Monday, April 18, 2011

Xyratex, JapaneseTsunami, and NetApp

We live in a global marketplace and the interruption of supply in Japan can have an effect on the global storage market. How long will it take before the distribution channels and factory inventories get used up is anybody's guess. But the folks at Xyratex have noted that there is a risk of material supply disruptions.

"The level of component supply disruption resulting from the Japanese disaster is not yet fully understood by the wider electronic industry nor the result in potential demand implication for disk drive and other components. Separately, in our Invest business, the acquisition of LSI's Engenio storage division by NetApp should have no material impact to our existing business with NetApp. And in our view potentially strengthens our position as the leading independent OEM provider of enterprise class storage systems in the market. Overall, I remain optimistic with regard to our future growth as a result of all the recent changes in both the markets we serve. We have a strong existing customer base and good opportunity to expand both the depth and breadth within these customers, as well as creating opportunities with new customers in both businesses. "

Additionally, although Xyratex does not seem to see any risk to their business due to NetApp's switching to their own newly acquired hardware division, I suggest they review the history of NetApp and Eurologic.

Will NetApp consider an outside hardware supplier a better and more affordable solution than an internal hardware supplier? It will be interesting to watch what happens. I would imagine that the internal supplier division would have an edge in negotiations.

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