NetApp Buys Onaro: A Gartner-Magic-Quadrant-Compatible Acquisition

There are lots of things to check when you buy a company. Is there good product synergy? Strategic fit? Cultural fit? Are there happy joint customers? In the case of our recent Onaro acquisition, we also used this test: Are the Gartner Magic Quadrant rankings compatible? In fact, Gartner lists NetApp and Onaro as the two most visionary companies in Storage Resource Management and SAN Management Software. (Third and fourth place vendors are EMC and then IBM.)

To see how familiar people are with Gartner Magic Quadrants, I did a quick poll of some random engineers: 28.6 percent hadn’t heard of magic quadrants, and another 42.9 percent had only a vague idea, so it seems worth explaining.

Gartner ranks companies by two criteria: Completeness of Vision, and Ability to Execute. Vision measures things like how well you understand the customers’ needs, and how well you innovate to meet them. Execution measures things like customer experience, track record and operational capabilities. Combining the measures into two dimensions gives you the magic quadrant:

You are a leader if you have good vision as well as a proven ability to execute. A challenger has good execution, but not much vision. I think of Dell as a challenger. They may not have any vision at all, besides “copy the leader”, but they have great execution.

Execution is based largely on track record, so when you enter a new market, you usually start out as a niche player, or – if you are lucky – a visionary. NetApp just showed up for the first time last year in Gartner’s Storage Resource Management and SAN Management Software quadrant. It would be impolite to paste Gartner’s copyrighted material into my blog, so here’s the link. As a first time entrant, we were pleased to be ranked in the visionary quadrant, with more vision than any other storage system vendor. Onaro was the only company above us, so the solution was obvious. :-)

For more information, you can see our own press release, but I also thought that Deni Connor did a good job of capturing both what Onaro does, and also our rationale for the purchase:

I've always been a fan of Onaro and its SANScreen product, which provides real-time analysis and monitoring of how storage, servers and network devices interact when faced with changes to the infrastructure…. Onaro just announced NAS Insight, which provides visibility into multiple NAS systems.

…

The acquisition has been rumored to be worth $120 million. If true, that is a small price to pay for the value Network Appliance receives from Onaro’s technology.

What I like about Onaro’s products is that they help you understand your data center at a higher level of abstraction. You can focus on storage service levels, and whether you are meeting them, instead of worrying so much about the low-level details of storage systems, servers and networks.

Comments

[David Scott Lewis]

Dave, kudos on your acquisition. BTW, it seems like you run a fun company.

I was VP, E-Business Strategies at META prior to Gartner's acquisition, so I'll comment on MQs from an analyst's perspective.

In fact, MQs are really for CIOs. Sarcastically, they're also used by Gartner for soliciting more vendor consulting.

So I wouldn't expect engineers to be familiar with MQs. Matter of fact, I suspect few have even heard of Gartner!! Software or hardware engineers have never been the target for analyst firms: For one thing, they have no budget. ;-)

[Shibin Zhang]

I used to be a very good SAN management software developer. I should send a resume to Onaro before the acquisition :)

[Shibin Zhang]

I did not finish my comment last time.

To a software developer, time of joining a company is critical. If he joins before the acquisition or IPO, he might earn a lot of money. If he joins after, he might not.

[reuben]

According to Gartner (2005!) data, host-based storage accounts for 34% of the overall market for external storage, with the remaining 66% going to "fabric-attached" (network) storage, expect this share to grow from 66% to 77% by 2007.
What is the an estimate of 2007 reality? SAN vs. NAS, FC vs iSCSI?

[josephmartins]

Old post, but worthy of a comment.

You asked the wrong question to the wrong group, Dave. Credibility (and accuracy), not familiarity, is the yardstick by which analytical instruments should be measured.

You must also ask yourself what NetApp would have done had the MQ ranked the two companies as incompatible.

It's like taking the woman you love to meet your parents for the first time. If they approve it only validates what you already believe to be true about her. If they disapprove, well, your actions will speak volumes about how you truly value your parent's opinion.

In this context I believe the MQ was largely irrelevant to NetApp's decision. I'm guessing the decision was set, little was going to change it, and the MQ only served as a feel-good measure of validation. That really doesn't say much for the MQ as it is difficult to measure the influence under the circumstances.