Analysts Debate Whether NetApp Will Be Acquired - Page 2

Balaouras said she thought it would make more sense for IBM or Cisco Systems to acquire NetApp.
"IBM is a major NetApp reseller. Cisco is transforming itself into a systems vendor," Balaouras said. "Barring those acquisitions, I think NetApp will continue to compete as an independent data storage and management company."
Charles King, principal analyst with Pund-IT, told eWEEK that Data Domain seemed to be a company that NetApp was very serious about acquiring.

"But any time a company goes after an acquisition and loses out to a key competitor, the company loses face," King said. "Plus, we saw how much money it took to make NetApp blink. It [the loss of the deal] did damage NetApp, but not seriously. A subsequent acquisition isn't the most important thing for them right now."
HP is making a sizable move into the enterprise space under Mark Hurd, King said.
"NetApp's products map well with HP's products. It could be a good deal for HP," King said. "The big question I have is this: If HP were to buy NetApp, where will IBM get all the gateways for its storage that NetApp now supplies it? Will HP continue to OEM those to IBM, or will IBM have to look elsewhere? Would HP continue to sell them to IBM? Seems like a stretch to me."
Brian Babineau of Enterprise Strategy Group agreed that NetApp is an ideal takeover candidate. But it isn't the end of the world if it isn't acquired, he said.
"They really needed Data Domain to accelerate growth. They didn't need Data Domain to continue to grow," Babineau said.
"They are still expanding their addressable market with a focus on bigger storage buyers and maintaining their branding and advertising campaign," he said. "There is a definite opportunity for NetApp to recapture their innovation heritage to spur growth-this could come from an acquisition or from helping customers leverage their entire portfolio-a concept that many vendors talk about but few rarely execute on."
David Vellante of Wikibon pointed out another possible argument for NetApp being acquired: that it won't be able to continue to compete as an independent.
"It lost out on Data Domain, and while it is a large company, it's not a giant like EMC, IBM, HP and Oracle [assuming it gets Sun]," Vellante said. "The other fundamental is that the data center 'stack' is reintegrating, and a storage-only player will continue to be squeezed as customers want more one-stop shopping for servers/storage/software/services-and maybe networking. So the thinking goes that NetApp management will see this squeeze play and bail."
"[However] I don't see any company willing to step up and buy NetApp for $12 billion to $15 billion-at least in the near term," Vellante said.
Zeus Kerravala of The Yankee Group told eWEEK: "Would HP or somebody else buy NetApp? Well, everybody needs storage, and everybody needs more storage. The IT-based storage seems to have the potential for better growth, more than Fibre Channel. What better company for HP or Cisco to buy for IP-based storage than NetApp?
"For Cisco, it would be good to own a storage division like NetApp; in the Unified Computing System, Cisco could then control an end-to-end solution. But it's tricky. The thing about Cisco buying NetApp is this: Cisco already has a close friend in storage in EMC, and buying NetApp would anger EMC. Cisco doesn't have a lot of friends [in storage]. It's like the kid in high school that has one good friend: You do what you can to keep him, especially if he's a rich friend."

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...