Thursday, May 22, 2008

NetApp to increase Direct Sales Force

There is an announcement today that NetApp plans to increase its direct sales force.

Sunnyvale, Calif.-based NetApp (Nasdaq: NTAP), a data storage company that employs roughly 700 in the Triangle, plans on boosting its sales force by hundreds of workers in the next few months. The move is important so that NetApp can pick up market share, CEO Dan Warmenhoven told analysts in a late Wednesday conference call.

A bigger direct sales force would seem to create an area of potential conflict between NetApp's inside sales force and their channel efforts . Perceptions of the channel can be different depending on where you stand, Somehow I don't think a bigger direct sales force will be good for channel sales even though the channel seems to do well for NetApp.

About 64 percent of revenue in the period came from the channel, compared to about 60 percent last year. "We were hoping to hit the two-thirds mark, but didn't quite make it," said Dan Warmenhoven, chairman and CEO of NetApp, of the growth in channel revenue.

And how will the new Direct sales force work with their OEM? IBM may not be thrilled...

This rollout of fresh support for NetApp products comes amid some buzz among Wall Street analysts of increasing channel conflict between the two companies. "We are hearing of some increased pressures in the direct sales vs. IBM channel side of the business," wrote Wachovia analysts Aaron Rakers, in an email to clients.

Storage consumers should have more parties to negotiate prices with as the NetApp sales department grows. I wonder if that will lessen conflict any?

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