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.

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