Last week we learned that NetApp’s executives consider IBM sales efforts incremental. If that is the case , then I suspect after looking up IBM sales numbers, that IBM management must consider their rebranded NetApp sales insignificant to their bottom line.

“IBM is very focused on what I call white space, which is where we are not covered,” Mendoza said. “For example, state and local government, and retail. So it’s largely incremental for us.”

IBM Numbers for 2005

Revenue $91,134.000,000.00
Cost of Goods Sold $54,602,000,000.00
Gross Profit $36,532,000,000.00
Gross Profit Margin 40.1%
NetApp’s number for IBM’ sales = about $60,000,000
That means that IBM branded NetApp’s unit sales
are much less than 1% of IBM’s sales. By the way, NetApp is reporting sales of $2,066,000,000.00 for 2006.

Would you consider that insignificant to IBM, or incremental as NetApp’s Mendoza states? It could be both. But I think the sales are probably much more important to NetApp than to IBM. I wonder how it makes IBM sales folks feel to know their efforts are merely incremental? Does IBM have a bonus plan and sales contest to help determine who is their most insignificant and incremental NetApp sales person of the year? : )

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1 Response to

  1. Dave Hitz says:

    I think you are confusing “incremental” with “important”.

    “Incremental” means that we expect IBM to sell to new customers that wouldn’t have bought NetApp otherwise.

    If IBM sold a billion dollars to new customers, it would still be incremental. Significant, important, but still incremental.

    Incremental is good, because if IBM sells to customers who are already buying NetApp, it doesn’t increase our sales.

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