Friday, June 29, 2007

Many years ago when we were a succesful reseller and RSP for NetApp we introduced a large brokerage firm and mutual fund company to NetApp's technology. We made an appointment with the NetApp folks in Sunnyvale and the District Representative from the DC area met us in Sunnyvale at the new NetApp buildings & conference center. The CTO from the company we were introducing to the new technology wanted a strategic partner, and at the time NetApp was the new kid on the block. So after the meetings in California, it still took many months of missionary sales work to show the customer that NAS was a really good way to go for his storage, and Zerowait was going to be around for a long time supporting the equipment.

As time went by the customer was getting more interested in trying and buying the equipment and as it was a very big customer, we had a bunch of mutual meetings with the customer and our engineers and some NetApp folks.

As the deal got very close to closing, NetApp decided that we could not sell in that area anymore and took the customer direct. This customer is now one of NetApp's largest eastern customers and NetApp gives them very good service and from what I understand astonishingly good price discounts.

Like so many other customers we introduced to the technology they fell in love with NetApp's simplicity, but as time has gone by this cusotmer, like so many others, is wondering if there may be a way of extending their product life cycles beyond what the vendor sales force requires to keep their sales numbers up.

And so we are chatting with them again, 6 years isn't so long in the life of a growing business.

Thursday, June 28, 2007

NetApp's former partner Dell is going to 'Clobber pricey NetApp'

It looks like Dell is about to try to get even with NetApp for past transgressions.

Dell: 'We'll clobber pricey NetApp with new iSCSI kit'
By Austin Modine in San Francisco
28 Jun 2007 02:30

Asthana said Dell will go after the big boys by reducing operational costs and making storage products that are customer installable and maintainable rather than services engagement needy. Dell certainly isn't the only company gunning after SMBs with all-in-one, multi-protocol boxes, but Asthana feels Dell will set itself apart by crafting cheaper storage that doesn't skimp on features.

"Some of our competitors are making cheaper storage devices, but they're not more capable," said Asthana. "They won't do it because they don't want to cannibalize their upper tier storage."


I wonder how long is a strategic timeframe in these companies' minds? This is from 1998...


WHEREAS, the parties wish to form a strategic alliance whereby Dell will
have the following rights on the terms and under the conditions set forth in
this Agreement: (i) to purchase and distribute on an OEM basis certain NetApp
filer products (pursuant to which OEM arrangement Dell would add to NetApp's
filer products an exterior casing of Dell's design, Dell brand markings, disk
drives (mass storage), memory (other than base memory) and NIC cards; (ii) to
have NetApp port NetApp's filer operating system and related software for
operation on Dell manufactured platforms and to distribute such Dell platforms
with such ported NetApp's filer operating system and related software; and (iii)
to manufacture filer products based on NetApp's hardware designs and
incorporating existing (i.e., non-ported) NetApp filer operating system and
related software.

Tuesday, June 26, 2007

Has Looney Tunes moved to Java Drive in Silly Con Valley?

Yesterday evening I was discussing NetApp's cartoon customer characterizations with a couple of our mutual customers. We provide monitoring, maintenance and management of these customers filers after they buy them from NetApp. What really pissed these folks off was the way NetApp is taking away Command Line Interface, and then boasting about it, as an idea concocted by their cartoon characters. I had missed this when I read the article yesterday, because I was laughing so hard, but the engineer pointed it our to me while we were drinking a beer at Iron Hill Brewery.

Personas have led to replacing of the command line interface for the products (which required programming skills) to a ‘drag-n-drop’ one, so even a user who does not understand the nuances of the products can use it, he says.
I wonder if the NetApp product manager that come up with this is named "bullwinkle' and has a degree from 'Whatsamtta U' ?


I know that our engineers think that taking away NetApp's CLI seems like a pretty boneheaded idea . We think our storage customers are pretty smart folks, which is why we talk to them and visit them as often as we can. Customers want the most value they can get for their storage dollar. Can a company as large as NetApp really be this out of touch with its customers?

Which cartoon character came up with the idea of handicapping their new FAS2020 with only 1TB of memory?

You just can't make this stuff up!

Monday, June 25, 2007

NetApp - whatever happened to simple maintenance, management and cost control?

Many of our NetApp service and support customers come to us because they have heard from coworkers and peers that Zerowait can help them control their maintenance costs, and then they learn about our remote management and other services that can help them control their out of control maintenance and upgrade costs for their NetApp equipment.

Recently, I heard from a customer in NYC that their NetApp SE was strongly suggesting they upgrade to a newer system. As I asked some questions I found out that their current hardware was not maxed out in anyway and could easily handle more, users, disks, and shelves. The customer learned that the SE was truly a Sales Engineer. Sales is the first word in that title, and they are not looking out for the customer's long term interest, but instead NetApp SE's are trying to sell you more equipment to boost their personal bonuses.

Can a vendor's Sales Engineer ever put the customer first? It is an interesting question that needs to be asked. I think the answer is that an independent maintenance organization is the only way for a NetApp customer to get the most value in performance and long term usage out of his equipment. NetApp sells boxes and software, not efficiency.

Instead of asking customers what is in the customers interest and building products for them, NetApp has embarked on building Avatars of their perfect customers, so that they can build perfect products for them.

One way of developing better products is by tuning into clients’ data management woes, understanding requirements, and shaping products to reflect needs. However, the knowledge that after-sales and marketing folks get from the field does not always permeate to the engineers/developers.

And that is why the company created Mike Raja and Joe and four other personas. Joe could be a DBA (database administrator)/Chief Information Officer/any other user of NetApp’s data management products.

“This is a new approach that we are trying. Innovation is important and these personas for users of our products help continually innovate,” Louis H. Selincourt, Vice-President, SMAI & Offshore Operations, told eWorld over lunch at the company’s headquarters in Sunnyvale, California, recently.

The idea came from the book, “The Lunatics Are Running The Asylum” penned by Alan Cooper, whose company makes software more user-friendly.

“Personas create a consistent ID of our users, so we can discuss them across the company while brainstorming,” says Selincourt.


So now NetApp has created cartoon characters to act as their perfect customers... You just can't make this stuff up!

At Zerowait we listen to real customers, and their real problems, and provide real solutions. We invest our research and development funds in creating better ways to help our customers, while NetApp is investing in cartoon characters to help their customers.

Friday, June 22, 2007

Testimony in the Brocade options scandal brings to light a rather interesting perspective by Silicon Valley Corporate management.

On the third day of the trial that began this week, a witness told the jury that Reyes told her during a private conversation that the back-dating of stock options in order to increase their value was "not illegal if you don't get caught," according to reports.

That statement entirely contradicted Reyes' defense lawyers' opening argument that neither the ex-chief nor anybody else at the company knowingly committed securities fraud.

The witness who claimed that Reyes had told her that only those that get caught are guilty was June Weaver, who worked in Brocade's HR department. Reyes' lawyers first attempted to block her testimony by arguing that it had only been partially revealed to them during evidence discovery, and that Weaver could not remember exactly when Reyes made the statement.

But Weaver was allowed to testify, and told the court that she remembered what Reyes said "very well," according to reports.


Our View

The US government must be admired for taking such a strong stand to protect the efficient and fair operation of the financial mechanisms that underpin the US economy.

But the anti-stock option fraud campaign is already facing the same sort of over-kill criticism than was generated by the Sarbanes-Oxley response to the WorldCom and Enron accounting scandals.

One Silicon Valley chief who has publicly condemned the DoJ's campaign as a "witch hunt" is Network Appliance CEO Dan Warmenhoven, who last year said that is doing more to harm than good to investor confidence.

Nevertheless a conviction of Reyes may encourage the DoJ to make some more examples of Silicon Valley chiefs. At least a few will be watching this trial with more than a little concern.


It is worth reading the whole article, but clearly there was something funny going on. It certainly doesn't look like the management had the long term interests of their customers, investors, or employees in mind. Are these statements representative of how the management was trying to build the company, or just on how they were trying to cash in quickly for themselves?

Thursday, June 21, 2007

What happened to selling the 'Magic' of NetApp? It seems they are resorting to competing only on price now. Somehow - I don't think NetApp can compete in the commodity storage business, they have a high cost support and maintenance model.Their sales strategy seems broken, it looks like they are fighting for the high margin business with EMC , and also fighting for the low margin business now with companies that are built to sell commodity priced equipment. Salesman go where the commission dollars are. Low margin typically means low commission. And saleman always work harder for a good commission.

"The mid-tier has a need for packages with everything bundled, including disaster recovery, backup and recovery, and repositioning," Chalaka said. "A lot of competitors are starting to offer this. We have been offering it ala cart, but it's been complex for resellers. Also, our prices have been higher than the competition's."

Now NetApp is fighting back with bundles starting at about $28,000, Chalaka said. These bundles are based on the FAS250, FAS270C, and FAS3020 iSCSI arrays, and include the controller, expansion shelf, and minimum of 2 Tbytes of capacity on the hardware side, Chalaka said.

The bundles represent a list price drop for NetApp of between 16 percent and 47 percent from their original prices, bringing the bundle prices to 10 percent to 20 percent below the competition, Chalaka said.


Can a company used to high margin sales and expensive technical support compete in the commodity storage business? Most companies are not succesful when they try to drastically switch their sales model. Maybe CDW can sell a bunch of storevaults at a low margin and NetApp can make it up on volume? Companies have tried this tactic in the past.

Only time will tell.

Wednesday, June 20, 2007

"To see what is in front of one's nose needs a constant struggle." George Orwell .
If you think your data is important and a corporate asset, defending your network is as important as the security of your storage.

However the firewall folks and anti spam folks don't seem to be working with the data storage encryption folks, I wonder why that is? Instead of creating a secure unified network and storage infrastructure we seem to be creating environments made up of a hodgepodge of different solutions that have not been tested together. Every company tries to put together a solution based on marketing information and sales presentations that neglect to mention that each vendor has their own security patches that you have to purchase and update regularly. Every implementation ends up unique because no two networks have the same releases of software on all of their defensive hardware and software. And no one has ever tested all of the releases in your situation before.

The DoD is increasing its budget and still they admit they are insecure....


The U.S. Department of Defense has noted the increasing number of hackers trying, and succeeding, to get into military networks. This sort of thing has been going on since the 1980s, when a gang of West German hackers, hired by the Soviet secret police (KGB) were caught inside Department of Defense networks, stealing classified data. But in the last few years, the hacker activity has accelerated. Currently, Department of Defense networks get probed six million times a day. Since last year there has been a 46 percent increase in attacks on Department of Defense web sites. There has been 28 percent more email based attacks. These are increasingly targeted at specific types of military users, or even individuals. There were more than twice as many attempts to insert viruses, worms and Trojan horse software on military systems. The attackers are looking for information, or secret control of, or at least access, to military systems. Some of the attacks have been massive and well organized. There have been at least four of these major attacks in the last year, hitting targets like the National Defense University, the Naval War College and Fort Hood. Each of these cost $20-30 million to clean up after.



What can a business do to defend itself? What business has the budget of the Defense department? Network Security, Data Security, with limited resources you are vulnerable to atttack, and with almost unlimited resources the DoD is still vulnerable to attack. So what vulnerability do you try to solve today with your available resources?

Monday, June 18, 2007

Data Points that may mean something:

1) One of our NetApp support customers wrote me this week that he can get a FAS3020 head with 3 years support from NetApp for $30,000.00 with ISCSI and NFS licenses. I found that interesting. Searching the internet the best GSA price I see is:
132-8
FAS3020HA-BNDL2-R5
FAS3020HA CFO,ISCSI,CIFS,NFS,SRESTORE,R5
$35,905.00


2) I learned this weekend that the NetApp FAS3020 will be End Of Lifed (EOL) by the end of the year.

3) I have heard that the new FAS2020 has only 1 Gig of memory. That is odd, why not put more memory on the system NetApp?

4) I also heard good things about Equallogic last week, sounds like NetApp is keeping an eye on them, especially in the PACS area. Maybe the healthcare industry is waking up to the fact that a Seagate drive is pretty reliable and NetApp charges too much for them?

Thursday, June 14, 2007

Holographic storage is it the future of storage? The Economist has an article on it this week that is worth reading.

Computing: After years of development, holographic data-storage systems are finally ready to go on sale

Gillian Blease

THE digital age has turned people and companies into data hoarders. Home computers bulge with music tracks, photographs, videos and e-mails; and government regulations and industry trends mean that companies, financial institutions and medical organisations are piling up information on an unprecedented scale. For really large amounts of data, storage capacity is no longer measured in gigabytes, terabytes or petabytes, but rather by the size of the warehouses needed for the discs, cartridges or tapes that carry them.

But a new storage technology, which will go on sale in the next few weeks after years of development, can squeeze more onto a small disc or cartridge than ever before. With the potential to store hundreds of times more data on a disc than today's DVDs or even the latest high-capacity Blu-ray and HD-DVD discs, holographic storage is about to hit the market.

Just an illusion?

Mr Krishna maintains, however, that the “killer application” for the technology is nevertheless in mass storage for the corporate market. Quite apart from the fact that it takes years for consumer-electronics companies to agree and adopt new standards, there is simply more money to be made from selling to businesses, he says. Tellingly, as well as pushing the HVD format, Optware is also developing a holographic-storage system for corporate use that stores information on rectangular cards rather than discs.

But despite plans to launch products in early 2006, Optware has yet to produce anything. And some observers remain doubtful that holographic storage will be commercially viable any time soon. IBM, once a leader in the field, has decided to concentrate on improving existing magnetic-tape systems instead, says Matthias Kaiserswerth, director of IBM's Zurich Research Laboratory in Switzerland. InPhase's first drive will cost $18,000, and each 300-gigabyte cartridge will cost a further $180. Holographic-storage technology certainly works and has all kinds of potential uses. But until the prices come down, demand for this unusual new technology could be all too holographic in nature: apparently there, but upon closer inspection proving to be only a mirage.


I certainly would like to investigate the InPhase technology for some of our Fortune 100 customers.

Wednesday, June 13, 2007

NetApp's Warmenhoven is taking an interest in a former customer who has chosen an HP EVA solution, here is the email exchange from Toasters the mailing list for NetApp filer users.


From: Warmenhoven, Dan (Dan.Warmenhoven@netapp.com)
Date: Tue Jun 12 2007 - 20:36:01 EDT


Hi Paul,

I am very sorry that you are no longer a NetApp customer. If you
wouldn't mind sharing with me, what vendor / product solution did you
choose to replace your F740, and why did you choose that solution over
NetApp (especially since it sounds like you were happy with both the
product and the support).

Thanks

Dan

Dan Warmenhoven
Chief Executive Officer

Network Appliance, Inc.
495 E. Java Drive
Sunnyvale, CA 94089
Phone (408) 822-6600
Fax (408) 822-6601


________________________________

From: XXX, Paul [mailto:XXX@###.com]
Sent: Tuesday, June 12, 2007 12:03 PM
To: NetApps list server
Subject: Farewell all!

Well, it is with deep regret that I bid all you toasters a fond
farewell. I'd like to say that I appreciate all the help during the
time that our 740 served us for about 8 years. The 740 was a fine
device and NetApps support was top-notch. After a very lengthy
discussion over several months, we went to another storage solution.
By the way, if anyone is interested in the 740 maxxed at 1TB raw and
includes a spares kit with motherboard and misc other parts that were
never used, send me an email. It is located in the Southern Indiana
area. First come, first serve. You have to arrange for transport. If
I don't hear anything from anyone by the end of the week, it's going to
the recycler. Thanks again to all.


If people concentrated on the really important things in life, there'd
be a shortage of fishing poles. - Doug Larson

________________________________

XXX, A+, CA, CCA, CET, MCSE

Systems Administrator
Shoe Carnival Inc.
(###)######
XXX@###.com



When I corresponded with the former NetApp customer yesterday I found that one of the main reasons for his departure from NetApp's products was the cost of maintenance and support. Like so many NetApp customers he was looking for an affordable alternative to NetApp's maintenance and upgrade policies. His email's last sentence to me yesterday ended with "Maintenance costs played into it as well."

Tuesday, June 12, 2007

How long can IBM stay in a low profit business sector? .

NetApp is very proud of its reseller relationship with IBM. And many of our customers have been able to get better deals by getting quotes on identical equipment from both IBM and NetApp. But I always figured it was going to be hard for IBM to make money on reselling NetApp equipment. Therefore when I saw this article in Today's Wall Street Journal I was not very surprised.


The software deals represent a fundamental reality at IBM: Big Blue's giant services arm has narrow profit margins, and its core hardware unit is struggling with weak sales growth. But margins in software are fat, and, boosted by deals, sales are growing well.


Will IBM continue to resell NetApp equipment even though it has narrow margins on the resale and service of the equipment? Will they be able to force concessions out of NetApp to get their margins higher? If IBM is able to get bigger margins out of NetApp will the result be lower profits for NetApp?

Interesting times.

Monday, June 11, 2007

We learn from history that we learn nothing from history. George Bernard Shaw....

I was surprised to see that VarBusiness has learned to read NetApp's history of treatment of the channel and are willing to discuss it in an article.


Why NetApp's Growth Slowed
Customers are cutting back; NetApp lacks broad channel strategy

VARBusiness logo By Robert C. DeMarzo, VARBusiness
12:00 AM EDT Mon. Jun. 11, 2007
From the June 11, 2007 issue of VARBusiness

Is the bloom off the Network Appliance rose? That's the question that came to mind as I watched NetApp's stock plummet more than 15 percent, or nearly $6 a share, the day after it disappointed investors with news of a revenue downturn. So the darling of Wall Street, the company whose hand had grown so hot in storage management that its CEO should have changed his name from Warmenhoven to Hotenhoven, is seemingly cooling down.
The man in charge of NetApp's channel, Leonard Iventosch, had a decidedly unconventional view of how to populate a partner base to sustain the company's growth. Whether driven by Iventosch, his superiors or the NetApp culture, which all clearly struggled with the channel, what the company wound up with is a small, loyal cadre of VARs rather than the army it now needs to drive its growth forward. All of its competitors are much further along in their channel development, having realized long ago that they needed to diversify sales efforts, drive down cost of sales and reach new markets.

The man in charge of NetApp's channel, Leonard Iventosch, had a decidedly unconventional view of how to populate a partner base to sustain the company's growth. Whether driven by Iventosch, his superiors or the NetApp culture, which all clearly struggled with the channel, what the company wound up with is a small, loyal cadre of VARs rather than the army it now needs to drive its growth forward. All of its competitors are much further along in their channel development, having realized long ago that they needed to diversify sales efforts, drive down cost of sales and reach new markets.


It seems that some folks are learning from history, NetApp has squandered its relationships with the channel over the last ten years, it is hard to build a loyal channel with their record. And perhaps George Bernard Shaw was wrong - Business people do learn from history when it hits their wallets.

Wednesday, June 06, 2007

If you can't describe what you are doing as a process, you don't know what you are doing. - W. Edwards Deming .

In my college years working on my business degree I studied production and inventory control methods. A few of the courses, and some of the better professors, took the time to explain that Deming was right about quality, but quality is also about relationships and how you deal with customers, vendors and other business partners. I learned in college and it has been reinforced in my almost 20 years in business that developing a process for quality control of a product is a lot easier than developing a process that helps to reinforce our many faceted business relationships.

What we learned was that Deming understood that quality was not just statistical sampling, it was also the understanding of the how and why you build your product or deliver your service, and how you maintain that diligence over time. Creating long term customer loyalty for your company and your product or service is not going to be based on price. In business long term relationship are the key ingredient to building a strong company, and it costs time and money to develop these strong relationships. So when companies stress that they are putting on a sales promotion, or going to beat out the competition for more business I have to ask myself " is their new business going to be profitable over the long term, or just going to push up their units sold numbers?" If the sales are not profitable for the vendor, eventually business forces will force the vendor to provide less service and support per unit.

Deming taught that “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.” This model seems to be working for Zerowait.


Tuesday, June 05, 2007

Keep your friends close, and your enemies closer. Sun-Tzu

I saw a headline today that made me think that NetApp is really starting to fear the second level storage companies who have a lower cost solution for reliable high availability storage.

3PAR(R) and NetApp(R) Form Joint Interoperability and Support Agreement


Joint customers have identified the dramatic reduction in storage capacity and management costs as the key benefit of the 3PAR and NetApp solution. Traditional datacenter infrastructures often consist of proliferating silos of block and file capacity. With this solution, both capacities can be reduced significantly through consolidation onto a single, massively scalable, tiered-storage pool. This storage pool is based on the 3PAR InServ Storage Server, with direct block access provided by 3PAR and file level access provided by the NetApp V-Series.

NetApp makes a substantial amount of its profits from selling Seagate hard disks and Xyratex storage shelves, obviously if NetApp's salesman are going to give up the sales of disk and shelves they are going to lose some commission. And most sales folks don't like to give up their commission to a competitors products. So how will NetApp - which is a hardware sales company going to make up the lost sales opportunities from this deal for its salesman?

Will this be a good opportunity for the 3PAR sales force? It gives them some gravitas, but how can working with a competitor be good for either sales force? A look back will show that NetApp does not play well with past partner companies like Dell, Hitachi and so many others. So it looks like they are taking Sun Tzu's advice and keeping an eye on their enemy.

Monday, June 04, 2007

If you want to understand today, you have to search yesterday. ~Pearl Buck

NetApp has recently put on a push to engage the channel to help it ramp up NetApp's anemic sales numbers. In the past, NetApp has used the channel as a missionary sales force and then abruptly pulled the best accounts for themselves, leaving the channel with the sales & market development costs, while taking the profits directly. Eventually the good storage channel companies get wise to this tactic, and don't do business with folks engaged in this type of strategy.


In his new role, Morris is responsible for all NetApp channel relationships and sales strategies across Australia and New Zealand, including increasing the level of channel engagement, growing the NetApp Platinum Partner portfolio and broadening the business though the NetApp key distributor, Avnet. He is also charged with the task of managing and growing strategic partnerships with IBM and major systems integrators.

As NetApp ramps up its efforts to make friends with the storage channel just remember to read your history. Google makes it all so easy.

Friday, June 01, 2007

What good can come out of an Options probe? Can a company where the Executives are focused on short term personal gain build products that have long term value?

Backdating Fine May Set Model
Brocade Is the First to Pay
Penalty in Options Probe;
SEC Debated Punishment
By KARA SCANNELL
May 31, 2007; Page A3

WASHINGTON -- Brocade Communications Systems Inc. agreed to pay a $7 million penalty to settle allegations it improperly issued stock-option grants, making it the first company to pay a fine in connection with the backdating scandal, according to people familiar with the matter.



It seems to me that the stakeholders in this settlement are being hurt in a few ways.
* The executives of companies in this scandal have squandered their 'trust' realtionship with their employees in this effort to pad their own wallets.
* Companies that lose their employees and customers trust end up hurting the stockholders, because it becomes harder to sell their 'value' to their customers when there is a taint of scandal. A harder sale is a less profitable sale, and it is hard to sell when your executives may be crooks.
* Employees may exhibit discomfort when working with customers who ask about the scandal and what the long term effect on their company & the executive staff might be. Are the executives going to be forced out? What is the transition plan?

As a consumer of technology products, I prefer to deal with companies and executives that take a long term view of their company's and products' value. Why should we trust that companies and executives that focus on short term personal gains will create products and support that provide long term value and return on investment? If corporate executives are looking at short term personal profits, will they be concerned with your long range plans? Options scandals have the taint of short term fast buck thinking, not long term value.