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NetApp Banks on iSCSI

Two days after Network Appliance Inc. (Nasdaq: NTAP) CEO Dan Warmenhoven proclaimed iSCSI the market of today,” IDC gave evidence the market is indeed accelerating to NetApp's advantage (see IDC Releases Disk Figures).

IDC’s latest disk storage numbers show iSCSI third-quarter 2004 revenue increased nearly 44 percent from the previous quarter, even as overall networked storage revenue dipped a bit. NetApp had 43.1 percent of the iSCSI market in the quarter, followed by EMC Corp. (NYSE: EMC), which had 22.1 percent.

The news is interesting on two counts. First, it indicates that the hoped-for growth in the much-hyped iSCSI market is actually occurring — even though it's clear iSCSI remains a sliver (1.7 percent) of the overall networked storage market, according to IDC. Second, it provides context for the rosy forecasts Warmenhoven paints for NetApp: On NetApp's Analyst Day Wednesday, execs projected an overall revenue increase ranging from 32 percent to 35 percent for fiscal 2006 — which begins May 1, 2005, for NetApp.

IDC says NetApp led all storage disk vendors with 24.6 percent year-over-year growth for the third quarter.

Though NAS remains NetApp’s bread and butter, Warmenhoven says iSCSI’s low cost and ease of use will allow it to grow more quickly than people think.

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