QandA: NetApp CEO Takes Aim At SMBs, EMC

Network Appliance two weeks ago introduced its first enterprise-class array and next month plans to unleash a new SMB product line, dubbed StoreVault, exclusively for the channel. Dan Warmenhoven, CEO of NetApp, spoke about these initiatives with Senior Editor Joe Kovar.

CRN: What's behind NetApp's push into the SMB space?

WARMENHOVEN: We think [enterprise-class solutions] are applicable to the midsize-business space. The customer need is there, we think we have the technology solution for that need, and it’s an attractive market opportunity. So we might as well go participate.

We've had some experience in taking our FAS250 or FAS270 and almost giving it to a medium-sized business with 100 employees. But they're overpriced for most medium businesses. The entry price is about $20,000. That's a lot of money for a small or medium business. Our goal is to get to an entry point of about $5,000 and at the same time provide [customers] a storage platform that handles all of their storage needs--a four-times drop in price while preserving most of the core functionality.

CRN: When you gave the FAS250 or FAS270 to those midsize businesses, what was the result?

WARMENHOVEN: Oh, they loved them. They actually loved them. And they gave us feedback on what they wanted. They like the notion of high-performance disk drives for their primary storage, but they'd like to do a blend inside the box of high-performance and cheap drives, and do in-the-box copy. So that's built-in on the $5,000 array.

They also told us what to do about the user interface. It's very simplified, tuned to a Windows environment. Most of these environments are dominated by Windows only, including file services, SQL Server, Exchange. So it has the look and feel of a Windows extension. A very simplistic administrative interface. [They didn't want us to] just cut the price but make it an attractive, easy-to-deploy solution for medium businesses.

How small? We're not trying to go after mom-and-pops. The boxes scale to multiple Tbytes. We're thinking the target market initially is probably largely professional-services firms like law firms, architectural firms, accounting firms or a doctors' cooperative. It can be used in other business environments, but I think the ones that are data-intensive, that really need something like this, are in the professional-services space.

CRN: Does that mean you are targeting the EMC AX150 space?

WARMENHOVEN: Oh, we're right on top of it. As we go around recruiting VARs and tuning our message and our advertising placement, you'll see a fair amount of vertical messaging in there around professional-services firms.

The AX150 is not a complete solution. It's only a SAN solution, or iSCSI. It doesn't do the [NAS] file services very well. Ours is a combined solution for all kinds of access needs: SAN, NAS, iSCSI. iSCSI and NAS are built into the basic product, with SAN an additional cost item. Especially given Microsoft's push toward iSCSI, the basic unit, over Ethernet, should support all your Windows devices for both file services, SQL Server, Exchange and all the rest.

CRN: Is this built with the Microsoft Windows Storage Server OS?

WARMENHOVEN: To a certain degree, it's going to compete with Windows Storage Server. But [the operating system is] Data ONTAP. A typical SMB today would probably need one or two AX150s with a Windows server on the front end to make the combined product that we'd be competing with [using a single appliance].

CRN: So one StoreVault will take the place of two AX150s and a Windows server?

WARMENHOVEN: A typical configuration: one AX100 or AX150 for the file services, another one for the SAN or iSCSI environment, and some fraction of those as a second volume using ATA disk for recovery purposes. It could be three, with the in-the-box copy function.

CRN: With the StoreVault, you can do the NAS, the iSCSI and the Fibre Channel, all in the same box at the same time?

WARMENHOVEN: All in the one box at the same time. You can put Snap Manager for Exchange and Snap Manager for SQL on there. All the snapshot capabilities for file servers. Flexible volumes for overprovisioning and efficiency.

CRN: With the new products, what is your message to SMB VARs?

WARMENHOVEN: Enterprise value at a small-business price point. I mean, it's a value statement. Our view is, they're struggling with the same data management issues that enterprises are. But they've got to solve those challenges in a more cost-effective manner. We think we've got that enterprise-class position now in a scaled-down value that they can afford.

We want to make it clear this is not a normal NetApp product. In fact, it's StoreVault by NetApp, not NetApp StoreVault. [At the sales kickoff] the executive who has this business unit reporting to him is going to tell the sales guys, 'Look, what you need to know about this product is what a priest needs to know about sex: Be aware it exists, and don't touch it.'

CRN: Will IBM OEM the StoreVault?

WARMENHOVEN: No, that is not available to them. It's not covered in the OEM agreement.

CRN: That's a NetApp decision?

WARMENHOVEN: No. When we did the OEM agreement, nobody knew what the future held. The OEM agreement was confined to the product families existing at that time. CRN: I thought it also included future products.

WARMENHOVEN: Only as derivatives of the core products. We view this as a very different product. But don't get me wrong. If IBM would like to OEM it, we'll have that discussion with them. But it's not encompassed in the current agreement. This is not a no. It's an 'if you're interested, let's go talk.' The economic model would have to be different, the support model would have to be different. It just has to be a different business arrangement.

CRN: Because of the pricing?

WARMENHOVEN: Because of the pricing and margins. And it's not clear to me we want to overdistribute this thing anyway.

CRN: The NetApp VARs would probably agree with you on that one.

WARMENHOVEN: Actually, the NetApp VARs won't get this box. The NetApp VARs are really oriented toward enterprise solutions. And I love 'em. And they're great. But we're trying to get to a different market. And this has a very different support policy. Our implicit support agreement on our core systems, our FAS series, is if you buy one from us, we'll upgrade it almost for life, for the next decade. You can add software to it, add more storage and upgrade the processors to keep it rolling forward. In this market, it's basically, what you bought is what you got. You can add a disk drive. You can maybe add a feature like Fibre Channel SAN. But this is not intended to be upgradable. Six months from now, you'll see a new version with enterprise functionality that is scalable.

CRN: What is your strategy for going after EMC?

WARMENHOVEN: We believe it's becoming increasingly a two-horse race between us and EMC. EMC has been the market leader, and we are definitely the challenger. The shortcoming of our playing the challenger role has been the scalability of our systems. We've had a significant set of customer advantages, including cost of ownership and ease of management, that helped us grow in the midrange. But our systems did not have the scale in terms of capacity or throughput that EMC's DMX has had. [Our new FAS6030 and FAS6070] will head up against both the Hitachi [Data Systems] Lightning and the EMC DMX.

So our strategy is to take the same advantages we have had in terms of overprovisioning and all those things that contribute to lower the cost, and take those capabilities that have matured in the market into the midrange. We're as big and bad as the big guys, and we've got advantages they can't touch.

CRN: What do you see as NetApp's advantages vs. EMC?

WARMENHOVEN: It comes down to three. The first is, if you look at customer requirements, from high-end, low-end, SAN, NAS, iSCSI, primary storage, secondary storage, compliance solutions, etc., EMC has addressed them with at least four different architectures: DMX, Clariion, Celerra and Centera. They have limited interoperability, different user interfaces and operations and procedures. And that leads to fragmentation in the customers' environments. We address that same range with one architecture. So from an operations viewpoint, [our products] all look and feel and act the same. They're all completely interoperable. And you can scale up from our midrange solution to our highest-end solution without changing or swapping out disk drives.

Advantage No. 2 is in basic cost of ownership--that is, asset cost and utilization achieved not just through a more efficient architecture. [Our] cost per gigabyte is a fraction of the cost of EMC. Coupled with that is, you get more bang for your buck when you buy less storage [from NetApp] to achieve the same business objective with our overprovisioning capabilities. The flexible volume capability we introduced about 12 months ago takes the typical storage utilization in an enterprise from about 30 percent to 40 percent up to the 70 percent range. So if you thought you needed 15 Tbytes, now you can get away with 10 Tbytes.

The third [advantage] is the cost of operation is much lower [than with EMC]. The level of simplicity we bring in terms of administrative functions and the level of integration we provide with applications really simplifies and streamlines the tasks that server administrators and data administrators have to perform.

CRN: When people look at EMC, they see a wide range of applications to go with the storage. Content management, archiving, virtualization . . .

WARMENHOVEN: We've chosen to do that largely through partnerships with companies like Symantec. In fact, I would argue that we have achieved a much higher degree of integration with [Symantec's] NetBackup product than EMC has achieved with Legato and their storage infrastructure. Likewise, we feel Documentum is a narrow point solution. We chose to partner with a wide variety of companies, including [Symantec's] KVS e-mail archiving software and tight partnerships with FileNet and a variety of others in that space.

It's our view that we can deliver a customer benefit superior to EMC's, and on a broader array of products than EMC's, by having a broad array of partnerships. And I guarantee that FileNet doesn't want to participate with EMC because they view Documentum as a competitor. They don't feel the same way about us.