Geneouses - Hetero and Homo

If you’re involved in the storage industry, you may be wondering which is more newsworthy of late.  Miss California, Bruno, or the NetApp-EMC tussle over Data Domain?

 

Regarding the latter, one of the most abused aspects of the discussion concerns NetApp’s track record regarding corporate acquisitions.  Biased rhetoric about selective transactions hardly paints a clear or accurate picture.  For proper perspective, it’s important to understand how NetApp’s growth plans drive our resulting acquisition strategy.

Many business case studies conclude that companies cannot grow forever purely via organic means.  At some point during most corporate evolutions, acquisitions play a prominent role in diversifying the asset base of a company by providing new revenue streams.  General Electric (GE) and Berkshire Hathaway are some very extreme and prominent examples of this corporate strategy.

It’s all about Strategy

While I can’t predict the future – to date – NetApp’s corporate acquisition strategy has been focused on adjacent markets addressable via our existing sales channel.  Specifically, we are focused on growth via new account acquisition.  Since we do not have dominant marketshare in the external storage market, acquiring new accounts is a key driver of our growth plans.

NetApp’s legendary Data ONTAP storage operating system offers the industry’s most integrated data management and protection platform.  It forms the heart of our *homogeneous* product strategy aimed at customers looking for a simple and consistent single-vendor solution to manage their corporate data.  While this integrated product family has enjoyed enormous success over the years, most large organizations are diverse enough to have multiple divisions / departments, many of which prefer various solutions from multiple vendors / suppliers.

In response, NetApp offers a range of *heterogeneous* products and solutions which have no underlying dependency on homogeneous NetApp products in order to deliver incremental value to customers.   Heterogeneous (storage-neutral) security, backup, monitoring, migration indexing and classification solutions are at the heart of this NetApp market reach strategy.  They are intentionally independent of Data ONTAP, but are of course complementary and compatible when interoperability is desired by customers.

Here’s a brief rundown of how our major acquisitions rate according to this categorization:

Company	Product				Heterogeneous	Homogeneous
Internet Middleware Corp	NetCache (Web)				X
ORCA	VI (RDMA)					X
Spinnaker	SpinOS (Global Namespace)					X
DECRU	DataFort (Encryption & Lifetime Key Mgmt)				X
Alacritus	VTL (Backup)				X
Topio	Block Replication / CDP (EOL)				X
Onaro	SANscreen (SRM)				X

The low-down

In addition to collectively positive ROI for our shareholders, each of these acquisitions has individually contributed significant and incremental intellectual property to NetApp.  For example, Spinnaker has spawned the successful Data ONTAP GX scale-out NAS solution while providing the foundation for our next-generation Data ONTAP 8 Family which we will launch later this year.

ORCA technology contributed remote direct memory access (RDMA) technology used in our current 7G and future pNFS-related product offerings powered by the Data ONTAP 8 Family.

Every other acquisition is all about compatible but highly differentiated technology to help address adjacent markets via heterogeneous customer requirements.  DECRU technology is integral to many international government data security strategies, while at the same time supporting key private sector security initiatives such as PCI compliance, HIPAA, etc…

Alacritus’ Journaled Object Store technology forms the heart and brains of the NearStore VTL product family – which offers industry-leading tape augmentation solutions for enterprises who prefer to enhance their tape backup environment rather than replace it.

Topio provided sophisticated heterogeneous block replication technology to help customers transparently migrate data from competitive SAN arrays.  Customers overwhelmingly told us they view migration as an event instead of a product, which is why we stopped selling that technology as a product, offering it instead now as a professional migration service.

And finally, Onaro’s SANscreen technology is enjoying explosive adoption and huge customer satisfaction as the simplest storage resource management (SRM) solution in the marketplace – delivering nearly instant ROI by helping discover, manage and optimize increasingly complex enterprise storage infrastructures.

Hetero 5 – Homo 2

The numbers don’t lie.  NetApp has continually outpaced the growth of the overall storage market by strategically incorporating the right mix of heterogeneous offerings and homogenously integrated technologies which maximize our value to customers.

Comments

[Rick]

Hmmm, I hadn't looked at it from that perspective before.

Makes sense!

[Jeff]

I agree. This is how we've been positioning NetApp technologies for years, ever since NetCache.

It's nice to have open Security & VTL offerings from NetApp today to help augment multi-vendor storage environments.

... and SANscreen is shaping up to be NetApp's "VMware-style" home run!