Zerowait Corporation

Since IBM started reselling NetApp products a few years ago savvy customers have been playing the two companies sales organizations against each other. Now it seems analysts are noticing this is causing some consternation in the competitive channel organizations.

This rollout of fresh support for NetApp products comes amid some buzz among Wall Street analysts of increasing channel conflict between the two companies. “We are hearing of some increased pressures in the direct sales vs. IBM channel side of the business,” wrote Wachovia analysts Aaron Rakers, in an email to clients.

I am certain that IBM reviewed the history of NetApp’s failed relationships with Dell and Hitachi prior to getting involved with reselling Filers. Reviewing a company’s history with partnerships can’t predict everything, but it certainly pays to do research prior to getting involved with a company that has such a well established history of making tactical partnership decisions to the detriment of end users. In our experience it makes end users feel secure when they know they can depend on a strategic partnership which guarantees them long term service and support for their high end storage equipment. IBM knows the way things work, how do their new acquisitions figure into their long term strategic view of their NetApp relationship and enterprise NAS sales overall?

To say that many enterprise IT departments are cutting back on their IT expenditures would not be surprising to many of our customers. But it is interesting to notice that the Wall Street Journal has written an article on the issue. Many of our customers are asking us to help them Tweak and Tune their NetApp storage to make the equipment last longer and provide more usable storage to them. The WSJ mentions how companies are reviewing their infrastructure.

“Mr. Rapken met with his lieutenants and decided he could trim his budget for 2008 by 10%, an amount between $10 million and $20 million. The savings would come from replacing employee PCs every four years instead of every three years, delaying a payroll-software upgrade, reducing the company’s use of contract workers, and leaving vacant positions unfilled while laying off a small number of workers.

At the same time, Mr. Rapken had ideas to use technology to improve his company’s overall efficiency: He is spending less than $300,000 to tweak software that YRC already owns, so that it better automates how freight is moved and tracked. The change is expected to improve workers’ productivity, ultimately lowering overall costs.”

There are many ways to unlock your storage system’s potential and also to extend the lifespan of the equipment. Most companies have ever expanding computer storage requirements, but only a limited budget. Extending the lifespan of your systems and unlocking their storage potential is a great way to stretch your budget dollars.

Before you buy new, why not check to see what your legacy systems can do? They are not outdated just because the vendor’s sales team and engineering staff tell you it is.

An interesting note in today’s Byte and Switch caught my attention.

Pacific Growth Equities analyst Kaushik Roy discussed a possible Fujitsu/Exanet deal in a report on NetApp last week: “We are concerned that NetApp’s second largest OEM customer Fujitsu Siemens may buy high-end NAS vendor Exanet, which would be incrementally negative for NetApp,” he wrote. “If they do not buy privately held Exanet, we believe Fujitsu Siemens might at least resell Exanet’s high-end NAS solution.”

If this rumor is true, and viewed in conjunction with IBM’s recent acquisitions as detailed by Andy Monshaw in this article . It may be that NetApp is about to lose two very big reseller OEM customers. Mr Monshaw certainly seems to understand how to bring together the pieces of a storage solution.

“This idea that hardware is commoditizing and the value is moving to software and services, which is sort of a mantra, is complete nonsense. Elements of hardware commoditize, elements of software commoditize, elements of services commoditize, as they move to global resource pieces of service capabilities.

So I think evidence of investment in the IBM storage business speaks for itself: XIV, Softek, Novus, Arsenal, FileNet–all around this space in the last two years we have had a series of very specific investments. And I wouldn’t call any of these niche, point-play investments. These are real, honest-to-God capabilities that we’re bringing to this portfolio. “

Whether the storage business in commoditizing or not, there suddenly seems to be a lot of interest from big players in building a solution that fits squarely in NetApp’s market niche.

I wonder why that is?

What does virtualization mean anyway?

“[Virtualization is] a technique for hiding the physical characteristics of computing resources from the way in which other systems, applications, or end users interact with those resources. This includes making a single physical resource (such as a server, an operating system, an application, or storage device) appear to function as multiple logical resources; or it can include making multiple physical resources (such as storage devices or servers) appear as a single logical resource.”

I had a conversation with a buddy of mine who works in the financial industry and is looking at some directory virtualization software. After listening to the benefits of the software I asked a simple question – ” is virtualization cheaper than what you are doing now?” At first it looks like it is, but that may be marketing ROI’s and not based on the real world. It seems that there is a lot of expense involved in buying the software, migrating data, and managing another layer on your storage network. But, is it any less expensive then running your old storage as an archive, the old stuff is usually already paid for. Are virtualization vendors adding complexity to your already tangled network infrastructure? How much is it going to cost to remove the virtualized layers of obfuscation when ‘Simplificaton’ becomes the hyped buzzword in the industry press.

What ever happened to keeping things simple? When has complexity ever been cheaper to install, run and maintain for the long term ? When has complexity ever simplified debuging anything? How long will these Virtualization engines be supported? How do you untangle your Data if they go away or you change vendors?

Sounds like Virtualization really is a way of locking you in for the long term to a chosen vendor.

This morning one of our customers in Texas called me to tell me to thank our engineering staff for helping them solve a thorny issue with one of their clusters. Our staff worked on Friday, and over the weekend they monitored the situation. The customer really appreciated all the support he had gotten from our staff, and wanted to tell me about it.

This particular semiconductor customer came to Zerowait for our third party service and support after NetApp tried to force them to upgrade their perfectly good systems by raising their price of support to ridiculous levels in 2003 . NetApp’s dedicated sales team wanted the company to buy new equipment, and they wanted to keep their legacy systems running. Zerowait provided a support policy for them that has maintained their High Availability systems in top shape at very reasonable costs for 5 years now.

High Availability storage systems do not get cranky just because the OEM has come out with a newer model. So why does NetApp charge so much for legacy storage support? Only the suits at NetApp know for sure.

New York State seems to be trying to drive more business away according to this Editorial in today’s Wall Street Journal.

Return of the Web Tax
Wall Street Journal May 1, 2008; Page A16

New York Governor David Paterson is not repeating the worst mistakes of his predecessor. That’s too high, or perhaps we should say too low, a bar. Still, the new Governor has resurrected one of Eliot Spitzer’s least popular ideas, a tax on Internet sales that he hopes will raise more than $70 million a year. Despised by consumers and constitutional scholars alike, this new tax will hit e-shoppers within weeks.

By signing the state’s budget, Mr. Paterson is now attempting to do what Mr. Spitzer only threatened: Force out-of-state retailers such as Amazon.com to collect New York’s sales taxes, which approach 9%, including local levies. A 1992 Supreme Court decision called Quill bars exactly this type of money grab. The Supremes ruled that forcing such obligations on companies with no employees or buildings in a state could cripple interstate commerce. Without Quill, small Web merchants would have to answer to 7,500 state and local tax collectors.

New York’s spendthrift pols are desperate for revenue, however, especially given that their current budget increases spending by 5% despite the pinch on Wall Street that will hurt state coffers. The Governor apparently believes he can get to companies like Amazon through New Yorkers who run ads for Amazon on their Web sites. In fact, if nonemployees with some business relationship with a company were enough to establish physical presence, then Quill would essentially be meaningless.

The courts may well ax the Paterson tax on these grounds. But until they do, some companies will feel pressure to pay instead of doing battle with a state government. New York’s overall business tax climate ranks 48th among the states, according to the Tax Foundation. Mr. Paterson’s money grab could make New York the biggest loser when it comes to tax competitiveness.

When will politicians learn that companies act just like people and move to locations that provide an affordable atmosphere in which to grow?

If analysts could accurately predict the future there would be no risk in investing upon their advice. Therefore, I have to wonder if analysts are predicting the future in their writings, or if they are not. If they accurately predict the future, they would be widely read and therefore the yield for return on investment based on their advice would be rather low. Following this logic the Contrarian who keeps his opinions to himself, may have the best return on investment.

Almost all storage industry analysts say that computer storage is going to grow, many of them get caught up in which type of storage will be the fastest growth or most widely adopted. But I don’t know of any that say that businesses and individuals are going to stop saving files. Will the future of storage be a remote storage service solution or will it be really cheap and reliable spinning media or flash memory?

A friend of mine pointed me to this article today:

As you move along the storage technology continuum, you’re trading price for speed. Getting information stored on tape, which is cheap, can take hours or days while accessing something on flash, which costs a pretty penny, takes microseconds. Plus, solid-state drives using flash can’t possibly store all of the data people are creating. There’s also the question of how reliable it is.

Given this, most companies requiring huge storage arrays rely on expensive machines from the likes of EMC or HP. Or they make their own “storage cloud” using commodity disk drives and a proprietary layer of software. By allowing companies to allocate and provision the storage in a software layer, it virtualizes the storage array. It’s essentially the same model that underpins the storage services offered by Amazon S3 and Nirvanix.

Meanwhile, tier-one storage equipment vendors companies such as EMC, IBM and HP have recognized that cloud storage is the future of computing, and are attempting to ride that wave without cannibalizing their high-margin box business. For example, EMC is offering services for SMBs through its Mozy acquisition. IBM last year purchased XIV, which makes the software that can be used to virtualize storage. Large companies such as NetApp and 3Par are attempting virtualize storage as well.

This article suggests to me that vendors are taking different approaches to solving the growth and high cost of storage, however they do not want to get into a business that will hurt their current cash cow business of selling arrays which are expensive and not all that efficient. This would suggest to me that there is an opportunity for a new entrant with a lower cost model to come into the marketplace and create a new market niche for themselves. I am certain that the next few months will reveal that there are many opinions as to whether the broadly defined storage marketplace decides on Flash, Cloud storage or spinning media.

But eventually the market will decide, no matter what the analysts say.

Intel has slashed the prices of their processors, the question at hand is how will this affect new NetApp equipment. The current models of the FAS3000 series and FAS6000 series are using AMD processors, will NetApp switch to Intel now?

It is an interesting question, brought on by an article I saw today.

Intel has slashed prices of some of its processors by up to 50 percent in a move it claims is for clearing out 65 nanometer (nm) processors to make way for 45nm ones. Nevertheless, the price cut might prove fatal for rival AMD (Advanced Micro Devices), whose chips have been hitherto considered low-price alternatives in the chip market.

Will NetApp switch processor manufacturers now that they can get cheaper components from Intel? How will this change their product line up? They seem to have canceled the FAS3020 and FAS3050 which were Intel platforms for the 64 bit FAS3040 and FAS3070. What will be the longevity of these systems?

I certainly hope that AMD will do everything they can to hang in and continue to build their business and maintain competitive pressures on Intel. AMD makes a great products and we are certainly big fans of their technology and products. I hope that NetApp continues to keep AMD as their preferred vendor.

Over the last week I have visited clients in Western PA and also spoke with quite a few on the phone about the costs of maintaining their storage infrastructure and the options for making their current storage last a lot longer than their original plan. One customer we work with just decommissioned their NetApp 630 which they have been running since 1997. We helped them maintain it as a rock solid platform so they could maximize their storage potential for many years. They saved a fortune avoiding upgrades from NetApp.

Tuning NetApp storage equipment so that it can provide our customers with the maximum ROI and lifespan is a specialty of our engineering department. And it saves our customers money in a number of ways.
1) We help our customers avoid the high cost of data migrations.
2) We allow our customers to maximize the storage potential of their systems. Often providing storage beyond the marketing literature limits they were told the equipment could support.
3) We provide support for equipment so that it remains the High Availability pillar of our customers’ storage architectures.

We recognize that our customers are looking for a good deal, and the best deal in the storage business often turns out to be to avoid the upgrade and unleash the potential of your current storage architecture. At Zerowait we specialize in helping our customers maximize their ROI on their NetApp equipment. I hope you will give us a call if your budget is tight, or for example, you may want to add more storage to your current very reliable NetApp 900 series platform to extend its lifespan and utility. If so, give us a call 888.811.0808 ,we look forward to helping you unlock your NetApp’s storage potential.

Over the last week I have been traveling throughout the Southeast visiting customers and going to a meeting with the ASCDI in Key West. During the ASCDI convention there was a presentation by Michael Sacharski of Pacific Enterprise Capital which specializes in Chinese opportunity development for American companies. Michael put on a great presentation and the discussion that followed the presentation was quite interesting. Jon Toigo also put on a great presentation during the conference that kept the crowd interested in the changes in enterprise storage that we have gone through and we will be experiencing in the next few years. Jon and Michael both travel throughout the world and between the two presentations it was clear that business today has to be international in scope.

The customers I visited during the trip are all to one extent or another engaged in international business, and the storage services we provide them are helping them achieve their business success. One customer is looking to develop business in the UAE over the next year or so and asked us how we would provide them with hardware, service and support there. As the dollar gets devalued more and more, our equipment is being shipped overseas regularly, and the opportunities for business growth sometimes surprise our customers as much as they do me.

Mr Sacharski’s conversation with me revealed that there are opportunities for Zerowait to sell into China as their economic growth is causing them to require massive amounts of data storage. Affordable high availability storage is as interesting to Chinese organizations as it is to G8 nations. It will be interesting to see what develops.