Zerowait Corporation

I am returning home to Delaware from San Diego today after a very busy week of visiting our customers in Southern California. We met with customers in publishing, entertainment, micro electronics, aerospace and defense. Every customer is looking at how to consolidate their storage to get by without breaking their budget. Maximizing storage to the capacity of their current NetApp systems is one way of making their budget dollars go farther because they can avoid a system upgrade. A couple of customers are looking at Equalogic storage and some were looking into home brewed BSD solutions running ZFS.

The paradigm has changed and high priced arrays are not a priority anymore. The priority is maintaining high availability without breaking the budget. Because of tightened budgets some customers are comparing their quotes from different divisions and have noticed that their pricing was different from NetApp for different divisions within the same company and were sometimes different within the same building for systems and support. One company that I met with that has a European division noticed that NetApp pricing was substantially different and that the Europeans could purchase the identical equipment for substantially less then the US division could. This might have something to do with the opportunity registration that NetApp uses, but with many companies today the lowest acquisition cost is the most important aspect of a purchase, and the vague logic of the pricing that customers are getting seems to be an issue.

This trip was enjoyable. I met with many customers and friends that we have been working with for over 10 years. We discussed the growth and maturity of the networks we have been working on and looked at the new challenges that occur because of rich media and compliance issues. Storing data for compliance can get quite costly and our customers were asking what types of solutions we could provide them that can provide reliability without breaking the bank. And we have some solutions that are a perfect for for today’s budget constrained IT environment.

The financial panic has hit Wilmington, Delaware. Many of the companies in the news have offices here – AIG, JP Morgan Chase, Citi, Bank of America, etc. As a member of the Delaware business community we are offering to help the local financial institutions by helping them lower their costs of support and maintenance for their NetApp storage infrastructures. The employees of these companies are our neighbors and friends. If we can help these companies to reduce maintenance costs perhaps these large companies can retain some of their highly trained IT staff who are our neighbors.

Tough times call for creative solutions and Zerowait has been providing an affordable alternative to NetApp for service and support for many years for some of the largest companies in the world. Since the Dot Com bust NetApp has focused on the financial sector, and their business grew over the last few years. But now these financial companies are hurting, and their workers are looking for reliable solutions that they can afford.

We recognize that a lot of local companies are hurting right now, and we have solutions that can help them maintain their high availability storage while they are cutting their budgets. Let’s work together to solve today’s problems and let other people assign blame. If you work for a financial institution with offices in Delaware, give us a call and we will give you an additional 5% off our already low prices.

Today the news reports are all about the financial panic. The great sell off and the doom that is coming. But there are always ways to economize and people are at their best when things look bad. Today people are looking at Zerowait as an option on how they can save money and not sacrifice the high availability service and support that their NetApp storage infrastructure provides. There are always options, and in hard times Zerowait can provide an affordable alternative for high availability service and support for your NetApp infrastructure.

Don’t Panic! Zerowait has the answer! Call us and we will calm your nerves.

Yesterday morning a Purchasing Agent for a big company that we have been working with for many years asked us to review a quote that NetApp sent to them. The Purchasing Agent could not understand how come NetApp’s prices were so high.

We were asked if we could provide the equipment and we told her that we could and our price for the equipment would save her about 40%-60% of what the NetApp quote was. Every Purchasing Agent knows that you need to have two suppliers to keep prices down. And Zerowait helps companies worldwide keep their NetApp equipment acquisition and maintenance costs down.

NetApp understands that they need two suppliers for their disk shelves and drives and is forcing Xyratex to accept a secondary supplier. NetApp is doing this to keep Xyratex’s prices down. They are forcing their supplier to lower costs through competition.

According to the transcript of the recent Xyratex earning call, NetApp is looking for a secondary supplier of storage shelves.

“My true feeling is at least in the short to medium term NetApp and ourselves have been discussing for a long time their desire from a risk perspective to have a second supplier,so I think it’s driven by that but I think the fallout of it will be to see whether things can be done more cheaply in that way. And I guess to a degree Xyratex should invite that because to the extent that we can get product to our customers more cheaply while not increasing our own production capabilities but by looking to CMs to do more for us, then it should actually be positive for us as well if that is the case.”

It is good to know that NetApp understands the reasons to have two sources for parts and services. And their executives validate the business model whereby NetApp customers invite Zerowait in to provide support for some NetApp systems within their storage architecture. Many times companies buy shelves of drives from Zerowait and we support the shelves we sold on a system and NetApp supports the shelves which it sold.

Whenever a company has all its eggs in one basket the purchaser and the supplier are tied together, and that is usually cause for mischief on the suppliers part.

If you are asking the question ” Why does NetApp charge so much?” Call Zerowait. We have the the answer. Competitive quotes for NetApp equipment will make NetApp sharpen their pencils. Just like NetApp is causing Xyratex to do.

Today storage administrators are wondering:

Why do Seagate disks cost so much from NetApp?
Why do yearly software downloads from NetApp costs tens of thousands of dollars?
Why do I have to upgrade my underutilized equipment that is working perfectly fine?
How am I going to support my storage infrastructure when my budget is cut?

Storage administrators see the forced upgrades and ridiculous software download pricing as crazy. They recognize that their vendor’s support costs are out of control. And they are trying to rein in costs because their budgets are being locked down. Storage vendors are not working with their clients and can be patronizing to them when they are having some troubles.

“Daniel J. Warmenhoven, CEO of data storage company NetApp (NTAP) (formerly Network Appliance), counts himself lucky that neither Lehman nor AIG was a big customer (though Lehman did take the company public). He says tech spending is holding up so far—in part because it lowers operating costs. ‘The analysts are always ‘woe is me,’ because their industry is getting hammered,’ says Warmenhoven. ‘Well, go cry in your own beer. Don’t ruin mine.’ “

What happened to long term business commitment to create loyalty between customers and vendors? Why are so many vendors willing to throw their customers “under the bus” as the saying goes?

At Zerowait we have worked hard to build an indivdualized long-term relationship with each of our customers. We understand that companies go through rough patches, and we find creative ways to work things through with them. High availability storage is a long-term business. We all know that you can’t throw away your documents and records.

Who is standing by you in these times?

NetApp seems to be getting ready to try to force some more customers to upgrade when they don’t have to. In tough economic times many companies are trying to extend the life of their storage and infrastructure assets, but that does not fit in with NetApp’s game plan. They sell boxes, and they need to sell more, so upgrades are being sold.

” The 3020, a smaller and older array than the 3140, will be end-of-lifed soon though, reducing the number of models in the FAS range by one and, we could read it this way, creating a space in the range for a new mid-range model.”

Zerowait understands that many customers are having a hard time currently, and we are working with them to try to keep their storage running at a cost they can afford. NetApp takes a different view of customers that are having trouble because of the financial shakeout.

Daniel J. Warmenhoven, CEO of data storage company NetApp (NTAP) (formerly Network Appliance), counts himself lucky that neither Lehman nor AIG was a big customer (though Lehman did take the company public). He says tech spending is holding up so far—in part because it lowers operating costs. “The analysts are always ‘woe is me,’ because their industry is getting hammered,” says Warmenhoven. “Well, go cry in your own beer. Don’t ruin mine.”

We look forward to helping the folks at AIG and Lehman, or the companies that acquire their storage assets, and we know that we can support their NetApp infrastructures at a cost they can afford for many years to come.

Over the last several years I have been watching Larry Ellison’s storage company Pillar Data Systems to see how they leverage their unique Oracle connection. It seems they have been very careful to not upset the applecart for the storage vendors EMC and NetApp. But after reading a few press reports today it may be that Larry’s companies are about to package a hardware and software solution to compete with NetApp and EMC.

Article 1

Pillar Data Systems, which offers what it calls application-aware storage systems, introduced “profiles” for integrating its systems with Oracle databases, VMs, and the Oracle Unbreakable Linux program. They said the profiles will produce improved utilization and performance, better system availability, and centralized management of storage in Oracle environments. The company is backed by Oracle CEO Larry Ellison.

Article 2

… users often need to wait too long for disk storage systems to transfer those terabytes of data into Oracle’s database software. The Oracle-HP storage server is meant to address that problem by performing some of the computer processing closer to disk drives. The Database Machine server can speed up processing of financial transactions or data analysis. Oracle has also taken aim at the nascent market for “cloud computing,” which lets companies run software in large, remote data centers, accessing it over the Internet. On Sept. 23, Oracle and Intel (INTC) announced joint work on database performance and security for cloud computing environments.

It would make sense for HP to work with Oracle on breaking the hold in customer environments that EMC and NetApp have. But finding a strategic partner that will remain loyal for the long term in Silicon Valley seems very hard. If HP, Pillar and Oracle can work out a long term arrangment it would be good for customers, because competition in the storage business always brings down prices.

It must be hard to pick your strategic partners these days if you are a storage vendor. For example, Riverbed is a partner of NetApp , but it looks like Riverbed is about to release a very competitive product offering to cut the growth of storage.

Riverbed calls its new product Atlas, and says it can eliminate up to 95% of redundant data in corporate storage systems. In a release earlier this week, the company asserted that the Atlas appliance “will do for its customers’ data at rest” what the company’s Steelhead products “have done for their data in motion,” eliminating redundancy “which typically burdens IT infrastructure by slowing down access to data and applications and increasing costs and operational overhead of data management.”

“Wolford makes the eye-opening claim that alpha testers are finding they can increase primary storage by 300%-1,000% by using Atlas. That sure makes Atlas sound like a big threat to the storage vendors, don’t you think?

Riverbed said it plans to start shipping the product in the 2009 first half.

Not sure if the Riverbed news this week is responsible, but it is the case that storage stocks today are under pressure: NetApp today is down $1.70, or 7.8%, to $20.10; EMC is down 83 cents, or 6.5%, to $12.01; RVBD is down 18 cents, or 1.4%, to $12.77.”

NetApp’s executive suite seems to be getting ready for some sort of change in the storage marketplace and may be preparing their own golden parachutes.

Attached to the 10-Q NetApp filed on Sept. 3 were amended change-of-control severance agreements for CEO Daniel Warmenhoven and other unnamed executives that were effective on June 19

Zerowait sponsored Racer 94 at the Reno races and we placed second in the Bronze T-6 Class. As a first time sponsor with a new pilot, Ott Claremont, we did very well in the Bronze T6 race. Our western customer conference was a success and we wish you could have joined us. Jon Toigo was our guest speaker on Friday night and he fostered an open discussion between our customers on the challenges they all face in satisfying the demands of the growing need for storage management in a world of tight budgets.

It was a great event, we look forward to next year.