NetApp's Past and Future - Page 2

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Storage is also the one area thats growing the fastest and therefore has the biggest challenges in management. We always felt that ... [if] the customers got a problem, he's going to look for a solution. As long as we were at the forefront of it, we had to opportunity to be it. And that's worked well for just about 15 years. I still have about another 15 years to go, by the way.

What is the market's biggest misconception about NetApp?

Well, we started as a small file server company. We sold departmental systems. ... In many cases, first impressions are lasting. In many ways, our competitors have tried to position us that way, too, as a departmental solution, not ready for prime time. In fact, most of our sales now are to major corporations for mission-critical environments. We suffer from the image of "file servers for departments."

But if you look around, the Oracle outsourcing operation where they host their customers European environments, that's pretty mission-critical, and that's all NetApp. The SAP Business ByDesign environment, that's all NetApp. These are mission-critical deployments of the first order, but the perception is: "Nice little file server company." We're going to change that.

To know us is to love us. If you are not a customer of us, in fact, we have been positioned well by our competitors. I think that has been part of the challenge. It's time for us to go break out and establish our own image in the market.

What new challenges does NetApp need to conquer in the future?

There are two or three. I really think one of them is products that are suitable for the medium-size enterprise. We've started a real strategic [small and midsize business] initiative. ... We've been really good for providing a value proposition for large enterprises, but medium-size enterprises have those same kinds of challenges, and I don't think we've presented them with any solutions scaled to them until just recently.

[SMBs] have a different style of buying. I think we have more work to do in enabling the channel partners and other parts of the ecosystem to be as effective as they need to be.

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My sense is that, given all the new style of projects that are going on in the enterprises today, both large and small, whether it be use of disk-to-disk for reduction of tape or whether it be encryption-we can go through a thousand different project styles-they are all new, and the customers have no experience, which means they have a dependency on the vendor or whoever they're dealing with to help them through those transitions. We've done a good job with that in our own professional services, but we've not enabled our channel partners to offer those same services.

Part of the strategy this year is to train them, make all our internal training available to our partners so they can provide that same of level of consulting services and support services to the medium-size enterprise customer. Its a whole set of solutions, not just a product. [It includes] even enabling our partners to be consultants to our customers. Its all around the evolution into the midmarket; its also broadening out in the enterprise.

We also still have a lot of untapped opportunity. We are at about 10 percent market share. Part of the question is: Where does the next piece come from? The medium-size enterprise is a component, but I think the high end is another component. We have done some research internally of what we call the "storage 5,000"-the 5,000 largest consumers of storage in the world. And we are a supplier to about 1,000 of those.

That means there's 4,000 left to go. That's a lot of market opportunity. That's 80 percent still untapped. That 80 percent represents at least 60 percent of the total dollars. Its not just size-yeah, were going after the big ones, but it's largely vertical-based. Weve focused our energies on eight specific verticals, and there are others beyond those that are really quite large.

What are your strongest verticals at this point?

Leading the way is probably technology. It's kind of our core business; it's where we started in 1994-95. And the big tech companies-Oracle, Texas Instruments, Cisco [Systems], Intel-they've all been big customers for a long time.

Page 3: NetApp's Past and Future

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...