In less than three months, Microsoft Corp. (Nasdaq: MSFT) will release Windows Powered NAS 3.0, an enhanced version of its Server Appliance Kit (SAK) software aimed squarely at Network Appliance Inc.'s (Nasdaq: NTAP) bread and butter.
It's easy to see why Microsoft wants a bigger slice of the NAS market. Worldwide spending on server consolidation, a major driver of NAS sales, is expected to grow from $5.2 billion in 2003 to $8.5 billion by 2006, according to IDC. Microsoft figures the server consolidation opportunity is enormous, with approximately 1.2 million old servers running Windows NT or Novell Inc. (Nasdaq: NOVL) NetWare, and 400,000 Exchange messaging servers installed just by Hewlett-Packard Co. (NYSE: HPQ) customers.
The threat to Network Appliance is real enough. Without even trying, the hungry Redmond giant has been successfully selling its Windows-based NAS appliance software to HP, Dell Computer Corp. (Nasdaq: DELL), and IBM Corp. (NYSE: IBM) since mid-2000. According to IDC, Microsoft started getting considerable traction after it shipped version 2.0 of its SAK in April 2001 and now has about 30 percent of the total NAS market worldwide (see IDC: Microsoft Ups NAS Share and Microsoft's SAK Attack).
[Ed. note: Cut to a Microsoft executive swinging back in a chair in Redmond... Mmmm, what about this NAS market then? Looks like theres something in it, guys...]
Lo and behold, HP and Dell are set to OEM version 3.0 of its NAS software soon after its launch in May. NAS 3.0, which will come soon after Microsoft launches Windows 2003 Server, will have more advanced file-serving and file-sharing features among client workstations and servers. Windows 2003 Server, formerly called .NET, has also been significantly souped up to take share in the storage market (see MS Touts .NET Storage Features).