Zerowait Corporation

What is a CIO or CTO to do in a world as mixed up as today’s Enterprise storage market is? How can the C- level executive make a 5 year storage plan when Sun and NetApp are going at each other so aggressively?

Jonathan Schwartz writes...
“The shift to commodity infrastructure is as inevitable as the rising tide – although for some, I’m sure it feels like a rogue wave.”

This is a statement of simple Adam Smith Economics, nothing surprising in that statement. But for a proprietary software vendor it’s fighting words…

Chris Mellor in Techworld sums things up well….
“Schwartz says that Sun will respond to NetApp’s lawsuit but will also open one of its own against NetApp in an aggressive raising of the temperature. Sun will file a suit attacking NetApp’s use of the Network File System, NFS, and requesting withdawal of all NetApp filer products from the market.

Ouch!

To rub in salt, Sun will pursue sizeable damages and donate half of any proceeds to free software causes. It’s not after the money in other words.

Also, to calm customer concerns, Sun indemnifies all ZFS customers against financial fallout from the NetApp suit. This extends to Apple.

In many people’s minds there is no way Network Appliance can emerge from this reciprocal pair of lawsuits as the good guys. NetApp started it. People urged talk at the CEO level to prevent a damaging effect on both companies. Schwartz initiated this and Warmenhoven has made unacceptable demands. “

Later in the article he states…
“What someone needs to do, perhaps, is to look Dan Warmenhoven in the eye, someone whom Warmenhoven respects absolutely, and say: “Discretion sir, discretion is the better part of valour. This engagement against Sun is one you cannot, in any real business sense, win.””

Jonathan Schwartz of Sun writes in his blog…

In the interim, if you’re a Net App customer looking for alternatives, we would be pleased to talk to you about lowering the cost of proprietary storage – if you’re a technical sort, start by trying out ZFS in software form. (There are also lots of reviews available, this one just posted). We’d also be happy to send you a free trial Storage System based on ZFS (pick the x4500 here). And remember, we indemnify our customers.

Now for a shameless plug…
In this chaotic environment, you can be certain that Zerowait will continue to provide outstanding and affordable monitoring, maintenance, and management for your NetApp filers for years to come! Give us a call we can calm your nerves!

According to storagemojo NetApp is cutting deals to move units out the door and to kill Isilon while it is still vulnerable.

“There is a rumor that NetApp, seeking to strangle baby Isilon in its crib, is giving away product to win deals.
At $1/GB I might buy one
If true, this could reflect continued weakness in NetApp’s results, as noted by analyst Tom Curlin at RBC Capital Markets in late July. They’d be plumping up the top line at the expense of the bottom line.”

At the same time as this is going on the CEO of Data Domain Inc., Frank Slootman seems to think that NetApp is still a Niche player in the storage marketplace. When asked to comment on NetApp by Glenn Hanus – Needham & Co. on their conference call this is what he said..

“Glenn Hanus – Needham & Co.
Anything you’re willing to say on NetApp?
Frank Slootman
“NetApp is a very different animal in the sense that NetApp really competes in their own accounts. NetApp has some percentage obviously of the storage market, which is considerable, but NetApp is not a broad-based competitor. NetApp is a very, very strong competitor when you get into NetApp shops. When you get outside of NetApp shops, you rarely ever see them. That’s very different for EMC. EMC has a very broad-based presence in the marketplace. Quantum tries to protect its installed base of tape devices and NetApp is trying to dig a moat around its install base of near store systems. That’s summing up the dynamic that’s going on out there”

So NetApp is cutting deals to kill competition and not doing very well at expanding out of its market niche. Is the “Moat” Slootman mentions to lock in NetApp customers or NetApp’s competitors out of accounts? An analyst should be able to get to the bottom of this.

According to this article about the recent EU decision Microsoft and NetApp are competitors.

“The pact negotiated by the European competition commissioner, Neelie Kroes, and Steven Ballmer, Microsoft’s chief executive, will enable Microsoft’s competitors — from global enterprises such as IBM Corp., Sun Microsystems Inc. and Network Appliance Inc. to small, independent software developers — to make and sell server software that works seamlessly with Microsoft’s, which industry experts predicted would open vast new sales opportunities.”

But according to this article NetApp and Microsoft are partners.

“NetApp is proud to increase its commitment to Microsoft and the MTCs. Our increased investment in the MTC program demonstrates our current success and desire to serve customers using the Windows Server platform,” said Patrick Rogers, vice president of Products and Partners at Network Appliance.”

This could be a case of keeping your “friends close and your enemies closer”, or it could be the beginning salvo in a opening battle between the two companies. Either way, as a customer or competitor you have to wonder who is leading the PR campaigns in these companies because customers are receiving two very different versions of how these companies view each other.

It looks like they are investing quite heavily in their own solutions, I wonder how long they will resell NetApp gear?

See here….
“In his session, Andy Monshaw, General Manager for IBM System Storage, estimated that IBM’s storage effort to be a $6 billion plus business with some 6000 people spread across 170 countries. IBM invests heavily in storage with more than $500 million in R&D annually that last year resulted in hundreds of patents. IBM views the evolution of storage through a lens that sees the time prior to 2000 as the time of invention, the time between 2001 and 2004 as the time of integration, and 2005 and beyond as the time of innovation. The company plans to leverage differentiation comes through virtualization, archiving, and security/encryption (which were three of the topics in the deep dives earlier), and also wants to expand solutions through ‘green’ storage, the greater use of digital media, and expanded efforts in the SMB space. IBM views itself as having marketplace momentum in storage hardware, tape, external disk, and storage software according to market share numbers that it hopes to continue to grow.”

It looks like IBM’s storage business is investing almost 1/4 of NetApp’s total revenue in storage R&D, that leads me to wonder how NetApp can compete with this investment in basic storage research by what they claim to be one of their largest customers. It also has me wondering how long IBM will be selling NetApp gear, they seem to be gearing up to use their 6000 people to sell their own solution, which would be more profitable for them. How significant a share of NetApp’s business does IBM represent, and can they afford to lose that portion of the business? You can be certain that IBM’s storage sales force will sell the gear that they are compensated the most on, that is the one certainty in all of this.

If I were in IBM’s shoes I would compensate my sales force more and better to sell my own gear which has higher gross margins for the stockholders.

NetApp and Microsoft say they are partners.

“Network Appliance is strategically committed to architecting storage solutions that are highly compatible with Microsoft technologies. Tight integration of licensed Windows® protocols and complete compatibility with Windows OS enhancements as well as Microsoft applications are Network Appliance™ development priorities. These solutions are backed by a global customer support infrastructure that integrates Microsoft Premier Support. “

But it looks like Microsoft is trying to compete with NetApp.

“Microsoft is on course to improve its share of the storage market that has long been dominated by EMC, Hewlett-Packard, NetApp and others, according to eWeek.

Ted Kummert, corporate VP of Microsoft’s data and storage platform division, said at Storage Networking World: “We’re making storage products that you can bet your business on.”

He says Microsoft has already proved itself as the “general platform for all data” – through widespread adoption of Windows, Microsoft Office and Exchange – and is carrying this experience forward into the storage market.”

When partners compete, they may both start to keep secrets from each other, and the partnership may eventually unravel. Will Sun and Microsoft have a stronger relationship then Sun and Microsoft each have with NetApp?

NetApp adds Bell Micro to its distributor list.

“We wanted to expand our customer reach and broaden our VAR base,” said Pete Rawden, UK channel director at NetApp. “Adding another distributor means that more resellers can get products easier and faster and deliver to users the benefits associated with NetApp products, including: maximising data infrastructures while minimising complexity, overhead and technical staffing costs.
“We … selected Bell Micro because of their capabilities and skills that will allow us to move in new directions and reach new end users. The appointment of Bell will also bring new complimentary partners to our community over and above but not affecting our DNS Arrow partners,” added Rawden”

I wonder how this affects NetApp’s Hard deck program and the superseding Foundation program? Most customers want a strategic long term approach, but NetApp seems to keep changing course in the middle of the cruise, leaving resellers and end customers wondering what is going to happen next.

What’s your back up plan if you can’t get hard drives from Seagate?

Another item for the ‘ you can’t make this up category’

See here….
The International Trade Commission (ITC) has announced that it plans to begin an investigation into several companies that either make or use certain hard drives. In a statement issued yesterday, the ITC said that the hard drives in question are alleged to infringe on patents owned by California residents Steven and Mary Reiber. The two filed a complaint with the ITC in September, saying that the importation of the hard drives violates section 337 of the Tariff Act of 1930.

There are currently five companies being investigated by the ITC, including Western Digital, Seagate, Toshiba, Hewlett-Packard, and Dell. All five companies either manufacture drives that use “dissipative ceramic bonding tips,” or sell products that use such hard drives. These parts are used to bond electrical wires within the hard drive—while the ITC doesn’t specify exactly which patents the technology allegedly infringes on, two patents that are owned by the Reibers, titled “Dissipative ceramic bonding tool tip,” appear to fit the description.

Here is more info ….
The Washington-based body said the investigation has been launched in reaction to a complaint of violation of Section 337 of the Tariff Act of 1930 and seeks a ban on importation into the U.S. of products that allegedly infringe on U.S. patents. The complaint was made a month earlier by Steven and Mary Reiber of Lincoln, California, and is centered around “dissipative ceramic bonding tips,” which is related to electrical wire connections inside the drives.

The ITC did not name the patents alleged to have been infringed, but according to U.S. Patent and Trademark Office records, the Reibers hold patents 6,935,548 and 6,651,864 covering such methods.

With Wednesday’s decision to open an investigation, the ITC has a 45-day timeframe in which to set a target date for completing the investigation. The case will be heard by ITC administrative law judge Carl Charneski, who will set an evidentiary hearing.

***********************************************

It sounds like the Selden Patent on the automobile to me…..

It sounds like Sun is looking at a long term Value Pricing strategy.

I was not in Denver this week, but many of the people I respect were. Chris Mellor often has some good insights, and here are some good nuggets from his report.

****”The promise is disk capacity at near raw disk prices, nt that Sun said that but why else produce this most commodity-like drive shelves unless you aim to undercut the EMC & Netapps of this world and their eye-watering prices for additional capacity. Buy a Sun storage product instead and add capacity via low-cost rack shelves like these.”****

****”Open Solaris gets a full NAS stack as CIFS is being added to it. That means people can build NAS products using it and compete with NetApp and EMC NAS – remember the JBODS? Open Solaris gets NDMP and failover too, both active:active and active:passive.”****

****”Of course the StorageTek customer base attending Forum got a loud, long and strong pro-Solaris message but that, being founded on Sun’s renewed and very public commitment to storage, went down okay. You get a feeling that a corner has been turned. Things are on the up and up and this product roadmap indicates that the future for Sun’s customers looks good.”****

From this report it looks like SUN is strategically going after the storage space with value priced equipment. My question remains whether Sun will be able to align their sales force with their customers’ desire for long term support and service over the their sales force’s tactical commissions for box pushing strategy. Are numbers shipped more important than long term customer relationships for service and support? It depends on your point of view.

The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. – Thomas Sowell

You can’t make this up….

Experienced computer professionals are being cut at Sun, EDS and Intel and yet politicians are helping to issue more H-1B Visas to foreign workers. So there are enough workers but American companies don’t want to pay them? Could this coincidence be the result of some influencing of our government ?

READ MORE

“For many established workers, the picture is less pretty than it is for new graduates. For instance, Electronic Data Systems Corp. said in a filing to the U.S. Securities and Exchange Commission last month that it was offering an early retirement program to about 12,000 of its 50,000 U.S. workers (download PDF).

Sun Microsystems Inc. said this week that it plans to cut 1,500 employees as part of a workforce reduction program announced in early August. And Intel Corp. recently confirmed that its IT staff is being cut by as much as 10% after an anonymous blogger described the layoff process in detail.

Those actions indicate that “midcareer workers better beware,” said Ron Hira, an assistant professor of public policy at RIT and author of the book Outsourcing America (American Management Association, 2005).

“The same firms that are laying off thousands are clamoring that they need more foreign workers,” Hira said. “One interpretation of this phenomenon is that companies have no interest in retraining or retaining incumbent workers to fill those positions.”

On Monday, the U.S. government began issuing about 85,000 H-1B visas for its new fiscal year — a total that is well short of what the high-tech industry says it needs for workers from overseas. Industry efforts to raise the annual H-1B cap have faltered as part of broader immigration-reform legislation, but proponents are still pushing Congress for an increase.”

Perhaps it is geography or specific states tax and employment policies that are causing these hiring and layoff anomalies. For example, Zerowait is always looking to add experienced IT engineers to our workforce, but it is hard to find folks with the specific set of technical requirements we need in Delaware. But I trust that Economics will help us find the solution in the long run.

Moore’s Law meets Physics and Economics at the same time..

Over the last few months many customers of ours have noticed that upgrading their filers to the newest systems seems to provide little performance dividend, and therefore keeping older systems running makes more sense now.

Over the weekend there was an article in the Wall Street Journal that did a little to explain why new Filers may not be that much faster then older Filers.

From the WSJ

“Chip speeds more or less hit a plateau about four years ago because the devices started generating too much heat. If past trends had continued, microprocessors would be about 20 times faster than they currently are. This is a problem. Microprocessors that run faster can do more.

Designers are trying to work around the problem by putting several processors on each chip. But it is hard for programmers to write software that does a lot of things simultaneously. So far, they haven’t devised any “must have” programs that encourage consumers to buy new chips.

The great plateau has had a drastic effect on chip sales. There is less reason for computer users to replace their hardware and little reason for hardware companies to buy the most advanced chips, which are the most profitable for chip makers. The total revenue Intel and AMD earn from microprocessors has been shrinking steadily since 2003.

This hardly means the industry is in a death spiral. But it does mean microprocessors are in danger of becoming more of a commodity, like memory chips.”

In my previous post I touched on Apple’s adoption of ZFS, other folks are asking interesting questions also.

As Matt Asay says in his posting.

“This, however, is allegedly only the tip of the iceberg of Apple’s adoption of ZFS, making the outcome of NetApp’s lawsuit important to more than just Sun.

Now, if I were NetApp, there are a few companies that would be extremely unwise to sue or otherwise involve in a lawsuit. Apple is one of those. I don’t think I’d want that PR nightmare and the hordes of Apple faithful that would be screaming for NetApp’s head.”

“Open source is the 21st Century’s. Get with the times, NetApp.”

The future of technology may depend on companies looking at open source code as a natural resource. Maybe future Silicon Valley companies will begin marketing software and products like Evian does water and Conoco does oil. There is a premium paid for the Evian’s brand and for Conoco’s brand and delivery of a consistent product. Will future storage consumers pay a premium for a brand and consistency?