IBM Swings New NAS Gateway

Having failed to make a dent on the low-end and midrange NAS market, IBM Corp. (NYSE: IBM) today said it is shifting its focus to the enterprise.

IBM last August discontinued its Windows-based NAS system after struggling for market share. Now its back with a NAS gateway built on its AIX operating system and Power processor architecture. IBM’s TotalStorage NAS Gateway 500 replaces the midrange Gateway 300 as IBM aims solely at the enterprise as a NAS target.

The new strategy is IBM's attempt to mount a serious threat to Network Appliance Inc. (Nasdaq: NTAP) and EMC Corp. (NYSE: EMC) in the NAS arena.

"We really believe we can compete on the high end with them,” says David Vaughn, IBM’s NAS product manager. “With our previous product, we couldn’t compete."

Vaughn says AIX and the Power processor give IBM’s new NAS offering the high availability and reliability needed for the enterprise. The systems are available in one- or two-node configurations; they support NFS and CIFS; and they work with other vendors' SAN gear through IBM's SAN Volume Controller software.IBM's pursuit of enterprise business makes sense, given that its customers don't buy one or two NAS systems, as smaller outfits would, but usually include NAS as part of a large, multiproduct order that includes IBM integration service. The company's focus on smaller organizations was apparently misdirected. "The NAS market has evolved from the midrange to the enterprise," Vaughn says. "NAS is not a standalone product for our customers. It’s part of a bigger solution and leverages other storage investments our customers have made.”

The opportunities available caused IBM to persist in the NAS business despite a weak showing with its now-discontinued Windows offerings (see IBM Kills Runts of NAS Litter and IBM to Scrap Windows NAS Lines?). According to the most recent figures from IDC, IBM had only $3 million in NAS revenue in the third quarter of 2003 -- good for just 0.7 percent of the market. NetApp ($136 million) and EMC ($130 million) dominated the NAS market over the same period, followed by Dell Computer Corp. (Nasdaq: DELL) ($22 million) and Hewlett-Packard Co. (NYSE: HPQ)($19 million).

In Heavy Reading's Fall 2003 Storage Networking Market Perception Study, IBM’s brand recognition in the NAS category was 63.8 percent -- relatively low for a major player such as IBM. NetApp and EMC’s numbers were far higher across the board -- except for price, where IBM ranked ahead of EMC but far below NetApp.

Maybe that’s why at least one competitor claims not to be worried about IBM’s new NAS gear. “They’ve had a number of offerings over the years. Why would customers look at this one?” an EMC spokesman opined.

Then there's the matter of AIX, which IBM competitors say is not designed specifically for NAS, but is used mostly for large file systems more common in high-performance computing. NetApp and EMC use operating systems specially designed for NAS. Then again, Dell and HP run under Windows.Vaughn counters that IBM chose AIX as its NAS OS after exhaustive testing showed it was the best choice. He claims IBM's benchmarks show its new gateways provide a 30 percent performance gain over comparable NetApp and EMC products. (Of course, without independent testing, claims for and against the use of AIX can't be proven.)

IBM's NAS Gateway 500 will be available in February, starting at $60,000. IBM will stop selling the Gateway 300 in March but will continue support for five years.

— Dave Raffo, Senior Editor, Byte and Switch