Data Domain, NetApp And The IT Industry

As I think about this latest acquisition, there are three major themes worth exploring.

The first theme has been covered widely already -- the impact of data deduplication, why it's hot, the value of differing approaches, why it needs to go everywhere in the stack, etc. 

No need to cover that one here.

The second theme is the impact to EMC, Data Domain and our mutual customers. 

I attempted to sketch out how Data Domain's technology and offering could potentially create a surprising amount of scale and synergy when juxtaposed with EMC. 

There were some colorful comments on that one.

The third theme revolves how this acquisition is emblematic of broader themes in the industry, and how a certain class of IT vendors will find themselves with hard choices to make going forward.  Although I'll be using NetApp as an example, the discussion actually covers a fairly broad spectrum of well-known IT players.

And, yes, I'm wearing an asbestos suit ...

Big Things Afoot In The IT Biz

No surprise, we're in a period of rapid consolidation in the IT industry.  Being a large, successful IT vendor is now a game of scale and synergy -- scale to reduce the costs of development, distribution and support, and synergies across the portfolio to increase the value of the overall offering.

For example, if one looks at what Oracle is doing, it's pretty clear they're thinking this way.  EMC's transformation from a single product vendor (Symmetrix) to the broad portfolio of today reflects that thinking as well.  Cisco might fall into this camp.  And there are other examples, if you think about it.

If you get involved in corporate strategy, you have this "aha" moment when you fully grasp the amazing potential of scale and synergy.  However, realizing that potential is another thing altogether, as we'll see in a moment.

Get Big Or Get Bought

Now, let's look at the chessboard from another perspective.  Imagine you're a mid-sized IT vendor, and you've become really successful with "your thing" -- maybe it's a particular technology, or a business model, or something else relatively innovative that's gotten you to a certain size.

At some point, other people start to figure out what you've done, and start to offer alternatives that are just as good -- or sometimes better -- than your unique gig. 

You might think you can compete through size and strength, until these newer competitors get bought up by the bigger companies, and then the tables turn on you.

For example, Dell had a killer business model -- until other vendors copied it.  In the late 90's, EMC had a lock on high-end enterprise storage, until there were "good enough" alternatives from other vendors.  NetApp has a nice file system with some useful tricks, but has never been able to move much beyond this. 

Lots of other examples in the industry when you look at it this way.

The key point here is simple -- the things that fuel the initial phases of growth of any successful IT vendor only have a limited life span -- the rocket fuel doesn't last forever.

So, What's An IT Vendor To Do?

It's easy -- buy or get bought.  Either play the "scale and synergy" game, or sell yourself to someone who wants to play that game.

To play the "scale and synergy" M&A game, you'll need three things:

(1) money, in the form of cash or equity
(2) a reasonable pool of attractive candidates to buy
(3) the ability to extract the "scale and synergy"

I am no financial engineer, so I don't have much to say about capital structures, debt to equity ratios, dilution and so on.  I can follow those conversations, but I don't have much to say.  To simplify the discussion, let's assume that our moderately successful IT vendor has a pile of money to work with.

The problem that's specific to these class of mid-sized vendors right now is that it's a pretty shallow pool of acquisition targets.  The larger and more interesting targets that have shipping products, happy customers, demonstrated growth potential, etc. are drawing the attention of the bigger players. 

These bigger players not only have more money, but usually have demonstrated an ability to extract more value from an acquisition.  Which tends to leave either very small companies who haven't demonstrated success, or a few picked-over shop-worn names that everyone else has looked at already, and decided to pass.

That's the M+A target pool that NetApp and others in their category are facing right now.  Not a lot of attractive choices, and -- if there is one -- there will likely be acquired by a bigger player who's more interested and can make a better offer. 

Making An Acquisition Work

The only proven way to make M+A work is to invest in building a machine and doing it over and over and over again.  That's the formula at Oracle, Cisco, EMC, Microsoft and the other big players.  We're not perfect, and we all make mistakes, but each company has a core discipline and track record in making acquisitions work.

Most people aren't aware that EMC was doing acquisitions way back in the 1990's.  I would offer that we weren't very good at it back then, just like any midsized IT vendor in our category.  It wasn't until we set off in a new strategic direction (thanks to Joe Tucci) that we invested enough effort to get really good at the whole thing.

By comparison, NetApp hasn't been able to demonstrate any real success in making their acquisitions work.  The Spinnaker acquisition could hardly be called a success (it almost tore the company apart), Decru disappeared into obscurity, Topio was withdrawn from the market.  One could argue that Onaro is enjoying some small modicum of success, but does it really matter?

Hard Choices Ahead

It was interesting to hear Dan Warmenhoven publicly tick through the list of potential suitors for NetApp, and take each and every one of them off the table for one reason or another.  While I could debate his logic, it's very clear that he and the rest of his management team are thinking long and hard about "Option A" -- be acquired.

By comparison, "Option B" -- buy a lot of stuff -- isn't working out so well.  There are bigger and more skilled players competing for the same acquisitions, and they can justify paying more simply because they have a track record of extracting value through scale and synergy.

Which leaves us with "Option C" -- carrying on as before.  Continue to focus on one single product and technology  (e.g. WAFL), continue to enhance it with new features such as dedupe and various forms of integration, incrementally tune the business model in terms of margin, channel mix, keep a brave face in public, etc. -- but hardly exciting in the big scheme of things.

Unfortunately, much as NetApp got their start in offering "good enough", there's a host of players waiting in the  wings waiting to do the same thing to them: open-source file systems such as ZFS, small aggressive players such as Isilon, Compellent and 3Par, and even encroachment from the consumer/prosumer/SMB marketplace. 

Not to mention big players like EMC that have enormous R+D budgets and are prepared to use them as a weapon.

Add to that the structural transition going on in the market from physical to virtual, and from enterprise IT to service providers (private cloud thinking in a nutshell), and you've got to ask yourself some hard strategic questions.

No Obvious Answer

Now, this discussion is nothing against their technology (every technology has strengths and weaknesses), or a discrediting of their rabid fans (who I will undoubtedly hear from in their typical colorful fashion), or even a critique of their conduct (still have big issues with that one) but in terms of The Big Game, it's not clear what their next move will be.

And it's not just NetApp -- I could construct a rather long list of other IT technology companies who are roughly in the same position that they are, and are facing the same set of uncomfortable choices.

Any thoughts?

Comments

[Glenn Grabowski]

Not to pile on Netapp but another gaping hole in their portfolio is "Cloud." How do they plan to take advantage of this future burgeoning market? EMC, Dell, HP, and others are making big bets to ensure they are well positioned for "the Cloud." I've yet to see their vision.

[Chuck Hollis]

Hi Glenn:

They tried to be pretty clear recently at their analyst day, e.g. they wanted to offer storage products that could be used in clouds, but didn't take it much farther than that.

It'll be interesting to see whether or not this thought matures into purpose-built technology, or just another repositioning of what they're largely selling today.

Time will tell!

-- Chuck

[shiningarts]

A little over a decade ago, EMC was in a same boat as NetApp is now in terms of company size, market cap, and technology stacks. As Chuck pointed out, Joe Tucci had a vision to expand the horizon of the company beyond its storage silo. He has spearheaded and accelerated M&A to make EMC viable and comparative within ever-changing IT landscape and topology. You may criticize him for being a gobbler and point to the Data Domain acquisition as evidence. Again, as Chuck already pointed out, it is matter of being gobbler or gobblee.

There is a saying "Election has Consequences." We are already been experiencing the fruit of our choices. Acquisition also has Consequences. EMC had to move fast to acquire Data Domain because NetApp was about to move in to gobble it up. For a while it seemed as so that Data Domain and NetApp were enjoying a honeymoon period as we all have witnessed. IT M&A, however, is not like eHarmony. It doesn’t work just because you think you have the chemistry to huddle together. (I am not sure what points to match between which hopeful suitors. The negotiators seem to have forgotten the real clients whose points needed to be “matched”—the shareholders. Instead, the lawyers and negotiators seem to have “fallen in love” to the point that they were willing to commit $57 million of shareholder money in a “prenuptial agreement,” conveniently forgetting that both companies were public companies and that both boards had fiduciary duties to the shareholders that rose above their newly-found love one for another.)

No, IT M&A is not a computer dating service, it is a chess game. It's about strategy, vision, and perseverance. Both companies involved need to exhibit sophisticated thinking in these areas to demonstrate that they are indeed a real player for real world.

In 2003, VMWare was a company three times smaller than Data Domain is now. In a little more than half a decade, Joe Tucci has transformed it into almost 20 times bigger—during the most significant economic downturn “since the Great Depression” no less. Consequently, VMWare is a lot bigger and more influential than NetApp for now. To be honest, NetApp envisioned itself as a graceful swan, diving blithely into the M&A pond, but it ended up looking more like a large turkey landing with a great belly-flop. Since its growth path has been foiled due to the failed acquisition attempt of Data Domain for now, it has, perhaps, two available choices left: either being acquired or fading away altogether. I strongly bet it will be acquired sooner rather than later. In other hand, Data Domain's growth will accelerated just like VMWare was before. Certainly, Joe has proved himself in fact as a master of IT M&A game for now. Checkmate done well, indeed!

[Chuck Hollis]

Shiningarts -- well said!

[KPC]

Hi Chuck,
If IBM or HP was interested in DataDomain and with tonnes of cash left in the bank, they would have got them. No big magic there. I was thinking that EMC paid too much for a company that was not worth billions. It will take more than 5 years for a breakeven with Datadomain.

However I admire Joe and EMC team for one reason. Being successful whatever be the market conditions. Hats off ! and well done.

On NetApp, I think its not checkmate yet. They have great talent in the team and will come back very strongly.

[SANd Man]

Congratulations on EMC's hostile takeover of Data Domain, Chuck. What you say is true. Size matters. And Joe Tucci clearly has a big...wallet.

It seems like the DD shareholders should be happy about the transaction, but are the DD employees happy? What's to prevent DD's best and brightest technologists from fleeing down the street to NetApp, where most would agree there is a much better culture fit? And how do we know that DD's talented senior staff won't get Diane Greene'd? Why should we think that EMC's sales guys are going to work as hard selling 'anti capacity' as they do selling capacity?

And why the constant NetApp bashing?

[Chuck Hollis]

Hi SANd Man

I'm glad you said what you did, because it reflects thoughts that I'm sure that others have.

In terms of Joe Tucci, I think the word you're looking for is "vision", as in "big vision". At least, that's what I would hope you think.

Anecdotally, the DD crew seems pretty excited about the opportunity. They're now the core of a new product group at EMC and have the opportunity to lead EMC (and hopefully the industry) forward in this space. Some will undoubtedly decide to leave, but -- generally speaking -- it looks good.

I think the "culture" thing was a red herring promoted by NetApp. As was the claims around anti-trust concerns. And let's not forget the whole spin that their shares were somehow more valuable than cash in hand. All ridiculous.

As a matter of fact, I can point to the exact time and place they introduced these themes into the discussion. There's absolutely no basis for any of it. For example, we figured out that EMC had more people on the west coast than NetApp did.

Anyone who can't keep up with the business needs to go find something else to do -- that's part of the culture. And that happens up and down the org chart. I wouldn't want to work for a company that tried to hang on to people who didn't want to be there, or couldn't keep up with the pace.

EMC has been selling efficiency technologies in storage for many years. We were first to introduce ATA drives to augment FC, for example. We were investing in dedupe (through Avamar and related) many years ago. Spin-down. Etc. I don't know why you or anyone else would think that somehow EMC gets to decide what customers buy. That's an unrealistic world view on your part.

The "NetApp bashing" (as you put it) generally has to do with their overall conduct in the marketplace. Between stunt marketing, misrepresenting their own capabilities as well as everyone else's, rumor mongering, and a host of other questionable tactics (many of which I can't share here), there's a consistent pattern of misbehavior that irks me to no end.

Their behavior during the acquisition process said more about their underlying culture than they probably realized.

I generally treat HDS, HP, IBM, 3Par, et. al. with more respect. Sure, I'll criticize their offering or strategy, but not their conduct.

Thanks for writing.

[Scott Waterhouse]

I would add that my anecdotal evidence shows DD folks are pretty excited to join too. The few folks that I have talked to have indicated they are very excited to be joining EMC, and very much looking forward to the next few months. I will admit that my sample size is small, so take this for what it is worth, but I have only positives to report from DD employees, no negatives so far.

As far as selling less rather than more--well, EMC has been doing it successfully for years. Archiving is all about efficiency. Even at the most superficial level, Centera is cheaper than DMX/V-Max. EDLs with deduplication are less expensive than storage without. We offer dedup on Celerra. I have never had a hint of resistance internally on any of these strategies.

Scott

[Paul P]

Clearly history has nothing to teach us.

Long, long ago, IBM laughed at EMC. Chuckled it did indeed. They no doubt even commented on the less than stellar aquisitions of the new boy on the block.

[shiningarts]

In retrospect, I really wondered where the anti-trust concern actually originated in addition to other cultural company compatibility and more. In my own experience as a former Documentum employee acquired by EMC, there was a little concern when Documentum was acquired because of the corporate culture shift. However, as we were being incorporated into EMCs culture, we realized that the best parts of Documentum really weren’t going to change all that much. Almost all of the pre-existing talents and key senior managements stayed with EMC and the employees, including me, were generally satisfied because we realized we had now become part of a much larger team with greater global influence. We could more effectively work “toward the greater good” (whatever that means).

On Being “Greened.” Diane Greene was on top of VMWare management until last year and, from what I hear, she was generally perceived positively, according to VMWare employees. I am sure she is a fine engineer and technician, unfortunately, as company gets bigger and evolves into a large enterprise, you need a professional manager who can lead the company beyond mom-n-pop shop mentality. Clearly, Ms. Greene wasn’t the person to take the company to the next level. That’s OK—it doesn’t mean she wasn’t great at what she did. It means there was someone better for the next step. The next question is whether Ms. Greene thinks she was “Diane Greened.” Since I don’t know her personally, I don’t really know. I offer an observation that might prove helpful, though. One of the original VMWare founders, her husband, still works for VMWare. Either he is rather ignoble by refusing to avenge the slight to his wife, the Greenes are on the outs, or they are OK with whatever deal worked out. My guess is that it’s the latter.

DeDuping and Garage Sales. EMC as a one of the premier storage vendor, DeDuping is a real quandary because if DeDupe works well, theoretically, then their existing sales would suffer because the customers would buy less hardware to store whatever junk they want to store. Here is where I apply the “self storage unit” theory. It is kind of related to the “nature abhors a vacuum” theory. Basically, under this theory, it is human nature to fill whatever storage capacity you have to its fullest extent. Even with DeDuping, at some point it will have limits. Only so much material can be removed—there is a certain amount of material that has to remain and be stored. No matter how much space DeDuping “creates”, it will get filled up with “essential stuff” and there will be a need for more storage. So, ironically, DeDuping isn’t a threat to EMCs storage products any more than the garage sale is a threat to the self-storage unit business. DeDuping is like the “garage sale” of the storage industry. Just because we have garage sales doesn’t seem to reduce the need for storage units. DeDuping may increase the effective capacity of existing storage, but it doesn’t replace the need for the storage unit.

It works kind of the same way that cutting taxes increases government revenue. Fiscal progressives believe that government can get more revenue by taxing people out of the wazoo for the greater good. On the contrary, the Government can more effectively increase the revenue by cutting taxes drastically because people are then motivated to work ever than before. Unfortunately, this kind of thinking is hard to grasp for the new clouds who are “computing for the greater good.”

I believe the DeDuping will be one of important pillars of the four major initiatives EMC is establishing: Solid State, Virtualization, DeDupe, and Cloud Computing. EMC is working hard to make sure it is not the General Motors of the IT industry. It is working hard to develop a vision that is responsive to marketplace change. Does NetApp have this type of vision and the wherewithal to make it work? No doubt there are many good people at NetApp, and there will be more there in the future. Well, good and talented folks are everywhere. What a company needs is a vision and a great plan to move the company forward. I believe NetApp may have vision on a limited scale, but they lack the leadership skills and financial resources to affect their vision.

Congratulations on Your Engagement. I believe, Data Domain employees and senior management should rejoice to be part of a new team that is professionally positioned to move their vision forward as EMC did with VMWare before. If Data Domain had joined NetApp, she would have paid more than $57 million prenuptial “dowry”, and I believe she would have been forced to abandon her vision into the Pacific Ocean during the next big IT earthquake because the industry is about to begin transforming in a huge way. Basically, Data Domain “married up.” She has been catapulted into the big leagues with this move. No matter how you look at it, hooking up with NetApp would not have gotten Data Domain to the same place. Ever. Good move Data Domain. Despite some initial adjustment anxiety, you have insured a positive future for your product and your employees.

[Mike Riley]

"...there's a consistent pattern of misbehavior that irks me to no end." I know you enjoy stirring the pot and bashing NetApp at every opportunity. (According to your own blog DDUP was an over-priced, bad idea for NetApp at $25/share). But, your statement is more of an insult to customers than it is to NetApp. It casts customers as uninformed and easily fooled. In fact, this would mean that customers are so gullible NetApp is able to fool an ever-growing population of people and fool them well enough to repeatedly buy. If NetApp can't do what they say they are going to do, then the market would have figured that out long ago. I would suggest that NetApp spends their energy focused on the customer and how to solve their problems. I know - we don't wake up every day figuring out how to make EMC happy but solving customer problems is really much easier than the conspiracy theories you subscribe to. We solve a customer problem and the competition is really just collateral damage at that point. Why spend sales time bashing a competitor? I'd rather talk to them about what they would like to accomplish.

[Dave]

Interesting topic Chuck. I've made similar assessments of EMC vis a vis competing with $100B giants (from a revenue or market cap standpoint) such as IBM, HP and ORCL. I would agree EMC used to be not so good at acquisitions (anyone remember Epoch?) and improved over time. However I don't think EMC is quite yet in the league of Oracle or IBM when it comes to acquisitions. It's easy with the success of VMware to forget Documentum. Even Avamar was a struggle for at least two years before you perfected that forumla-- and it's still not quite there globally.

Will acquiring DDUP gets EMC out of the grow or be acquired category? I doubt it. So EMC suffers from the same lack of acquisition candidates as does NTAP.

Further, I don't think EMC makes a great acquisition target. I think it's price is too high to get the prized VMware asset, which is by far the most interesting to potential acquirers. So I think EMC remains independent and must figure out a way to grow.

My advice would be, rather than spending $2B+ on a $3B de-dupe market, EMC should be targeting potentially higher growth, more strategic businesses such as the information management space. This biz is a mess, no one owns it and it's a much larger opportunity than de-dupe. It's also one where CIO's are active and EMC needs a way to become more strategic to CIO's as are IBM, HP and Oracle today.

[Lee Razo]

Chuck,

"there's a consistent pattern of misbehavior that irks me to no end"

This statement makes it sound as though your issue with NetApp is a personal one and not one based on any kind of objectivity that would be of benefit to anyone outside the "vendor fud-slinging" community.

Quite frankly it's a feeling I've been getting more and more as I've followed your blog over time.

Regards,
Lee

[Chuck Hollis]

Hi Mike Riley and Lee Razo (both NetApp employees)

Go read what I wrote carefully, please.

My statements were around NetApp's conduct in the marketplace solely. Many customers are informed enough to make intelligent decisions regarding their needs and various vendors' capabilities.

Conversely, we do a nice business at EMC filling the gap between what NetApp promised and what they actually delivered in more than a few customer environments.

This is not how I want EMC to make money, and -- if you think about it -- it's entirely avoidable.

Specific examples of conduct that stand out for me would include publicly gaming the SPC, announcing your "special relationship" with SAP (?), featuring misleading capacity savings "guarantees", not to mention Val's infamous "conspiracy theory" meltdown around Centera.

I occasionally go to industry events where NetApp presents, and I always come away amazed on how skilled people can be in creating an inaccurate and misleading perception without actually telling a factual lie.

And we get involved with all sorts of competitive bake-offs where we believe that the NetApp team is seriously overstating their capabilities.

From the outside, it's not a pretty picture.

I don't see this sort of consistent pattern from any other storage vendor in the marketplace. NetApp appears to be unique in this regard.

Yes, you have people who love your products. I occasionally meet them. It's a great product line for many environments -- that is, when it's not oversold.

I'm sure that there are many well-meaning people at NetApp who are focused on solving customer problems, as are we.

But I for one am personally waiting for the day when NetApp -- as a company -- decides to evolve its public conduct in a more positive manner. It'll be good for NetApp, good for the industry, and good for our customers.

We can only hope.

-- Chuck

[Alex McDonald]

Chuck

I've read your blog for many years, and much of what you say is solid in its approach to the subject; analytical, creative, occasionally a little breathess and self-congratulatory, but in the main good stuff. There's the occasional spat when you get it wrong on subjects of a more technical nature, and occasionally you can be rude and dismissive in your comments. But I recognise that it is, in the main, what you would expect from a blog in a competitive industry.

On the other hand, calling out NetApp for what you describe as "questionable tactics"; and then stating "many of which I can't share here"; is more than remarkable for the extremely bad judgement you display.

If you're unwilling to commit your charges to the public record here, then you should not hint at their existence and then deny us the right to inspect them, comment on them, refute them, or judge them. To claim some moral high ground by casting ill defined and unspecified smears about your opponent is nothing short of reprehensible, and this kind of repulsive innuendo will do nothing but damage your credibility.

[John F.]

Hi Chuck,

From my personal experience, I'd have to say you live in bizzaro world. Every engagement I am involved with entails rolling EMC out the door. I've been at Netapp since February 2005. I'm still here, even in this "tough" economy. Exactly who are you trying to convince? In the process of that, who are you insulting? A little helpful advice: You may want to rethink your strategy. If you decide not to, I don't have a problem with that. Your current strategy has been very helpful. You should be on the NetApp payroll. Thanks (In more ways than you could ever imagine.) for your support.

John F.

[A Former NTAP Customer]

Wow Chuck, it looks like you've atracted a bunch of bitter NTAP'ers.

It just means that your doing your job well and the DD deal really squashed their roadmap. :)

I hope one day we will see NTAP evolve into a product line outside the Filer.

Cheers,

[Rikin]

Chuck,

Your observations about NetApp and the storage industry are either intentionally or ignorantly out of touch and completely ireelevant.

Either way, you can't win so why not stick to matters closer to home?

[shiningarts]

I think the piano player on this bar is, perhaps, the perfect blogger. While I doubt that Chuck is blogging to establish sainthood, I think he is blogging to encourage conversation, to generate interest and create buzz.
A good blogger understands that blogging needs to have some entertainment value along with substantive content. At EMC, there are legions of bloggers that are officially sanctioned by EMC. But, none of those carries the same entertainment and informative qualities as Chuck's blog (not to mention the mischief-factor). Just like the Star War movies, a good blog needs some hint of the epic battle between good and evil to amuse the crowd. T he dark force in Chuck's rendition of the classic battle is undoubtedly NTAP, and the force you wish to have with you is clearly EMC 2 !

That doesn’t mean NTAP is REALLY bad, it is just a character to create a balancing tension. Some of the evidence of these phenomena is that whenever something big happens in this blog, the NTAP Stormtroopers muster up and show their presence here in great numbers, I can feel it… Also, to be a good blogger, you can’t be the type to read books from beginning to end. If you do that, you might as well admit right away that you are not an effective blogger. The excellent blogger can’t stand to read or write a theme expanded through thousand pages of dreary plot because he already knows where it's going and that there won't be any interesting twists or turns along the way. No, the novelist does not do well as blogger because blogs are stream of consciousness, not novels. They flow along as long as there are ideas feeding them, they may dry up. Until that happens here, I, for one, am looking forward to many more dark characters who makes this blog really interesting…

May the force (E=MC 2 ) be with you!

[C.J.]

Chuck, Chuck,......Chuck.

You truely live in an Ivory tower; with no obvious contact with your current or past customer base. Having sold and used both NetApp and EMC products I can say with 100% confidence that EMC's customer experience has always been less than enjoyable; bordering on painful. Consistency in such tough economic times is crutial to weathering this storm and NetApp has truely demonstrated this and continues to. EMC on the other hand hopes customers keep their mouths shut, keep smiling and don't ask questions even though your products are bolted together like a techno frankenstein.

I'm sorry Chuck but you just don't see it....

[Tim S.]

Chuck

I have observed your blog for sometime now and honestly looked at it as another strategic means by EMC to attempt to control mindshare and distort real actual information making data appear in the most favorable EMC light. I have yet to hear an opinion in this blog which is based in honest truth. Let me set the table for who I am and why I have decided to speak out. I am a former Cisco employee who worked for the company when it was fighting the Bay Networks and Cabletron Systems of the world. I watched it transition from those relatively equal in size companies to fighting large goliath companies like Lucent and Nortel. I experienced the culture of a company who practiced and preached customer first and they lived by the practice of really the GE rules of doing business ethically. There was zero tolerance for stepping outside of that expectation. There were public examples along the way of Cisco having employees do things that were ethically wrong and Cisco leadership responded by termination of those employees. After leaving Cisco I worked for Cisco Partners and grew many of them to regional and in two cases national players in the telephony market place. I later saw storage as an avenue for exciting opportunities and quickly joined a company who was as significant EMC partner. I was shocked at the methods to which EMC sales used to close deals. In truth nothing stands in the way of a deal closing. This was far from a Cisco who cared about the customer first, no matter the cost of a sale. It was first and foremost important to make sure the customer was happy and deals were done with ethics. I have watched EMC sales offer gifts as little as clothing shopping to as large as leased cars. All in an effort to get a deal. I have also sat in a room with senior leadership of EMC where I was told as a partner that I was not allowed to deliver professional services on EMC deals if EMC had PS resources on the bench. I was forced to close business on EMC paper because revenue was important to EMC and it didn’t matter that the partner needed revenue to grow its credit lines and show its business partners that they were growing the business in the right manner. I then came across NetApp out of being forced to look at partnering alternatives. I was amazed at how they work with their customers and their partners. NetApp operates its model just as Cisco did and still does. They treat their customers with respect and they will forgo closing a deal if it is not in the best interest of a customer. My friend you write this blog as though you are the model of a company. Your organization is very far from it. You are the Nortel and the Lucent of the 90s and the little company that you find it so important to discredit is the one that is coming for you. I am excited to see them win because you need a dose of reality.

NetApp simply responds to meet the customers "practical" technical needs and they bring innovation to this market place. They will continue to innovate technologies and when they are first introduced you will talk about how poor judgment NetApp has for introducing such a technology to the enterprise storage space and then year or two later you will introduce the same technology and claim that you are the first to introduce it.

This is a very tired game and me as one who helped EMC grow to its current market position and I am tired of all the mis-information. Your company has significant problems and all the former and many current employees who live it every day know that this blog you portray as truth and insight is merely a sad attempt to continue to spread inaccurate information. Please use this forum to talk about your products and your value not to bash other companies and their market presence. You are frankly bad at it and you simply push more people away because of this nonsense you call honesty.

[Chuck Hollis]

C.J. -- nice to hear from yet another NetApp fanboi.

I always look forward to the personal insults, the baseless and irrelevant comparisons, with a bit of mudslinging thrown in for good measure. Never do I get any facts or specifics to respond to, just the sound of breaking wind.

I, for one, have a specific issue with NetApp's conduct in the marketplace. I can point to at least a half-dozen incidents that exemplify my point.

The latest example of NetApp's irresponsible conduct can be found at: http://blogs.netapp.com/virtualstorageguy/2009/07/real-world-vce-validation.html

I, for one, found this sort of hit-and-run stunt marketing repugnant and doing a disservice to potential customers.

At some point, NetApp will hopefully stop being the frat boys of the storage industry, and raise their standard of conduct to match their products.

-- Chuck

[Chuck Hollis]

@Tim

You bring up a lot of points, so let me attempt to deal with them one at a time.

This blog is written by me personally, not EMC. I work for the company, I am not the company.

Your story regarding working for an EMC partner sounds like a painful exception from a distant past. I, for one, would not condone any of the behavior you are speaking of, and neither would any of the executives I work with.

I would bet the people involved don't work for the company any more as a result.

Go talk to any current EMC partner -- you will likely hear a very different story, borne out by a multitude of industry surveys where EMC is ranks at the top (or near the top) of all vendor partners.

As I have stated here and other places, this is not about NetApp's products -- every product has its strengths and weaknesses.

This is about NetApp's public conduct involving consistently over-representing their capabilities using a variety of questionable marketing tactics.

I get exposed to just about every public example of this sort of nonsense, and it gets tiresome after a while. Occasionally, I express my opinion regarding their conduct.

I also frequently get exposed to customers who've tried to build a bridge too far based on NetApp's overstated claims. I do not enjoy this part of my job at all, and it's entirely avoidable.

No vendor is ideal -- far from it. We're all continually working to improve our companies.

Thanks for writing ...

-- Chuck

[SANd Man]

Chuck, it's been interesting to watch this comment thread unspool. Enlightening perspective from all sides.

EMC and NetApp have tremendous opportunities to grow in the years ahead, in many ways, to great heights. I'd like for both companies to be successful in the market.

And yet I continue to find myself rooting for NetApp more so than EMC, as I find the tone of EMC's public discourse to be generally more mean spirited toward competitors. And I understand that IT is a competitive market, and I know that NetApp and others are sometimes guilty of similar behavior. But when I read your attacks on NetApp and the Anarchist's attacks on IBM and HDS, they just rub me the wrong way. I don't think I'm the only one. On a visceral level, these attacks make me WANT to buy from NetApp, IBM and HDS.

Let the customers decide which vendors' claims are overinflated. We're pretty smart people. We'll figure it out.

I hadn't planned to comment on this thread again, but I just read your comment about NetApp being "the frat boys of the storage industry" and I almost choked on my coffee. The EMC sales team's reputation for frat boy antics is LEGENDARY in the industry, with ink spilled across the front page of the Wall Street Journal on this very topic.

Surely you jest.

[Chuck Hollis]

SANd Man --

Sorry you don't like us sharing our opinions regarding our competitors. Despite the obvious biases, hopefully you've found something useful in there at one time or another.

I can't defend the behavior of certain EMC people back in the 1990s. I was here at the time, and it wasn't pretty to watch a few bad apples mess things up for the entire company.

Fortunately, we eventually wised up, rooted out the people responsible, and vowed "never again". As if none of us has ever done something in the past that we wished had never happened :-)

Interestingly enough, some of these people ended up at EMC competitors (with behaviors still intact!) so it ends up being a small world indeed.

That being said, I would suggest you look at the EMC of today, and not some faded snapshot from a decade ago.

That is, of course, if you're interested in a balanced perspective.

I don't think NetApp has grown up yet, culturally speaking. We get a new marketing stunt every few weeks.

For example, did you happen to notice Vaughn Stewart's most recent "report" from a "customer"? More holes than most swiss cheese, but offered up as solid.

As a smart guy who can figure stuff out, what was your reaction to that one?

And how did you react when you found out that NetApp's much-ballyhooed "native FCoE" turned out be completely unusable in most customer situations? Or when they crowed about gaming the SPC? How about the "guarantee"? Or any number of similar stunts?

By comparison, we do our best here at EMC to keep that sort of stuff from getting out the door. We aren't perfect, but at least you can tell we're trying.

Thanks for writing!

-- Chuck

[storagegorillaman]

I literally have in front of me the firmware revision sheet covering all storage for a global company, to the tune of 5 petabytes, 5 primary data centers and 50 remote sites. It's about 3/5 ntap, 2/5 EMC.

The EMC part keeps shrinking. Mr. Hollis, can you guess why?

The EMC line items in the sheet include 11 firmware revisions (multiple version of cx, dmx, etc), 3 dart codes code revisions, and 2 ECC revisions, for a total of 17 line items. They morph all the time, especially the Celerra and Flare. They get stuck at certain code revs because of wonky support contract issues. They run into problems of dart & flare bugs. Heck, I can't even get the current Celerra code to join an AD domain! Celerra is not unified storage, no matter how many times you say it.

Now, compare that to NetApp, who's hardware covers the same time period:

Operating system, 1 line item - Ontap, Sanscreen 1 line item, DFM 1 line item.

I upgrade the ntap hardware myself remotely. No scheduling, no mucking around (software install ontappackage). I do Sanscreen and DFM as well, and while there are issues sometimes, they're not too rough. There's no comparison between those and the nightmare of, say, ECC5x->ECC6x, or the CX4 one of my admins deployed raid6 on.

Feel free to call me a fanboi, but Chuck, DOOD, c'mon man, sysadmins like what works...

[Chuck Hollis]

Storagegorillaman

I have serious doubts you are who you say you are.

You show up as a first-time commenter on this blog.

You use a handle that can't be found on Google, Twitter or anywhere else.

And you offer up a bogus email address.

Now, why should I believe even a single word of what you claim, when you can't even come clean as to who you really are?

You don't say what you're using the arrays for, you don't say why you're using a wild mix of different EMC array products, you toss around innuendo and incorrect information, and you don't offer any useful context or specifics whatsoever.

It wouldn't be the first time a NetApp employee pretended they were someone they weren't. Your commentary sounds suspiciously like a NetApp sales presentation.

And, like most NetApp competitive assaults, there are no useful facts to evaluate and compare -- just invective and hyperbole.

If I am wrong, and you'd like to any sort of serious conversation, why don't you start by identifying yourself?

Or, if you're actually a NetApp employee, don't you think this is unethical conduct?

By the way, it's spelled "dude".

Any real sysadmin would know that :-)

[Chuck Hollis]

Everyone

Please go back and look at the original blog post topic.

My goal was to have a broader discussion about the structure and shape of our industry, and the difficult strategic choices many vendors will face in the future, including NetApp as an example.

Instead, we seem to have called out the NetApp Fanboi League into responding by either attacking me personally, attacking EMC's reputation, or attacking EMC's products.

If you go back to the commentary, you'll find all three in abundance from the NetApp faithful.

But, you'll also notice that not a single one of these characters felt like refuting or discussing the original premise of the post.

So, I'll take that as they agree with my views on this one.

-- Chuck

[Geert Kruiter]

I like your approach in which you almost seem to make clear that only large companies survive in the end. I speak and work with many companies in the ECM and BPM sector especially small and mid-sized companies. Many of them are truly capable of carving out an excellent niche in either technology or with point solutions with an attractive growth model.
But the thing I don't like to admit is something that indeed underscores your story, I always seem to have discussions as to how preparing them for an exit in the next 3-5 years and which acquisitions they need to do along the way to that exit moment (it's our business to support them in this process).

I simply hope that there will be enough entrepreneurial whizz kids in software land willingly to start up a business and grow something that is capable of challenging the big ones such as EMC and the likes.
Otherwise our business landscape will turn into a boring moon landscape with just a few large companies dominating the business.

Perhaps EMC should introduce a yearly "Challenger Award" for a company that best out beat them in one or more sectors. Because the most important and crucial element in the ECM/BPM and related technology sector is simply ensuring a constant and high level of innovation. That is even in the interest of the big ones where true innovations are difficult to achieve.