bought the home three years ago. Thomas Mendoza is president of Network Appliance, a Sunnyvale, Calif., data-storage company.

The King and Mendoza families declined to comment. Mr. King, 73 years old, is the longtime host of the CNN talk show "Larry King Live." Ms. Southwick, 47, is a former host of the television show "Hollywood Insider."


You just can't make this stuff up !

Thursday, February 22, 2007

It is always nice when we get a letter like this...

Hi Mike,

Thank you for your letter following up on the order we placed. I am
impressed by the quality of customer service that your company has
provided, and fully satisfied both with the order and the helpfulness of
your staff.

--
BXXXXX NXXX ( Name x'd out for privacy)
Manager

Wednesday, February 21, 2007

One of our customers read the Google study in the previous post and sent along this link and the conclusion is fascinating. I certainly hope that all our customers will read this . You can download it here

Disk failures in the real world:
What does an MTTF of 1,000,000 hours mean to you?

Bianca Schroeder Garth A. Gibson
Computer Science Department
Carnegie Mellon University
{bianca, garth}@cs.cmu.edu


7 Conclusion

Many have pointed out the need for a better understanding of what disk failures look like in the field. Yet hardly any published work exists that provides a large-scale study of disk failures in production systems. As a first step towards closing this gap, we have analyzed disk replacement data from a number of large production systems, spanning more than 100,000 drives from at least four different vendors, including drives with SCSI, FC and SATA interfaces. Below is a summary of a few of our results.

* Large-scale installation field usage appears to differ widely from nominal datasheet MTTF conditions. The field replacement rates of systems were significantly larger than we expected based on datasheet MTTFs.

* For drives less than five years old, field replacement rates were larger than what the datasheet MTTF suggested by a factor of 2-10. For five to eight year old drives, field replacement rates were a factor of 30 higher than what the datasheet MTTF suggested.

* Changes in disk replacement rates during the first five years of the lifecycle were more dramatic than often assumed. While replacement rates are often expected to be in steady state in year 2-5 of operation (bottom of the ``bathtub curve''), we observed a continuous increase in replacement rates, starting as early as in the second year of operation.

* In our data sets, the replacement rates of SATA disks are not worse than the replacement rates of SCSI or FC disks. This may indicate that disk-independent factors, such as operating conditions, usage and environmental factors, affect replacement rates more than component specific factors. However, the only evidence we have of a bad batch of disks was found in a collection of SATA disks experiencing high media error rates. We have too little data on bad batches to estimate the relative frequency of bad batches by type of disk, although there is plenty of anecdotal evidence that bad batches are not unique to SATA disks.

* The common concern that MTTFs underrepresent infant mortality has led to the proposal of new standards that incorporate infant mortality [33]. Our findings suggest that the underrepresentation of the early onset of wear-out is a much more serious factor than underrepresentation of infant mortality and recommend to include this in new standards.

* While many have suspected that the commonly made assumption of exponentially distributed time between failures/replacements is not realistic, previous studies have not found enough evidence to prove this assumption wrong with significant statistical confidence [8]. Based on our data analysis, we are able to reject the hypothesis of exponentially distributed time between disk replacements with high confidence. We suggest that researchers and designers use field replacement data, when possible, or two parameter distributions, such as the Weibull distribution.

* We identify as the key features that distinguish the empirical distribution of time between disk replacements from the exponential distribution, higher levels of variability and decreasing hazard rates. We find that the empirical distributions are fit well by a Weibull distribution with a shape parameter between 0.7 and 0.8.

* We also present strong evidence for the existence of correlations between disk replacement interarrivals. In particular, the empirical data exhibits significant levels of autocorrelation and long-range dependence.


I wonder why these folks are not invited to speak at storage conferences like SNW ? Could it be that the vendor community has something to hide?

Tuesday, February 20, 2007

Google releases significant research paper on Disk Failure.

Download it here

http://216.239.37.132/papers/disk_failures.pdf




I wonder why NetApp has not done this research, or if they have why didn't they release it? Perhaps they can do a follow up study on FC disks?

Monday, February 19, 2007

Is NetApp concerned that Huawei and Xyratex have teamed up? If Huawei is using the same storage subsystem provider as NetApp how long will it be before Huawei introduces a very similar product to NetApp's? Suppose that NetApp's Gross Margins remain high, Huawei's interest in the enterprise stroage market is logical from a business perspective, and in the long run may produce competition for NetApp equipment. How similar will the Huawei equipment be to NetApp's DS14 series of storage shelves? It will be interesting to see what hits the market from this team.

Storage is a priority for Huawei, according to the company's spokeswoman Lynn Zhou. "Both storage and security are recognized within Huawei as areas of strategic importance as [telecom] operators move towards an all-IP network environment," she said in an email to Byte & Switch.

Certainly, Chinese technology giants have been fleshing out their storage strategies. Huawei, for example, was teamed up with 3Com, and also forged partnerships with FalconStor, Intransa, iVivity, and Xyratex.


The Chinese connection may also explain NetApp's rush into Bangalore India to lower its cost structure.

Friday, February 16, 2007

While I was visiting some of our customers last week I ran into a few that were actually told they could not use any more power by their Colo's and their power companies. Coincidentally computerworld also noticed there is a problem. I have not seen any mention of how many BTU's are saved because our lives are more efficient because we can work remotely now, I wonder what the trade off is between working at home, shopping from home and commuting to work and driving to the shopping mall?

Economic growth is going to require power. We are going to need more electrical power to run our infrastructures that is certain, are we going to build generating stations and power them with fossil fuel or nuclear power? Probably both.

Storage density can save a small amount of power in data centers and so that is what our customers in the situation are looking at. Below is an excerpt of the article.

February 15, 2007 (Computerworld) -- Estimated electricity consumption by servers in the U.S. doubled from 2000 to 2005, when the systems consumed as much power as every single color TV in the country or all the electric devices used in the state of Mississippi -- take your pick.

The growth in power use is due to increases in the number of servers being installed and stacked in data centers as demand for computer services accelerates, according to a paper written by Jonathan Koomey, a staff scientist at Lawrence Berkeley National Laboratory who has been advising the U.S. Environmental Protection Agency on energy issues related to data centers.

Using server growth figures based on data from market-research firm IDC, Koomey estimated the amount of power consumed annually by servers and associated equipment, such as cooling systems and uninterruptible power supplies. Those technologies consumed 45 billion kilowatt hours nationwide in 2005, he wrote in his paper, which was funded by a grant from Advanced Micro Devices Inc.

Koomey expects power consumption to rise by another 75% by 2010. But he said in an interview yesterday that forecasting consumption is a little harder because it's unknown how much demand for new computing services, such as a YouTube, will affect electricity use.

*************
Some folks just don't care about their energy usage.



Thursday, February 15, 2007

NetApp profit falls as expenses rise
By Rex Crum, MarketWatch
Last Update: 5:48 PM ET Feb 14, 2007

SAN FRANCISCO (MarketWatch) -- Network Appliance Inc. on Wednesday reported a fiscal third-quarter profit that fell 13% from a year ago as the storage-technology company said that expenses rose and revenue exceeded analysts' expectations.


From the you can't make this up department -

... Sen. Ted Stevens, the man who described the Internet as a series of tubes: It's time for the federal government to ban access to Wikipedia, MySpace, and social networking sites from schools and libraries.

And now some humor from Clive in London.....

Essential vocabulary additions for the workplace (and elsewhere)!!!

1. BLAMESTORMING: Sitting around in a group, discussing why a deadline was missed or a project failed, and who was responsible.

2. SEAGULL MANAGER: A manager, who flies in, makes a lot of noise, craps on everything, and then leaves.
3. ASSMOSIS: The process by which some people seem to absorb success and advancement by kissing up to the boss rather than working hard

4. SALMON DAY: The experience of spending an entire day swimming upstream only to get screwed and die in the end.

5. CUBE FARM : An office filled with cubicles.


6. PRAIRIE DOGGING : When someone yells or drops something loudly in a cube farm, and people's heads pop up over the walls to see what's going on.

7. MOUSE POTATO : The on-line, wired generation's answer to the couch potato.

8. SITCOMs: Single Income, Two Children, Oppressive Mortgage. What Yuppies get into when they have children and one of them stops working to stay home with the kids.

9. STRESS PUPPY: A person who seems to thrive on being stressed out and whiny.


10. SWIPEOUT: An ATM or credit card that has been rendered useless because magnetic strip is worn away from extensive use.



11. XEROX SUBSIDY: Euphemism for swiping free photocopies from one's workplace.

12. IRRITAINMENT: Entertainment and media spectacles that are annoying but you find yourself unable to stop watching them.

13. PERCUSSIVE MAINTENANCE: The fine art of whacking the crap out of an electronic device to get it to work again.

14. ADMINISPHERE : The rarefied organizational layers beginning just above the rank and file. Decisions that fall from the adminisphere are often profoundly inappropriate or irrelevant to the problems they were designed to solve.

15. 404: Someone who's clueless. From the World Wide Web error Message "404 Not Found," meaning that the requested site could not be located.


16. GENERICA : Features of the American landscape that are exactly the same no matter where one is, such as fast food joints, strip malls, and subdivisions.


17. OHNOSECOND: That minuscule fraction of time in which you realize that you've just made a BIG mistake. (Like after hitting send on an email by mistake).


18. WOOFS: Well-Off Older Folks.

Wednesday, February 14, 2007

Is there a windfall profits tax in Google's future?

Will it hurt tech investment in R&D?

From US News and world report.....

... Why not confiscate a portion of Google's fat annual profits–the company's 2006 earnings were some $3 billion on revenue of $10.6 billion–and use it for some relevant national goal? The search-engine company is, after all, profiting from technological infrastructure it didn't even build, an "information superhighway" (to use a quaint term) that came out of a government defense project. It's time to pay Uncle Sam back. When Sen. Barack Obama officially announced his own presidential bid last weekend, he called for a new Internet initiative. "Let's lay down broadband lines through the heart of inner cities and rural towns all across America," Obama said.

So there you go. A portion of Google's profits, as well as those perhaps from Amazon, Yahoo!, and eBay could be funneled into a government-managed fund to pay for laying down fatter pipe. Heck, it's too bad that some candidate missed an opportunity back in 2004 to advocate the confiscation of home builders' profits to help low-income renters buy their own McMansions. Of course, profits at Lennar, Centex, and Toll Brothers aren't what they used to be, thanks to the housing bust. And if oil prices drop, neither will those at ExxonMobil or Chevron. And if the economy sinks, Google's bottom line won't look so healthy, either.

The thing, though, is that these targeted taxes don't have a great track record. Look at what happened when oil companies were hit with the windfall profit tax that President Carter signed into law in 1980. According to a report by the Congressional Research Service, as recently unearthed by the Tax Foundation, the windfall profits tax–a real bear to administer–had two nasty side effects: 1) It didn't raise as much money as forecast. Instead of raising $320 billion between 1980 and 1989, it raised only about $40 billion; 2) the CRS determined that the windfall profits tax had the effect of decreasing domestic production by 3 to 6 percent. So the United States had to import more oil than it otherwise would have.

And that's the big worry. Today's earnings are tomorrow's investments, both in exploiting hard-to-reach oil reserves and in alternative fuels. And in some cases, today's earnings are what allow companies to make it through the lean times. Confiscating profits is hardly a pain-free way to finance new government spending.

Congress may already be undercutting Clinton's plan. She views that "strategic energy fund" as payback from companies that have been benefiting from government subsidies. But the Democrats in Congress are already stripping out those subsidies as a way of paying for promotion of renewable fuels under new pay-as-you-go budget rules.

Adam Smith's "Invisible Hand" works in mysterious ways....

Tuesday, February 13, 2007


Entertainment and Storage meet in Beverly Hills!

It looks like CNN's Larry King and his wife are purchasing the President of Network Appliance Tom Mendoza's House.

By Ben Casselman
From
The Wall Street Journal Online

Talk-show host Larry King and his wife, Shawn Southwick, have agreed to buy a Beverly Hills home listed for just under $12 million.

The five-bedroom, Tuscan-style home was on the market less than two weeks before the couple agreed to buy it. The almost 10,000-square-foot house, built in 1989, has a skylit foyer and a master suite with a sitting room and twin bathrooms. There is also a two-bedroom guest house and a pool. Local agents identified Mr. King as the buyer. Listing agent Stephen Resnick of Westside Estate Agency confirmed that a contract has been signed, with the deal set to close later this month.

Mr. Resnick wouldn't name the sellers but said they spent two years renovating the house. Records show the sellers are Thomas and Kathy Mendoza, who bought the home three years ago. Thomas Mendoza is president of Network Appliance, a Sunnyvale, Calif., data-storage company.

The King and Mendoza families declined to comment. Mr. King, 73 years old, is the longtime host of the CNN talk show "Larry King Live." Ms. Southwick, 47, is a former host of the television show "Hollywood Insider."

It would make an interesting interview on the Larry King show for Tom Mendoza to spend an hour answering questions on his company's technology, future vision, and commitment to long term relationships for resellers, partners and customers.

Inquiring minds are wondering if Larry King will get transferable licenses with the purchase?

Monday, February 12, 2007

Andrew Carnegie
Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results.


Is NetApp going to stand by its reseller partners for the long term?

Network Appliance chief executive officer Dan Warmenhoven warned partners they need to sell more of the company's software and services or risk "being left behind" as the company grows.

In in keynote address at the company's annual partner summit held this week in San Francisco told partners that they need to increase their commitment to NetApp in order to continue to work with the company.

"You have to lead with NetApp," Warmenhoven said. "If you walk into an account with a NetApp relationship and are not leading with NetApp, then maybe that relationship will not be there in the future."


Whatever happened to the Hard Deck mentioned in CRN for resellers that got so much press about two years ago?

Network Appliance is defining which customers can and cannot be approached by its direct-sales reps, CRN has learned.

Under the forthcoming Hard Deck program, the Sunnyvale, Calif.-based vendor of SAN and NAS products will work with its channel managers and district sales managers to determine which customers throughout North America will be named accounts targeted mainly by direct sales and which will be channel-exclusive, said Leonard Iventosch, NetApp's vice president of Americas channel sales.

Or this article...

Leonard began by telling me that he has been at NetApp for about five years. That means he came in at just about the same time that many channel partners were getting screwed by the company by having their primo accounts reassigned to direct-sales androids at the mother company. It is unclear whether Leonard had anything to do with this.

He went on to say that Hard Deck was conceived as a good thing for channels. He went to great pains to say that the line being drawn between 'big accounts and all the rest' was not intended to create a no-fly zone for channel guys, but for NetApp guys. This is what was unclear in press accounts of the program – so unclear in fact that several resellers e-mailed me to complain about the program.

If you are a channel guy, everything below the Hard Deck is yours, Leonard said. NetApp direct-sales androids don't get any commission from this business unless it is filed through a channel partner.