Friday, February 29, 2008
Chinese trade with Europe is about to be revolutionised by the rebirth of the old overland silk route - this time via rail. An alliance of rail operators from the Pacific to the Baltic have just completed a trial run, moving cargo from China to the EU in just 15 days - under half the time it takes to ship containers. The first train, carrying electrical goods, clothes and ceramics from Beijing, arrived in Hamburg late last week, five days ahead of schedule.
Moving heavy inventory around the world is expensive, Fed Ex and UPS do a great job for us, but sometimes we move a lot of heavy equipment to different locations, and it can get complicated. The company that figures out how to get the Containers or Piggy Back cars from this train directly to the European docks with a Roll on Roll off solution, and then onto a fast freight ship to the USA or Canadian East Coast rail lines is going to make a fortune.
It will inevitably happen in one way or another, because time is money.
Tuesday, February 26, 2008
"It has been my experience" Ervin offered privately, "that the madam of a whorehouse is seldom a virgin"
When the folks at the WSJ quote Gartner about companies preparing to tighten their belts on IT spending it piques my interest.
Gartner yesterday advised clients to cut their tech budgets – even if they haven’t been told to do so by their CEOs. In retrospect, the move seems inevitable. Research companies have been tripping over themselves to release forecasts that show slowing tech spending. Last week, we saw our first forecast that showed a spending decline. That money has to come from somewhere, or, in this case, has to not come from somewhere. The budget-cutting advisory is either the mathematical corollary to a spending slowdown or a self-fulfilling prophecy. In a press release, Gartner gave businesses six tips on how to make the cost cutting go smoothly:
1. Start now. Don’t wait for evidence of a recession to show up on your bottom line.
2. Put the best people you have on the cost-cutting team, and don’t let them resume their regular duties until the new budget is in place. Tie year-end bonuses to how much they save.
3. Don’t second guess earlier decisions. No one project is to blame for the current situation.
4. Get an auditor to make sure the cost cutting is reflected in the overall business’s budget.
5. Share your results with the rest of the company on a weekly basis. Cost cutting is an act of necessity; people want to know that you’re making progress.
6. Have the legal department help you figure out how to get out of onerous contracts.
So how does this relate to Zerowait's business? Our business has been growing very steadily for the last few months as companies look for ways to cut their IT and specifically storage costs while retaining highly trained staff. Clearly the CEO's CFO's , CTO's and CIO's of the world are now preparing for harder times on the way. To stay within tighter budgets a decision may have to be made between staff and hardware support costs, but the C level executive's all know that storage and storage requirements will continue to grow. Given the recessionary times, How would that Madam in Sam Ervin's quote keep her business running? Good staff is hard to replace, would she cut back on building maintenance costs and marketing expenses and keep her staff ? She certainly knows what it takes to produce revenues : ) .
Thursday, February 21, 2008
NBER has recently published a paper which is very interesting and clearly states some of the problems that we are facing .
Implicit contracts do not necessarily contemplate systemic problems, which may characterize the subprime crisis. There have been at least ten banking panics in U.S. history, but the last one, during the Great Depression, is a dim memory for most people. A banking panic occurred when depositors at banks had reason to believe that their bank held assets of possibly lower value than they had previously believed. Banking panics tended to be a peculiarly American phenomenon because the United States had many banks (because of branching restrictions), resulting in less diversified portfolios than might otherwise have been the case.
Banking panics are not irrational, as Charles Calomiris and I show 9. Rather, they are rooted in a lack of information. Panics have tended to happen near business cycle peaks; with a recession coming on, there would indeed be some loans that would not be repaid 10. Depositors would go to their banks and demand their cash back, because the value of cash is easily determined, unlike the value of bank deposits. But the banking system could not honor these demands, since their loans are illiquid, so redemption was suspended. In fact, suspension was usually illegal, but was tolerated during panics11. The illiquidity of assets, and resulting plummeting prices should these assets be sold, meant that another solution needed to be found."
The illiquidity does affect the storage business - because enterprise storage is expensive when new capital is costly. NetApp's sales declines may be a leading indicator from the credit contraction in banking as Reuters says:
Chief Executive Dan Warmenhoven said weaker orders by U.S. financial services clients stung by the credit and mortgage crisis had spread overseas, with large banks including France's Societe Generale (SOGN.PA: Quote, Profile, Research) cutting back on technology spending. Banks are among NetApp's largest customers.
"We are less concentrated now, but the problem has spread," Warmenhoven told Reuters in an interview after company on Wednesday reported fiscal third- quarter results.
"They're squeezing down all their expense structure internally," Warmenhoven added. Technology budgets "are on the table."
NetApp, based in Sunnyvale, California, plans to add jobs in marketing and sales to boost its market share in fast-growing industries such as telecommunications and energy and lessen dependence on banks, Warmenhoven said.
"The strategy going forward is to expand broadly," he said.
Most folks understand that storage is a horizontal business, but the fear of recession and credit crunch is also horizontal - it affects all business sectors that store information. Therefore growth of new storage products into other sectors which NetApp hopes for may be constrained by broad based economic fears.
Efficient storage management and extended service life are essential ways to maintain staff and infrastructure if we are in a worsening credit and business cycle. Some folks we work with say our business of maintenance, management and monitoring is countercyclical, which may explain one of many reasons that we are growing so quickly.
We are living in interesting times.
Monday, February 18, 2008
When NetApp came out with their separate Storevault division a couple of years ago, I thought that it was going to be doomed to failure. How could NetApp concentrate its efforts on two different markets? It just did not make any sense. Respected bloggers like Ben Rockwood thought it was an odd choice also...
StoreVault is to NetApp as LinkSys is to Cisco. NetApp wants this business to be entirely seperate and entirely self-sustaining. Thats why they put up so many brick walls. The diffrence of course is that LinkSys product sells at Fry's for $100... StoreVault isn't expensive but you don't throw $10,000 at a storage solution your unsure about especially when it has a non-refundable policy.
If anyone from StoreVault is reading this... help me help you! Competing against yourselves is fruitless and avoidable.
But NetApp thought they could do it.
June 26, 2006
StoreVault: Storage for Small Businesses
NetApp has created a new division, called StoreVault, to provide storage systems for small and medium businesses (SMBs). The S500 is our first StoreVault system. It's based on the same Data ONTAP software that we use in our enterprise systems, but with a management interface optimized for SMBs, including simple wizards for the most common tasks. (Pricing starts around $5,000. Maximum capacity 6 TB. Supports iSCSI, Fibre Channel SAN, CIFS and NFS, as well as snapshots and double protecting RAID.)
One challenge of building an SMB product in a company like NetApp is that we focus so much on the requirements of giant enterprise customers, that it would be easy for us to get confused about the needs of small and mid-sized companies. Mid-sized businesses aren't just stripped down versions of big enterprises. They have their own separate requirements, and simply creating a stripped down version of the standard enterprise solution isn't good enough. Our CTO calls it "enterprise disease" when people who have spent too much time focusing on giant customers try to design products for smaller ones. We created a separate StoreVault division in part to protect our SMB team against enterprise disease.
Perhaps the market has changed and now it looks like NetApp to allow its SMB resellers to sell its high end Filers against IBM and NetApp sales folks?
February 14, 2008
NetApp Moves StoreVault Back Into Mothership
NetApp will widen the audience for the successful SMB system
By Mary Jander, February 14, 2008, 1:30 PM
Network Appliance is eliminating the boundaries that kept its StoreVault division a distinct entity inside the company.
"Today, StoreVault is focused exclusively on sales to small and medium businesses. We see a bigger opportunity to expand the target for the StoreVault platforms into remote and branch offices as an extension of our core FAS product line," said Jay Kidd, chief marketing officer at NetApp. "Coupled with our FAS 2000 product, this now gives our NetApp and our channel partners a broader entry product line to sell."
So this seems to suggest that CDW will now also sell filers.
StoreVault, a Network Appliance Inc. division, has inked a deal with CDW Corporation to sell its StoreVault S500 storage product to customers that buy through Web site and catalog advertising, but StoreVault resellers are concerned that the new deal may affect their selling strategy.
Under the terms of the agreement, CDW will add a new selling component to the StoreVault S500, which will entail advertising the product online as well as through its catalog. Customers can buy directly from CDW, which will not publish the street price of the product in ads to protect StoreVault's 400 other resellers' ability to charge in relation to their integration work. Instead pricing is available directly from CDW.
A clear plan requires teamwork and vision, how is this muddled sales and marketing plan for storevault easily explained to NetApp's resellers, customers or employees? NetApp has at least one employee who sees the value of clarity in corporate vision. Rusty Walther writes. ...
(1) Do you understand the vision and strategy of both our company and department, and do you agree with them?
Employees that fundamentally disagree with, or are confused by the strategic direction of a company or team are very easy to recruit away, since the “roots” they need to stay grounded simply don’t exist.
Can he explain strategic direction as exemplified by the storevault roadmap to the rest of us?
Wednesday, February 13, 2008
My next stop was at a government agency where we talked about network engineering concepts and how to improve storage reporting and create even better trending information than our current exception reporter program is now capable of. Our inventive customers are coming up with some nifty ideas which we will be incorporating into the next version of our monitoring program. Customers always appreciate when we incorporate their ideas into our systems which inevitably makes our service and support better for them. We deliver the services that our customers tell us they need at an affordable price. It makes everyone happy!
My final visit was with a customer that Zerowait introduced to NetApp back in the summer of 2000. Although we introduced the customer to NetApp when we were NetApp resellers and registered service providers , NetApp took the customer direct soon after Zerowait had done the missionary sales work and hosted the customer at NetApp's Sunnyvale conference center. High Availability Storage remains a small business, reputation is important since everyone knows everyone. We have been working with NetApp equipment since 1998, so it is no surprise that Zerowait has a reputation for long term service and support, and we are working with this customer again after 7 years.
Quality service and support never goes out of style. Our customers understand our direction and dedication to the idea of providing long term affordable quality service and support. So even though the weather yesterday was frightful, causing the traffic to be ugly, I had a great day visiting our customers and friends.
Friday, February 08, 2008
I went to their website www.infiniti.com and ran through it and came up with a couple of close by dealers: Winner Infiniti in Newark, DE and JBA near Baltimore, MD. Since my belief is that it's a good idea to get a feel for the marketplace before making a purchase of this size, I sent the specification to both dealers and asked for quotes last week. Neither car dealer has provided me pricing yet. Winner won't even respond to emails or phone calls. Three JBA salespeople have called me, but none will provide me a price. Rachel at JBA told me she would get me a price, but could not get the color I wanted, since they didn't have it on the lot. I asked, "Does that mean you can't order it? People used to be able to order cars with different features?" According to Rachel I am unable to order a car from the factory that I would like. If we don't have it right here, you can't have it, is their motto, I guess. By the way she has not sent me a price yet either.
What happened to customer service? Why can't I order a car I want from Infiniti? What is so difficult about providing a price? We hear all the time from customers who are amazed at how quickly Zerowait comes back with a quote for them. They tell us it can take two weeks sometimes to get pricing out of other storage vendors. Has the inability to price items become passe`? Is Zerowait so unique? Is business so good that vendors can afford to just diss their customer quote requests?
I wonder why dealers can't provide a price quote immediately--for cars or storage. Right now, I wonder what the street price of a G35 is. Can you imagine if NetApp made it this hard to order a filer or parts. Wait-- they do! I wonder if Infiniti and NetApp have the same programming team working on their "Quoter" tools.
Wednesday, February 06, 2008
When the customer started their conversation with NetApp, a F760 with 1 TB of storage was a lot. Back then NetApp had a road map of how with head swaps they could cheaply and effectively continue to upgrade their systems and storage to grow with customers usage. Back in 1999 the road map seemed pretty reasonable: stay with NetApp and storage was an affordable toll road. But then NetApp changed from Alpha processors to Intel processors with the 800 series and they moved to BCS (520) drives from ZCS(512) drives and moved to the DS14 shelves. None of this had been on the public road map that NetApp showed their customers and upgrading suddenly had additional costs. NetApp told customers that 520 sectors was better and the DS14 shelves would be supported for quite a while. So upgrading sort of made sense. But it seemed the toll road had gotten more expensive suddenly, and the maintenance costs were higher too.
Things were going along pretty well for a while but then NetApp decided to change things up a bit and came out with the DS14 MK2 shelf, which had a wider slot in the disk carrier so customers could not use their DS14mk1 carriers in mk2 shelves. NetApp also decided about this time that 512 sector drives were good again, at least for Nearstore purposes. This left people wondering if they were still on the same road any more. While they were able to look at their newest road maps and see the newest things on the horizon, it seemed to some that the map held no way to get back home anymore. And there were a lot of folks out there who just wanted to keep their old equipment running on the old map.
Zerowait started getting more and more customers who liked the old maps: they were easy to understand and simple to maintain, and the repair parts were readily available from Zerowait.
This is the road map that we provided, a simple, safe road map of maintenance for your old equipment with a low fee and easy to understand helpful folks who were committed to making your trip enjoyable.
NetApp has just shuffled its executive suite, now that they are a big company their road maps are pretty extensive. I hope that they can still find their way to where they are going, because it seems that many of their customers have given up trying to follow the NetApp maps.
Friday, February 01, 2008
NetApp has been playing the same hand now and with the same players for a few years now. And while their technology was new it seemed they could play the hand and with bluffs and some discounting they were able to continue to grow. But it seems that since the Spinnaker purchase in 2002 they have been unable to significantly increase their ability to provide performance gains which are valuable to their customers. So they have been growing on their reputation more than on their abilities to increase performance.
NetApp acquired its clustered storage technology when it bought start-up Spinnaker in 2002. Back then the company said that it would complete the integration of Spinnaker's clustered file system into its mainstream product line by the end of 2006. The job still is not done, and only very recently the company was talking about completing the integration during 2009. If there are any more delays, customers may worry that NetApp's efforts to converge its clustered and non-clustered products have totally foundered.
As in poker, moving the executives to new seats should have no affect on the cards they are playing.
Georgens' new title is president and chief operating officer. In order for him to take that position, NetApp's former president Tom Mendoza has been moved sideways into the role of vice chairman. The company described that position as a newly created role, in which Mendoza will be 'chief customer advocate'.
Providing long term value to customers is what is required to keep a company growing. Slicing and dicing software feature sets, and dealing from the bottom of the deck in license transferability with customers seems to have made it harder to get customers to come back to the table for another hand at the NetApp poker table.