At its recent meeting for industry analysts, NetApp not only trumpeted its most recent successes in the market and demonstrated its current wares, but executives also revealed the vision and strategy that they believe will allow the company to continue on its yellow-brick road of growth.
Now, NetApp is as pure a storage vendor as you can find. More specifically, NetApp is a disk array company. The only other pure storage player of enterprise-class size today is Hitachi Data Systems (HDS), as EMC has significantly broadened its portfolio to become an information infrastructure company. The real value-add of modern disk arrays comes from the software that works in conjunction with them, starting with the storage OS and including a wealth of storage management solutions focused on physical storage processes and data management, including snapshot and replication software.
Tom Georgens, NetApp’s president and CEO, presented the company update and strategy. One of his primary responsibilities is to increase shareholder value. The fact that NetApp just finished its fiscal year 2011 up 30% in revenues, to $5.1 billion, has not been lost on the financial markets, which have rewarded NetApp with an increase in share price (roughly $60 share). Georgens pointed out that NetApp is of large enough revenue size to be bought by investment houses, and that there were only half a dozen or so IT companies (such as Google) with a dedicated product focus that could fall into that category. From an IT perspective, that means that NetApp seems to be doing a lot of things right.
Georgens stressed the importance of corporate culture as a competitive differentiator. The fact that NetApp has scored high on best places to work surveys is nice, but what that translates into from a company perspective is employee dedication, focus and innovation, which has translated into continuing growth. He also emphasized that NetApp is a product company and not a services player. Although professional services are important and NetApp will provide some service, NetApp will continue and even extend its emphasis on partnerships and third-party relationships, such as with VARs, system integrators and OEMs.
Georgens believes that, through product leadership, NetApp can take advantage of market growth opportunities and use that emphasis to take market share from competitors. Thus, the company can continue to evolve from being viewed as a technical computing company to also being considered a business computing company from a storage perspective.
Although the global macroeconomic outlook is dreary, NetApp plans to pour on the investment even at the risk of overshooting a little. The company doesn’t want to let opportunities slip away by being too cautious. As an analyst, I feel this approach by a number of IT vendors, not just NetApp, offers a higher upside reward than downside risk even though no one has a crystal ball on the economy.
