Zerowait Corporation

NetApp – whatever happened to simple maintenance, management and cost control?

Many of our NetApp service and support customers come to us because they have heard from coworkers and peers that Zerowait can help them control their maintenance costs, and then they learn about our remote management and other services that can help them control their out of control maintenance and upgrade costs for their NetApp equipment.

Recently, I heard from a customer in NYC that their NetApp SE was strongly suggesting they upgrade to a newer system. As I asked some questions I found out that their current hardware was not maxed out in anyway and could easily handle more, users, disks, and shelves. The customer learned that the SE was truly a Sales Engineer. Sales is the first word in that title, and they are not looking out for the customer’s long term interest, but instead NetApp SE’s are trying to sell you more equipment to boost their personal bonuses.

Can a vendor’s Sales Engineer ever put the customer first? It is an interesting question that needs to be asked. I think the answer is that an independent maintenance organization is the only way for a NetApp customer to get the most value in performance and long term usage out of his equipment. NetApp sells boxes and software, not efficiency.

Instead of asking customers what is in the customers interest and building products for them, NetApp has embarked on building Avatars of their perfect customers, so that they can build perfect products for them.

One way of developing better products is by tuning into clients’ data management woes, understanding requirements, and shaping products to reflect needs. However, the knowledge that after-sales and marketing folks get from the field does not always permeate to the engineers/developers.

And that is why the company created Mike Raja and Joe and four other personas. Joe could be a DBA (database administrator)/Chief Information Officer/any other user of NetApp’s data management products.

“This is a new approach that we are trying. Innovation is important and these personas for users of our products help continually innovate,” Louis H. Selincourt, Vice-President, SMAI & Offshore Operations, told eWorld over lunch at the company’s headquarters in Sunnyvale, California, recently.

The idea came from the book, “The Lunatics Are Running The Asylum” penned by Alan Cooper, whose company makes software more user-friendly.

“Personas create a consistent ID of our users, so we can discuss them across the company while brainstorming,” says Selincourt.

So now NetApp has created cartoon characters to act as their perfect customers… You just can’t make this stuff up!

At Zerowait we listen to real customers, and their real problems, and provide real solutions. We invest our research and development funds in creating better ways to help our customers, while NetApp is investing in cartoon characters to help their customers.

Testimony in the Brocade options scandal brings to light a rather interesting perspective by Silicon Valley Corporate management.

On the third day of the trial that began this week, a witness told the jury that Reyes told her during a private conversation that the back-dating of stock options in order to increase their value was “not illegal if you don’t get caught,” according to reports.

Nevertheless a conviction of Reyes may encourage the DoJ to make some more examples of Silicon Valley chiefs. At least a few will be watching this trial with more than a little concern.

It is worth reading the whole article, but clearly there was something funny going on. It certainly doesn’t look like the management had the long term interests of their customers, investors, or employees in mind. Are these statements representative of how the management was trying to build the company, or just on how they were trying to cash in quickly for themselves?

What happened to selling the ‘Magic’ of NetApp? It seems they are resorting to competing only on price now. Somehow – I don’t think NetApp can compete in the commodity storage business, they have a high cost support and maintenance model.Their sales strategy seems broken, it looks like they are fighting for the high margin business with EMC , and also fighting for the low margin business now with companies that are built to sell commodity priced equipment. Salesman go where the commission dollars are. Low margin typically means low commission. And saleman always work harder for a good commission.

“The mid-tier has a need for packages with everything bundled, including disaster recovery, backup and recovery, and repositioning,” Chalaka said. “A lot of competitors are starting to offer this. We have been offering it ala cart, but it’s been complex for resellers. Also, our prices have been higher than the competition’s.”

The bundles represent a list price drop for NetApp of between 16 percent and 47 percent from their original prices, bringing the bundle prices to 10 percent to 20 percent below the competition, Chalaka said.

Can a company used to high margin sales and expensive technical support compete in the commodity storage business? Most companies are not succesful when they try to drastically switch their sales model. Maybe CDW can sell a bunch of storevaults at a low margin and NetApp can make it up on volume? Companies have tried this tactic in the past.

Only time will tell.

“To see what is in front of one’s nose needs a constant struggle.” George Orwell .
If you think your data is important and a corporate asset, defending your network is as important as the security of your storage.

However the firewall folks and anti spam folks don’t seem to be working with the data storage encryption folks, I wonder why that is? Instead of creating a secure unified network and storage infrastructure we seem to be creating environments made up of a hodgepodge of different solutions that have not been tested together. Every company tries to put together a solution based on marketing information and sales presentations that neglect to mention that each vendor has their own security patches that you have to purchase and update regularly. Every implementation ends up unique because no two networks have the same releases of software on all of their defensive hardware and software. And no one has ever tested all of the releases in your situation before.

The DoD is increasing its budget and still they admit they are insecure….

The U.S. Department of Defense has noted the increasing number of hackers trying, and succeeding, to get into military networks. This sort of thing has been going on since the 1980s, when a gang of West German hackers, hired by the Soviet secret police (KGB) were caught inside Department of Defense networks, stealing classified data. But in the last few years, the hacker activity has accelerated. Currently, Department of Defense networks get probed six million times a day. Since last year there has been a 46 percent increase in attacks on Department of Defense web sites. There has been 28 percent more email based attacks. These are increasingly targeted at specific types of military users, or even individuals. There were more than twice as many attempts to insert viruses, worms and Trojan horse software on military systems. The attackers are looking for information, or secret control of, or at least access, to military systems. Some of the attacks have been massive and well organized. There have been at least four of these major attacks in the last year, hitting targets like the National Defense University, the Naval War College and Fort Hood. Each of these cost $20-30 million to clean up after.

What can a business do to defend itself? What business has the budget of the Defense department? Network Security, Data Security, with limited resources you are vulnerable to atttack, and with almost unlimited resources the DoD is still vulnerable to attack. So what vulnerability do you try to solve today with your available resources?

Recognizing Vendor Lock in and how to avoid it.

Whether you supply information technology, or merely use it, you will benefit from understanding, classifying and measuring switching costs. The “friction-free” economy is a fiction; look for more lock-in, not less, as the information age progresses. Hal Varian 1998

It looks like NetApp is taking lessons from Hal Varian’s playbook-
During the last earnings conference call, Network Appliance’s Chief Executive Dan Warmenhoven said the company is seeing software subscriptions grow and become a larger portion of total revenue. Software subscriptions can “embed the company with customers for years” and provide recurring revenue to boost cash flow, he said.

Click here for a great powerpoint by Hal Varian on Lock in

Data Points that may mean something:

1) One of our NetApp support customers wrote me this week that he can get a FAS3020 head with 3 years support from NetApp for $30,000.00 with ISCSI and NFS licenses. I found that interesting. Searching the internet the best GSA price I see is:
132-8
FAS3020HA-BNDL2-R5
FAS3020HA CFO,ISCSI,CIFS,NFS,SRESTORE,R5
$35,905.00

2) I learned this weekend that the NetApp FAS3020 will be End Of Lifed (EOL) by the end of the year.

3) I have heard that the new FAS2020 has only 1 Gig of memory. That is odd, why not put more memory on the system NetApp?

4) I also heard good things about Equallogic last week, sounds like NetApp is keeping an eye on them, especially in the PACS area. Maybe the healthcare industry is waking up to the fact that a Seagate drive is pretty reliable and NetApp charges too much for them?

Holographic storage is it the future of storage? The Economist has an article on it this week that is worth reading.

Computing: After years of development, holographic data-storage systems are finally ready to go on sale

But despite plans to launch products in early 2006, Optware has yet to produce anything. And some observers remain doubtful that holographic storage will be commercially viable any time soon. IBM, once a leader in the field, has decided to concentrate on improving existing magnetic-tape systems instead, says Matthias Kaiserswerth, director of IBM’s Zurich Research Laboratory in Switzerland. InPhase’s first drive will cost $18,000, and each 300-gigabyte cartridge will cost a further $180. Holographic-storage technology certainly works and has all kinds of potential uses. But until the prices come down, demand for this unusual new technology could be all too holographic in nature: apparently there, but upon closer inspection proving to be only a mirage.

I certainly would like to investigate the InPhase technology for some of our Fortune 100 customers.

NetApp’s Warmenhoven is taking an interest in a former customer who has chosen an HP EVA solution, here is the email exchange from Toasters the mailing list for NetApp filer users.

From: Warmenhoven, Dan (Dan.Warmenhoven@netapp.com)
Date: Tue Jun 12 2007 – 20:36:01 EDT

Hi Paul,

I am very sorry that you are no longer a NetApp customer. If you
wouldn’t mind sharing with me, what vendor / product solution did you
choose to replace your F740, and why did you choose that solution over
NetApp (especially since it sounds like you were happy with both the
product and the support).

Thanks

Dan

Dan Warmenhoven
Chief Executive Officer

Network Appliance, Inc.
495 E. Java Drive
Sunnyvale, CA 94089
Phone (408) 822-6600
Fax (408) 822-6601

________________________________

From: XXX, Paul [mailto:XXX@###.com]
Sent: Tuesday, June 12, 2007 12:03 PM
To: NetApps list server
Subject: Farewell all!

Well, it is with deep regret that I bid all you toasters a fond
farewell. I’d like to say that I appreciate all the help during the
time that our 740 served us for about 8 years. The 740 was a fine
device and NetApps support was top-notch. After a very lengthy
discussion over several months, we went to another storage solution.
By the way, if anyone is interested in the 740 maxxed at 1TB raw and
includes a spares kit with motherboard and misc other parts that were
never used, send me an email. It is located in the Southern Indiana
area. First come, first serve. You have to arrange for transport. If
I don’t hear anything from anyone by the end of the week, it’s going to
the recycler. Thanks again to all.

If people concentrated on the really important things in life, there’d
be a shortage of fishing poles. – Doug Larson

________________________________

XXX, A+, CA, CCA, CET, MCSE

Systems Administrator
Shoe Carnival Inc.
(###)######
XXX@###.com

When I corresponded with the former NetApp customer yesterday I found that one of the main reasons for his departure from NetApp’s products was the cost of maintenance and support. Like so many NetApp customers he was looking for an affordable alternative to NetApp’s maintenance and upgrade policies. His email’s last sentence to me yesterday ended with “Maintenance costs played into it as well.”

How long can IBM stay in a low profit business sector? .

NetApp is very proud of its reseller relationship with IBM. And many of our customers have been able to get better deals by getting quotes on identical equipment from both IBM and NetApp. But I always figured it was going to be hard for IBM to make money on reselling NetApp equipment. Therefore when I saw this article in Today’s Wall Street Journal I was not very surprised.

The software deals represent a fundamental reality at IBM: Big Blue’s giant services arm has narrow profit margins, and its core hardware unit is struggling with weak sales growth. But margins in software are fat, and, boosted by deals, sales are growing well.

Will IBM continue to resell NetApp equipment even though it has narrow margins on the resale and service of the equipment? Will they be able to force concessions out of NetApp to get their margins higher? If IBM is able to get bigger margins out of NetApp will the result be lower profits for NetApp?

Interesting times.

We learn from history that we learn nothing from history. George Bernard Shaw….

I was surprised to see that VarBusiness has learned to read NetApp’s history of treatment of the channel and are willing to discuss it in an article.

Why NetApp’s Growth Slowed
Customers are cutting back; NetApp lacks broad channel strategy

The man in charge of NetApp’s channel, Leonard Iventosch, had a decidedly unconventional view of how to populate a partner base to sustain the company’s growth. Whether driven by Iventosch, his superiors or the NetApp culture, which all clearly struggled with the channel, what the company wound up with is a small, loyal cadre of VARs rather than the army it now needs to drive its growth forward. All of its competitors are much further along in their channel development, having realized long ago that they needed to diversify sales efforts, drive down cost of sales and reach new markets.

It seems that some folks are learning from history, NetApp has squandered its relationships with the channel over the last ten years, it is hard to build a loyal channel with their record. And perhaps George Bernard Shaw was wrong – Business people do learn from history when it hits their wallets.