NetApp Exec: Company Ready to Grow with New CEO, Flash, Cloud Offerings
New NetApp CEO George Kurian is squeezing out efficiencies in declining legacy product lines so the vendor can double down on the surging cloud and flash storage markets.
’George is laser-focused on execution and accountability,’ Val Bercovici, senior director of NetApp’s office of the CTO, said Tuesday at the Raymond James Technology Investors Conference. ’Having a fresh perspective at the top is clearly what the board wanted to see when they appointed George as CEO [in June].’
Bercovici urged those in attendance at the New York Marriott East Side not to confuse a lack of top-line growth for NetApp over the past three years with a lack of progress. The Sunnyvale, Calif.-based vendor has instead used that time to dramatically shift its product mix in favor of more modern and emerging storage technologies, Bercovici said.
’We’re very much ready for growth once some of the emerging products we have … and the rest of our data-fabric cloud portfolio starts to become material,’ Bercovici said. ’We hope, obviously, for revenue growth again.’
Kurian was appointed CEO after the company's last CEO, Tom Georgens, was let go by the company's board of directors in June. And Rob Salmon, NetApp’s president in charge of go-to-market operations, announced last month that he plans to retire around the end of April.
Despite all these transitions, Bercovici said NetApp continues to be able to attract top talent, with the vendor planning to soon announce a new chief marketing officer.
’I think change is healthy,’ Bercovici said, noting NetApp is having to change its business consumption models to become more cloud friendly.
Despite having an early dominant position in the hybrid flash market, Bercovici acknowledges the vendor was a latecomer to the all-flash market. But over the past year, Bercovici said, NetApp has made fantastic strides in the flash-only market, delivering 445 percent growth in all-flash FAS units off a pretty significant base.
’We’re clearly taking share again in the flash marketplace,’ Bercovici said. ’We’re very much addressing a lot of the realities in the industry right now.’
But Bercovici views the shift to flash as mere table stakes when compared with the transformational opportunities around cloud and hyperconverged infrastructure.
’It’s still primarily just a media transition from disk to flash, and it’s not that profound,’ Bercovici said. ’The cloud marketplace in general is a much more profound transition in the industry.’
Cloud finally took off in 2014, according to Bercovici, and accelerated further in 2015 once consolidated billing made it possible for enterprise to recognize the extent of their shadow IT and get true visibility into cloud consumption on an aggregate basis.
’Cloud is a major disruptor in the marketplace,’ Bercovici said. ’We’re not one of those companies that’s denying cloud.’
The flow of workloads, though, isn’t simple unidirectional from on-premise to cloud. Bercovici pointed to an IDC study that found half of enterprises actually repatriate data off a public cloud back to a hybrid service provider or on-premise system once they realize the cost and quality of service challenges associated with public cloud.
’Public cloud done right, the way that Amazon does it, is an extremely lucrative business,’ Bercovici said, pointing to AWS operating margins of more than 25 percent. ’And that flies in the face of the notion of being cheap.’
Pricing pressure today is most fierce in the all-flash ecosystem due to the high concentration of startups in that space.
’There’s a lot of VC [venture capital]-driven money out there, and literally a lot of startups are, I think, buying [market] share as opposed to earning it,’ Bercovici said.
NetApp is willing to give up margin as needed to be competitive on a deal-by-deal basis, Bercovici said.
Some of the emerging all-flash vendors have also encountered headwinds recently as they increasingly find themselves going up against established vendors who also have very capable flash products in their portfolios, according to Bercovici.
’The competitive landscape is nowhere near as greenfield as it was a year or two years ago,’ Bercovici said.