Wednesday, October 24, 2007

Is NetApp making deals this week , or digging a trench?

According to storagemojo NetApp is cutting deals to move units out the door and to kill Isilon while it is still vulnerable.

"There is a rumor that NetApp, seeking to strangle baby Isilon in its crib, is giving away product to win deals.
At $1/GB I might buy one
If true, this could reflect continued weakness in NetApp’s results, as noted by analyst Tom Curlin at RBC Capital Markets in late July. They’d be plumping up the top line at the expense of the bottom line."

At the same time as this is going on the CEO of Data Domain Inc., Frank Slootman seems to think that NetApp is still a Niche player in the storage marketplace. When asked to comment on NetApp by Glenn Hanus - Needham & Co. on their conference call this is what he said..

"Glenn Hanus - Needham & Co.
Anything you're willing to say on NetApp?
Frank Slootman
"NetApp is a very different animal in the sense that NetApp really competes in their own accounts. NetApp has some percentage obviously of the storage market, which is considerable, but NetApp is not a broad-based competitor. NetApp is a very, very strong competitor when you get into NetApp shops. When you get outside of NetApp shops, you rarely ever see them. That's very different for EMC. EMC has a very broad-based presence in the marketplace. Quantum tries to protect its installed base of tape devices and NetApp is trying to dig a moat around its install base of near store systems. That's summing up the dynamic that's going on out there"


So NetApp is cutting deals to kill competition and not doing very well at expanding out of its market niche. Is the "Moat" Slootman mentions to lock in NetApp customers or NetApp's competitors out of accounts? An analyst should be able to get to the bottom of this.

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