|
“We want to be the Cisco of storage”
Dan Warmenhoven, Chief Executive Officer, Network Appliance (NetApp) brushes aside reports suggesting slowdown on hardware spending and talks candidly to Ashwani Mishra on competition in the storage market and NetApp’s strategy moving forward. Excerpts from the interview:
 Recent media and analyst reports suggest that there would be a decline in hardware spending across the globe and this would have an impact on the company margins? Your views.
Do you think it is on the decline? We have no examples yet. Has it happened or is it going to happen?
Nobody can predict the future and claim that it has already occurred. We will see if it actually does. There are many surveys that say this but I am not convinced. The slowdown has not yet occurred. People are concerned about economic slowdown. I have been through a couple of recessions but this doesn’t feel like those times.
Not even in North America where there have been cutbacks in orders from large customers?
No. We see issues in some verticals. Our sales and business financials are down a bit for the last two quarters. But with the exception of one vertical (financial services) it doesn’t seem to spill over to the rest of the economy. Especially in terms of projects associated with cost reductions, improving efficiencies and business responsiveness, the customer community is still moving forward.
That’s the reason we should be careful in saying that hardware spending has declined across verticals because it has only happened with the financial services.
Even in Europe, there are certain verticals and regions that are soft but still, we have a growth rate of 30 to 35 percent year-over-year (YoY). Our business in North America is growing at 20 percent YoY. Here in India itself we will do a business of approximately 40 percent YoY. This is not a slowdown.
You could see the dotcom bubble bursting. Today I see clouds and there is no storm in sight yet.
Your recent acquisition of Onaro (a storage service management provider) has transformed NetApp from strictly a storage system provider to a vendor that enterprises can look at for meeting their storage hardware, software and technical support needs. However, the acquisition does not go far enough on the software side. Do you think that there is still a gaping hole in your data protection portfolio?
No. I don’t think so. When you have hundreds of systems and lots of storage you need better tools to effectively manage it. The same problem existed with the network 20 years ago. If you had a big complex network, how did someone figure out what was happening on the network?
This is a good analogy for storage today. You can look at utilization, capacity, performance and other factors that help you provide efficient service levels for various applications. It is a question of scale.
I won’t call it a gapping hole. The Onaro acquisition addresses the problem of scale-up and is aimed at customers who get very large and with this, their requirements scale up. Many of our customers are using it already.
In terms of competition, what or who do you see as the greatest threat to NetApp?
The number one competitor by far is EMC across the globe. EMC has about 25 percent market share and NetApp has around 10 percent market share. The recent Gartner magic quadrant projected EMC and NetApp as the market leaders.
The reason for this projection according to me is that we (EMC and NetApp) are the only companies that have a purely horizontal focus in terms of providing solutions for storage and data management. We may have different philosophies that go into the making of our solutions. But in a general sense we try to focus on providing a complete portfolio of solutions that customers need in the area of storage and data management.
Then you have some start-up companies. Most of them have interesting technologies but they are not long-term viable standalone businesses and would get acquired in the future. But none of them are a threat to us.
HP plans to aggressively compete against you post its acquisition of PolyServe. What is your counter strategy?
What about it? (Bends forward to speak.) Okay. Here is my theory on server companies in general. If you look a few years back, they were the leaders in storage and storage was defined as the extension of the server, a peripheral, and they are still in that frame of mind.
However, the customer community doesn’t think so. The community thinks that storage is a separate piece of their infrastructure like servers and networks, and not a peripheral.
They (HP and IBM) are great companies and I have worked with both and I have lot of respect for both these companies. But in the storage space they do not view storage as strategic function. All the server companies have lost shares over the last several years and most have moved from developing and manufacturing their own equipment to reselling somebody else’s equipment.
IBM sells our systems while HP resells equipment from Hitachi. Due to this, these companies continue to lose their competitiveness and market share. They are not a threat but an opportunity.
So what will be the key to NetApp's growth moving forward?
Great leadership (bursts into laughter.) Alright, on a serious note, we want have to have a clear focus on all that we do. We want to capitalize on areas by providing solutions where the customer community has a challenge that is not being addressed. Our strategy is to innovate and anticipate the changes in the market and offer solutions that are distinctive and solve customer problems.
We were the first to bring to the market an enterprise class storage system based on cheap ATA drives. Why? Because customers needed an alternative to tapes for mass storage and they couldn’t afford the cost of the disks at that point.
I think there is only one start-up apart from us that has over-provisioning capability even today. Does anyone have cloning to match our level of disk utilization? I don’t know of any company that can provide data access to NAS, SAN and iSCSI on the same system or on a consolidated framework.
Customers and their needs define the market. There may be variations in size but fundamentally, they are the same. We want to be the Cisco of storage. We want to be a complete solution provider for the customer needs associated with storage and data management.
We are now at the fourth position behind EMC, HP and IBM. With our current growth rate, we should be number two in terms of market share by overtaking HP and IBM in a year or two.
|