IBM/NetApp Deal Blossoms

IBM Corp. (NYSE: IBM) today began shipping products from an OEM deal with Network Appliance Inc. (Nasdaq: NTAP) and announced that it is sticking with an older OEM partnership with Adaptec Inc. (Nasdaq: ADPT) for now (see IBM Ships NetApp NAS).

IBM will rebrand the NetApp FAS270 system as the IBM TotalStorage N3700 beginning Aug. 26. The system is a NAS filer with iSCSI capability and will be the lowest-end NetApp system that IBM will sell as part of an OEM deal announced in April (see IBM, NetApp Ink OEM Pact). Charlie Andrews, director of IBM TotalStorage, says IBM will add NetApp midrange products in the fourth quarter.

IBM scrapped its own unsuccessful NAS systems in favor of selling NetApp gear, and there is speculation that it will drop the DS300 iSCSI and DS400 Fibre Channel low-end SANs it starting selling through an OEM deal signed with Adaptec last September (see IBM Slips iSCSI Into SAN). Financial analysts point to poor sales of the systems as one of the reasons for Adaptecs lackluster financial results last quarter (see Storage OEMs Set to Shuffle Deck).

Andrews says Big Blue hasn’t soured on Adaptec, and the DS400 is part of a new bundle, along with a 10-port switch that IBM calls a SAN Starter Kit.

“They’re delivering what we need,” Andrews says of the Adaptec systems. “We’re not dissatisfied with their performance. There are a variety of rumors out there, but we don’t have any specific plans of replacing them...“Would we ever replace them?” Andrews asks, briefly interviewing himself. “We always entertain alternatives that we look at. There’s never a time when I could tell you we wouldn’t want to sell more. There’s also good acceptance of the DS4000 in the lower space.”

The DS4000 comes from an OEM deal with Engenio Information Technologies Inc. (see IBM Still Loves Engenio). The low-end system has been mentioned as a possible replacement for the DS400. The NetApp systems give IBM an iSCSI alternative to the DS300 although at a much higher price. The IBM N3700 begins at $50,000 while the DS300 starts at less than $5,000.

But at least customers are paying for NetApp iSCSI systems. According to IDC, NetApp was the leader in the young iSCSI market with 43.3 percent share in the first quarter of 2005, while IBM barely made a dent (see iSCSI Ramping, Says IDC).

It’s safe to say IBM is more enthused about NetApp as a partner than it is about Adaptec. Last week, IBM and NetApp announced greater interoperability between their hardware, and NetApp joined a blade server industry group spearheaded by IBM (see IBM's Got Virtual Vision).

“We found the companies are more complementary than we first thought,” IBM storage chief Andy Monshaw says. Might we see the relationship expanded to include NetApp selling IBM gear? “You never know,” Monshaw says with a grin. “Watch this space.”— Dave Raffo, Senior Editor, Byte and Switch