Friday, March 30, 2007

Dell is caught in an accounting scandal

Is it possible for public companies to comply with all of the rules of the stock exchanges and Sarbanes Oxley any more?

An internal investigation into Dell's accounts has uncovered "evidence of misconduct" and accounting errors, the struggling computer maker said on Thursday night.

Dell has done more to commoditize technology than just about any company. I would hate to see them go away.

Wednesday, March 28, 2007

Playing high stakes poker with your storage strategy?

Cisco has decided they hold the winning hand.

March 27, 2007 (Computerworld) -- Last week's announcement that Cisco Systems Inc. intends to acquire NeoPath Networks Inc. (see "News Briefs") passed by with little fanfare other than with competing vendors lauding it as a validation of the file virtualization space as a whole. But on a larger scale, this announcement may signal that switch vendors are willing to step out from under the shadow of storage vendors.

Any storage professional in an enterprise data center knows that when buying a storage-area network (SAN) or network-attached storage (NAS), you typically first work through a storage vendor like EMC Corp. or Network Appliance Inc. The idea that one would first bring a networking vendor such as Brocade Communications Systems Inc. or Cisco Communications Inc. to the table to discuss strategic storage problems seems anathema.

This acquisition brings Cisco more directly into the storage conversation. If needing to consolidate and virtualize files across multiple NAS heads, suddenly it's Cisco's engineers leading the file-consolidation discussion, not EMC's or NetApp's.

This acquisition also brings Cisco directly into competition with companies whose products it had carefully avoided competing against. For instance, Cisco's MDS9000's Storage Service Module (SSM) switch complemented other storage vendor's virtualization offerings by allowing them to install and run their software on Cisco's Fibre Channel directors without directly competing against them.

What does this mean for the Cisco NetApp partnership?

Tuesday, March 27, 2007

Yesterday I was visiting customers in Chicago, and all of them said our support was better than NetApp's Support.

One customer is a new customer of ours that we just installed a transferable licensed FAS 940 for. They are migrating more data to the filer now and already thinking about more data they can transfer on to their filer. Over a lunch of Chicago hot dogs we discussed their storage infrastructure and growth plans now that they have an affordable enterprise storage solution. Another customer that loves filers when combined with Zerowait support !

Another customer I met with needs us to support their F740's. NetApp has cancelled support on these units and they are of vital importance to their operation. The third customer I met with was looking at purchasing a NetApp upgrade for their Data Center. They used to deal directly with NetApp but now they have to deal with a NetApp reseller who has not ever visited their operation and does not understand what they do. So he works with Zerowait.

It was a good trip to Chicago .

Thursday, March 22, 2007

The other day I was at a user group meeting with a bunch of NetApp users. Some of these folks are old customers and friends and others had never heard of Zerowait. At the meeting, I was asked not to discuss what Zerowait did, but I was allowed to ask questions about the NetApp engineers presentations. The NetApp marketing folks were not very happy I was there, but I thought since we maintain and support a tremendous number of filers that I would be welcomed as a user. For some reason, NetApp is not happy that they make a lot of software revenue from our legacy hardware support customers who we advise to maintain their software support through NetApp. It seems contradictory to most business models - NetApp makes money for doing nothing, and they are not happy about it. Most companies love a cash cow like legacy software support, but not NetApp. It would seem to be the perfect business for private equity to buy at a discount. Since NetApp does not like supporting old code why not sell it to Blackstone or KKR? It is a cash cow, therefore private equity companies should be interested. It would be good for NetApp's shareholders, good for the NetApp's customers, and good for the new owner.

Since the NetApp marketing folks were so unhappy I was there I did not eat any of their food or drinks and afterwards when we went out to eat I made sure to pay for my own food and beverages. If Zerowait was sponsoring a User Group meeting I would make certain NetApp sales and marketing folks would be invited, an open exchange of information is best for everyone. That is why sunshine laws are passed.

In a world of contradictions and hypocrisies NetApp's legacy hardware users are left to navigate an arcane world of transferable licenses and protocols. For example , we learned last week that some hardware may or may not be supported for 5 years depending on the designation of the customer type. It came to light in regards to R150 customers. Those that are government related have longer support available to them than non government customers. How many companies in the USA don't do any business at all with any government agencies? How can a company determine whether they are a government related business or not?

Is it Nonsense or not?

Lewis Carroll
(from Through the Looking-Glass and What Alice Found There, 1872)

`Twas brillig, and the slithy toves
Did gyre and gimble in the wabe:
All mimsy were the borogoves,
And the mome raths outgrabe.

Wednesday, March 14, 2007

Contradictions ...
From Business Week
Starting and stopping plans at will can enable execs to hit multiple stock peaks. After shares at storage technology outfit Network Appliance Inc. (NTAP ) rose 28%, to around 30, late last year, CEO Daniel Warmenhoven set up a plan under which he sold 600,000 shares for roughly $20 million from January to March. The sales stopped just before weaker earnings sent the stock tumbling below 28. In late August, after performance started to mend, Warmenhoven set up a new plan. Starting in mid-September he sold shares worth $15 million as the stock rose into the high 30s. His most recent automatic trade? Forty thousand shares, worth $1.6 million, on Nov. 16, a day after a strong earnings report sent the shares up 5%. Network Appliance didn't respond to requests for comment.

I wonder why Dave Hitz doesn't mention this in his blog about NetApp's ethics?

When Dan joined NetApp, the first value he focused on - long before we had an explicit, written list - was Trust and Integrity. At the end of his first staff offsite meeting, Dan said, "I want everyone to rank our candor. You know each other better than I do. Did people say what they really believe? Did you? I won't ask you to explain your score, but I'm going to go around the room, and I want everyone to give a grade from one to five - five is good - on how candid you think we were with each other during this meeting."

Candidly, does Dave Hitz believe that it builds ' Trust and integrity ' to play games with stock values and plans which only serve to enrich the executives who run his company? How does that help NetApp keep their customers' trust? How does playing with stock values create an atmosphere for technical innovation?

On a related subject, since reading an article in the Australian , I have contacted numerous NetApp suppliers to see if we can buy the " Off the Shelf Technology" NetApp uses. Because NetApp's CEO has said - We think of ourselves in the hardware sense as using standard off-the-shelf components.

So far each of the suppliers I have contacted has told me that the parts NetApp uses are proprietary to NetApp and not for sale. What kind of magical shelf is it that the NetApp equipment is kept on at these vendors?

I remain perplexed by these contradictions.

3/16/07 UPDATE One of my readers sent me this today to add to this post from today's San Jose Mercury.
"For seven years, a majority of Network Appliance directors, together with its top officers, engaged in a scheme to grant undisclosed, in-the-money stock options to themselves and others," the lawsuit says.

Sunday, March 11, 2007

It could probably be shown by facts and figures that there is no distinctly native criminal class except Congress. Mark Twain

Updated to include the storage industry...

It could probably be shown by facts and figures that there are only two distinctly native criminal classes in the USA, Congress and the Computer Storage Industry.

Does this seem like an overpriced service offering to you?
Active Archive is priced at $4 per user and $5 per Gbyte per month, although Hegarty says that discounts are available if users buy storage capacity in advance.

If so, this must seem as nutty to you as it does to me...
The service involves Kazeon hooking its IS1200 indexing device to a customer's network and scanning files based on factors such as file age and size. Pricing for the Data Assessment Service, available now, starts at $10,000 for an initial 4 Tbytes, with each additional Tbyte costing $1,000.

Are these people serious?

Thursday, March 08, 2007

Trust but Verify week part 4
A little research can save you a bundle!

Sometimes doing a little web research can truly save customers a bundle. I think everyone can agree that paying over $80,000.00 for 2TB of storage is insane, NetApp seems to think it is rational.

The FAS3040 and its gateway version brother V3040 support up to 252 disk drives and 126 terabytes of capacity. Rogers said the entry-level cost for a FAS3040 with 2TB of storage will set a buyer back $83,000.

If you search around for prices on the web you can find pricelists which have different prices, and you can also always call up IBM to get a competitive price bid also.
Search Results view full pricelist
SIN Part# Description Price
132-8 FAS3040A-BNDL3-R5 FAS3040A,Act-Act,FCP,ISCSI,R5 $27,581.76
132-8 FAS3040A-DC-BASE-R5 FAS3040A,IB,DC,ACT-ACT,OS,R5 $40,118.93
132-8 FAS3040A-IB-BASE-R5 FAS3040A,IB,ACT-ACT,OS,R5 $38,206.49
132-8 FAS3040AS-IB-SYS-R5 FAS3040A,IB,ACT-ACT,SAN,OS,R5 $30,339.94

Zerowait does not sell new NetApp equipment. but give us a call if you want some strategic help in dealing with your NetApp sales force tactics. And remember to write on your PO to NetApp ' All licenses and protocols are transferable'

Wednesday, March 07, 2007

Trust but Verify week part 3
Hey NetApp - what does Commercial Off The Shelf (COTS) mean to you? Please define.....

Read the complete interview that the excerpts below are from. the Australian
(Interviewer) Over time do you see NetApp growing more into a software company than a hardware company?

(Netapp) We think of ourselves in the hardware sense as using standard off-the-shelf components. We've never done an integrated circuit design or an ASIC or whatever.

Question 1) If this statement is true why would Xyratex who makes NetApp's shelves tell folks who try to order a DS14 mk2 shelf or an ESH2 that these parts are proprietary NetApp designs? Aren't standard off the shelf components available to the general public? - According to the Wikipedia definition of the term they should be.

Question 2) If this statement is true how come when folks call Jabil Circuit to buy NVRam cards they are told they are NetApp proprietary designs? Aren't standard off the shelf components available to the general public? - According to the Wikipedia definition of the term they should be.

From Wikipedia

Commercial off-the-shelf (COTS) is a term for software or hardware products that are ready-made and available for sale, lease, or license to the general public. They are often used as alternatives to in-house developments or one-off government-funded developments. The use of COTS is being mandated across many government and business programs, as they may offer significant savings in procurement and maintenance. used immediately.

Tuesday, March 06, 2007

Trust but Verify week part 2

Partnerships for the common good are great for everyone involved, but long term partnerships require trust and verification. NetApp has a history of making statements supporting strategic relationships with manufacturing and reseller partners. However, they seem to have a problem with keeping relationships for the long term. There are many examples of this over the years, and it is worthy of a discussion with NetApp, whose trail of broken relationships is lengthy, to find out how long they will support their systems and customers. Does NetApp consider its customer sales techniques tactical or strategic? What length of time does NetApp consider to be strategic?

Question 1)
A) How long did the Dell / NetApp relationship last?
B) What happened to cause the Dell /NetApp relationship to fall apart?
C) What was NetApp's strategic support strategy for the customers with the Dell branded filers?
D) How does the current Dell/EMC relationship affect NetApp's long term market penetration?
E) Did anything NetApp do cause Dell to begin a relationship with EMC?

Question 2)
A) How long did the Hitachi / NetApp relationship last?
B) What happened to cause the Hitachi/NetApp relationship to fall apart?
C) What is NetApp's strategic support strategy for the customers with the Hitachi branded filers?
D) How does the current Blue Arc/Hitachi realtionship affect NetApp's long term market penetration?
E) Did anything NetApp do cause Hitachi to begin a relationship with Blue Arc?

Question 3)
A) Based on past experience how long can customers expect the IBM / NetApp relationship to last?
B) What will be the support strategy for customers if the IBM/NetApp relationship to falls apart C) What volume of IBM sales will transfer IBM sales from the Incremental sales volumes referred to by NetApp management to respectable sales volumes?
C) What is IBM's strategic support strategy for the customers with NetApp product sold through IBM's channels if the relationship falls apart?

"If you fail to get it right at the start, it may cost you dearly to fix it later - that is if you are even permitted the opportunity to fix it."
Curtis E. Sahakian

Monday, March 05, 2007

Trust but Verify week - Part 1

Last week while driving between appointments I got some time to think about a statement by NetApp which seems to raise a lot of questions.

"With revenues up 36% over Q3 of last year, and 100 petabytes of storage shipped during the quarter, NetApp is quickly becoming the vendor of choice for enterprise customers' storage and data management needs."

Question 1) Can this 100 petabytes be verified by NetApp? Providing a listing of the disks types and quantities sold would be the easist way to verify this claim by NetApp. Currently there is a question as to whether this is raw disk capacity, or was this number the capacity of the filer heads sold ? This can vary a lot since most systems are not sold with the full capacity of drives and shelves.

Question 2) NetApp right sizes disks quite aggresively, what is the capacity of the disks once they are right sized? NetApp should provide a real usable storage number after right sizing so customers can see what the 'actual raw capacity' of the storage purchased is, instead of the marketing capacity. If right sizing is 10% of disks for example, NetApp only sold 90 PB.

Question 3) What is the system overhead on the systems sold? Systems sold with large numbers of disks may pay a substatial penalty for the operating system's overhead and spares allocated. Additionally, RAID DP takes an additional fraction of the raw disk space. If system overhead and Raid DP takes 30% of disk space then 90 PB * (1-.3) = 63 PB . That is still a lot of disk. So why not just talk about usable storage in press releases?

Providing customers and analysts with a verifiable number of disks by capacity and disk type would allow them to check and see what the actual petabytes sold by NetApp was in the quarter. The numbers in the article can mean almost anything and therefore are crying out for verification.

Friday, March 02, 2007

I spent the last few days in Dallas and Austin. It was great getting together with our customers and hearing how much they like our customer service and engineering support for their filers. Almost every customer was interested in the Google and CMU articles which you can download from our website you will see them at the top. It was interesting to see the the Main Stream Computer Media picked up on these articles this week and you can read Computerworld's take here

Disk drive failures 15 times what vendors say, study says
Drive vendors declined to be interviewed

In April I will be at a conference with Jon Toigo and this subject will be discussed in detail.

UPDATE - A few of the customers in TX that I visited were interested in my new truck, and asked me to post a picture the truck. It is a 1951 M37