Wednesday, December 22, 2010

Mixed messages

Over the last week there have been some interesting articles on NetApp in the press. What drew my attention was the conflicting views in the articles. While the financial press seems to think there is a lot of growth potential in the company, the trade press has noticed that there seems to be a problem with the company's selection of acquisition targets.

Forbes
"NetApp can benefit in multiple ways from demand for cloud services:

(1) Higher storage market share

NetApp has been helping companies evolve to a private cloud infrastructure since before the term cloud became popularized. NetApp private cloud solutions are based on its industry-leading data and storage management technology.

We believe NetApp’s share in storage market will rise as firms adopting Cloud Computing will increasingly turn towards NetApp, one of the pioneers of the industry with proven products and expertise, in order to effect a massive change in their IT infrastructure that will help them remain competitive.

(2) Higher software licenses and demand for consulting services

In addition to witnessing increasing hardware sales, NetApp will see a surge in software license and maintenance as well as support and consulting services revenues, which are dependant on hardware sales, given the newness of the technology provided.

We estimate there could be a upside of 20% upside to the Trefis price estimate for NetApp’s if its share in the storage market increases to 16% by 2017 as against our current estimate of 13%."


On the other hand we have this from Network Computing.

"The end of Decru's market life is also a commentary on NetApp's ability to manage acquisitions. The truth is, some organizations are better at acquiring technologies and making them their own than others. Cisco's leading position in the Ethernet switching business came through the acquisition of switch pioneer Kalpana, (along with a few competitors), and while most storage guys think of Clariion as a pure EMC product, it was initially developed down the road at Data General.

NetApp, on the other hand, has not managed to turn an acquisition into a successful product line. They've had what can, at best, be called modest success with Onaro's SANscreen SAN management tools and the NearStore VTL product line derived from Alacritus's technology. Topio's continuous data protection for heterogeneous environments became NetApp's ReplicatorX before the folks in the corner office decided to rename it, yet again, and kill it off. "

Zerowait's service and support business for NetApp legacy equipment continues to grow strongly as NetApp's customers seek an affordable. and reliable way to extend the lifespan of their primary storage hardware. Additionally, in 2010 our SimplStor product line gained a foothold in more data centers, as storage customers embrace the concept of commodity hardware with enterprise level high availability service and support for their secondary and archival storage. Our international customer base recognizes that Zerowait concentrates on what we do best - providing outstanding service and support.

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