In a self-described FUD piece today StorageBod wonders about Netapp's future. To put a finer point on his thoughts, in a comment he wrote:
Your first billion was the easiest billion; the rest gets
harder...there's a target pointed in the middle of your foreheads' now.
You are going to have to run even faster, even to stand still. Can you
do it and can you do it without increasing your product set?
Normally I would enjoy this sort of badgering, but in a subsequent comment he wrote:
Complaint about NetApp is how vulnerable they are...they are not the
only ones tho'...there are more vulnerable companies out there; 3Par,
Compellant, Isilon, BlueArc etc, etc...the trailing pack who need to
grow quickly or get bought.
OK, at least he mentioned 3PAR first! After all, we are larger than the rest of the pack he mentioned, not to mention in a much stronger financial position. To put a finer point on it, 3PAR is not vulnerable to debt (we have none), nor to cash weaknesses ($108 Million and increasing every year).
So what vulnerability is StorageBod imagining? I suspect it was similar to those voiced by EMC blogger Chuck Hollis:
But, as you point out, it doesn't strike many of us as a defensible
position long-term. It's just too easy for competitors to provide a
"good enough" and attack those rich margins.
EMC tended to think it was in an unassailable position a decade ago
with the Symmetrix. We were quite wrong. If I was doing a storage
startup, it'd be pointed directly at draining NetApp's profit pool.
I also think that single-product companies lose the benefit of
hybridization -- combining multiple technologies in new and interesting
ways.
My take on this is that the storage industry tends to have different dynamics than most other industries. Yes size matters and Netapp and 3PAR and everybody else plays by those rules, but after achieving a critical mass, size is less important than paying attention to details. Doing things more effectively - not just in a more grandiose fashion - makes the largest difference.
We are not concerned about competitors trying to copy us and providing "good enough". A competitor's assessment of "good enough" will likely not be adequate to many customers. It's how we grew our business over the last 10 years inside the jaws of EMC's formerly unassailable Symmetrix business. I was an independent outsider when 3PAR began and to tell the truth, I thought the folks at 3PAR were out of their minds. But 3PAR has steadily grown and continues to gain market share - primarily in the high end of the market. Admittedly, the high end has not been a place for hottest growth over the last decade, but we've climbed and are still steadily climbing. As the service provider model of IT evolves and gains traction, we like our chances with our products and technologies there. FWIW, our new mid range F-class systems are doing very well, but we probably need a larger reseller channel to address the number of mid-range opportunities we are seeing. That is a growth problem, not a shrinkage problem.
3PAR's capacity guarantee program works because we consistently deliver utilization levels that our customers didn't think were possible and we stand behind it with a contract. Customers continue to check it out and are coming to the understanding that great utilization comes from a system designed for optimal efficiency and not simply to be "good enough". If you stop thinking about storage administration as managing disk layouts you are on the right track. 3PAR admins don't manage disk layouts.
The question of hybridization and crossover potential is very interesting. Innovation can come from trying to tie disparate things together and this sort of integration is incredibly valuable when done well. However, a hybridization mind set often assumes that most core innovation has already been done and that most future gains will come from integrating across functional boundaries. 3PAR doesn't think fundamental storage technology is even close to being fully developed. The problems customers assume they have to live with should not be tolerated.
So yes, it's possible that we are vulnerable. The storms of technology change could make 3PAR and Netapp irrelevant in the years to come. Speaking only for 3PAR, we believe there is still a gold mine in revolutionizing storage efficiency and will continue to compete based on that belief.