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STORAGE INSIDER: NetApp gets ready to invade the SMB market
[July 05, 2006]

STORAGE INSIDER: NetApp gets ready to invade the SMB market

(InfoWorld Electronic News Via Thomson Dialog NewsEdge) Looking at IDC's latest forecasts, the next few years will see relentless revenue growth for storage boxes priced as much as $15,000 apiece; sales of larger storage devices will increase much less, if at all.

Ask yourself who's is going to buy all those little storage devices, and if the answer is "not small businesses" you may need another cup of java, Jolt, or whatever else wakes you up in the morning.

With that in mind, I was not too surprised to hear that Network Appliance is launching a new line of products for SMBs. It's a logical follow up to the company's recent expansion in the high-end and HPC segment.

Offering an SMB product makes a lot of sense for a revenue-hungry company such as NetApp, because the SMB market has big growth potential. By contrast, gaining market share in high-end segments often involves stealing customers from other vendors, which could trigger some fierce fights and getting involved in some challenging data migration problems.

NetApp pre-empted the announcement of StoreVault, which is both a new business unit and the new SMB product line, in a May interview with CRN, but no product specs where unveiled at the time.

With this week's announcement, I learned that the StoreVault S500 is a 2U box that can host as many as 12 SATA drives. Customers can choose disk drives with 250GB and 500GB capacities, allowing a maximum expansion of as many as 6TB. The unit has dual power supplies but a single controller that supports NetApp dual-parity RAID configurations -- a much-needed protection from the simultaneous failure of two drives.

The S500 runs what I understand to be a scaled down version of Data Ontap, NetApp's flagship OS, but customers can take a generous number of snapshots -- as many as 250 -- which should satisfy most data recovery scenarios.

As do its larger NetApp siblings, the S500 has built-in concurrent file and volume serving, the latter via iSCSI for now, but with plans to add FC later this year. Also, I am told that the storage provisioning process has been simplified to meet the requirements of SMB customers.

NetApp must have carefully weighed the S500's features set against those of competing units such as the Dell/EMC AX150 or the HP MSA1500; the other products lack a similar combination of unified storage, dual parity RAID, and the benefits of taking so many snapshots.

At about $5,000 for a 1TB entry level configuration, StoreVault's price should be competitive, but selling to the unfamiliar SMB segment may call for other incentives to doing business, such as a local VAR presence and the possibility of purchasing other goodies, say servers or PCs, from the same outlet.

As far as I know, NetApp plans to serve that new layer of customers via a single distributor with global reach, Tech Data, and by building a network of VARs, initially in the United States only, then also abroad.

Will NetApp's carefully planned strategy to win new storage converts succeed? SMB is quite a different and more difficult market segment than the enterprise field. There is a greater affinity with retail, which makes sales much more dependent on VAR support than on the efforts of vendor salespeople or the actual product characteristics.

Obviously, VARs will be more likely to support products that bring in more money for them. In business lingo, that could translate into thinner margins for the storage vendors and into somewhat less predictable sales strategies -- two experiences to which NetApp (just like some of its competitors) may not have been exposed to yet.

Regardless, now that another runner has joined, it will be interesting to keep an eye on the SMB storage race. Who knows? Having more affordable and easy-to-use products could become contagious and spread to other storage solutions and markets.

Join me on The Storage Network blog with questions or comments.

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