Wednesday, October 01, 2008

"How come NetApp charges so much?"

Yesterday morning a Purchasing Agent for a big company that we have been working with for many years asked us to review a quote that NetApp sent to them. The Purchasing Agent could not understand how come NetApp's prices were so high.

We were asked if we could provide the equipment and we told her that we could and our price for the equipment would save her about 40%-60% of what the NetApp quote was. Every Purchasing Agent knows that you need to have two suppliers to keep prices down. And Zerowait helps companies worldwide keep their NetApp equipment acquisition and maintenance costs down.

NetApp understands that they need two suppliers for their disk shelves and drives and is forcing Xyratex to accept a secondary supplier. NetApp is doing this to keep Xyratex's prices down. They are forcing their supplier to lower costs through competition.

According to the transcript of the recent Xyratex earning call, NetApp is looking for a secondary supplier of storage shelves.

"My true feeling is at least in the short to medium term NetApp and ourselves have been discussing for a long time their desire from a risk perspective to have a second supplier,so I think it’s driven by that but I think the fallout of it will be to see whether things can be done more cheaply in that way. And I guess to a degree Xyratex should invite that because to the extent that we can get product to our customers more cheaply while not increasing our own production capabilities but by looking to CMs to do more for us, then it should actually be positive for us as well if that is the case."

It is good to know that NetApp understands the reasons to have two sources for parts and services. And their executives validate the business model whereby NetApp customers invite Zerowait in to provide support for some NetApp systems within their storage architecture. Many times companies buy shelves of drives from Zerowait and we support the shelves we sold on a system and NetApp supports the shelves which it sold.

Whenever a company has all its eggs in one basket the purchaser and the supplier are tied together, and that is usually cause for mischief on the suppliers part.

If you are asking the question " Why does NetApp charge so much?" Call Zerowait. We have the the answer. Competitive quotes for NetApp equipment will make NetApp sharpen their pencils. Just like NetApp is causing Xyratex to do.

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