IBM Swings NetApp Gateway

Network Appliance may see itself becoming a major player in the SAN space, but its OEM partner IBM still considers NetApp primarily a NAS provider -- and is likely to stick with that view.

IBM signed a deal to OEM NetApps systems in April 2005 in hopes of providing quality NAS to its customers after failing with several tries on its own. (See IBM, NetApp Ink OEM Pact and IBM Turns a New NAS Leaf – Again.) Since then, NetApp has shifted to become more of a Fibre Channel SAN play, and it has a new enterprise platform to get more customers to use its boxes for block storage. (See NetApp Solid On SANs.) During its earnings call last week, NetApp CEO Dan Warmenhoven spoke of becoming “a serious contender in SAN.”

But IBM’s John Foley, product manager for the IBM-NetApp alliance, doesn’t see NetApp becoming IBM’s SAN provider. According to Foley, IBM is happy with results of the NetApp partnership but intends to keep its own Fibre Channel SAN lineup and supplement it with NetApp systems for NAS. IBM today said it would begin selling NetApp’s V3000 gateways as the IBM System Storage N5000 Series Gateway. (See IBM Adds NetApp and NetApp Promotes SATA.)

IBM now sells NetApp's low-end FAS270 system and its midrange FAS3000 series gateway/storage devices, with NetApp’s new FAS6000 systems to follow. (See IBM/NetApp Deal Blossoms and IBM Releases N5000 Series.) IBM intends to bring out future NetApp gear within 90 days of NetApp’s rollout.

IBM is also reselling NetApp system software. It added DataFabric Manager today, and plans to sell NetApp’s next generation DataOntap GX software within 90 days of NetApp’s rollout. (See NetApp Nudges Closer to New OS.)Foley says the NetApp systems that IBM resells are used “mainly as NAS in the midrange with a Fibre Channel link. We see about 20 percent of the boxes having the Fibre Channel feature turned on. Fibre Channel is not the primary mission of the box, because [customers] also have the CIFS or NFS [NAS protocols] turned on. We see customers buying them primarily for IP -- NAS or iSCSI -- and then turning on a single Fibre Channel link for high-performance applications such as databases.”

NetApp took its boldest step into Fibre Channel SANs last month when it launched the FAS6000, which it touts as an enterprise SAN platform that will challenge the EMC Symmetrix and Hitachi Data Systems TagmaStore. (See NetApp Scales Up.) NetApp never mentioned IBM as a rival, although IBM competes in the enterprise SAN space.

Foley says IBM plans to sell the FAS6000 within 90 days, but he doesn’t see it as a threat to IBM's own Fibre Channel SAN business. Foley says the new NetApp systems most closely match IBM’s DSS4800 or 6000 midrange SANs, but IBM considers the NetApp series primarily as NAS or iSCSI boxes rather than Fibre Channel SANs.

“I haven’t seen performance numbers from NetApp yet on the 6000,” Foley says. “From what I’m hearing, the power of the 6000 models would probably be equivalent to the [IBM DSS] 4800 or 6000, but -- and it’s a big but here -- it is not IBM’s intent to go head-to-head with the 4800 or 6000. Although capable of Fibre Channel support, we see these [NetApp] boxes deployed in IP environments.”

IBM will pass on some NetApp systems. Foley reports that IBM will not sell the FAS900 midrange system because of overlap with the FAS6000. NetApp will carry both products because it considers the FAS6000 a higher-end product than the FAS900.Foley also says there are no plans to add the virtual tape library (VTL) NetApp brought out in February, even though IBM’s own VTL has been about successful as its NAS line was before the NetApp deal. (See NetApp Readies Virtual Tape.)

“As always,” Foley says of VTL, “we keep our options open.”

Although they see the products in a different light, both IBM and NetApp say they’re thrilled with their deal so far.

NetApp reports that IBM contributed to 2 percent of its overall revenue -- or $12 million -- last quarter and forecasts IBM to make up 3 percent of overall revenue for the next fiscal year. “IBM is outperforming both their expectations and ours,” Warmenhoven says.

Foley agrees, claiming sales of the NetApp gear were 165 percent above IBM’s target for the first quarter of this year.Last week Thomas Weisel Partners upgraded NetApp’s stock in anticipation of IBM sales becoming 10 percent of its revenue within a couple of years. But analyst Steve Berg of Punk Ziegel & Co. says IBM sales of NetApp gear are still insignificant, especially when compared to the success IBM has had selling midrange systems through a similar OEM deal with LSI Logic’s Engenio storage division.

“I think that [2 percent] is a pretty small number. IBM’s not hitting with the fat part of the bat,” Berg asserts, pointing to the way IBM views NetApp products. “The thrust of it is NetApp perceives themselves as a broad-based storage vendor and IBM views NetApp as a NAS vendor. That’s bound to put expectations out of whack."

But for now, IBM's and NetApp's expectations appear to be in sync, despite future plans.

— Dave Raffo, News Editor, Byte and Switch

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