Zerowait Corporation

If you can’t describe what you are doing as a process, you don’t know what you are doing. – W. Edwards Deming .

In my college years working on my business degree I studied production and inventory control methods. A few of the courses, and some of the better professors, took the time to explain that Deming was right about quality, but quality is also about relationships and how you deal with customers, vendors and other business partners. I learned in college and it has been reinforced in my almost 20 years in business that developing a process for quality control of a product is a lot easier than developing a process that helps to reinforce our many faceted business relationships.

What we learned was that Deming understood that quality was not just statistical sampling, it was also the understanding of the how and why you build your product or deliver your service, and how you maintain that diligence over time. Creating long term customer loyalty for your company and your product or service is not going to be based on price. In business long term relationship are the key ingredient to building a strong company, and it costs time and money to develop these strong relationships. So when companies stress that they are putting on a sales promotion, or going to beat out the competition for more business I have to ask myself ” is their new business going to be profitable over the long term, or just going to push up their units sold numbers?” If the sales are not profitable for the vendor, eventually business forces will force the vendor to provide less service and support per unit.

Deming taught that “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.” This model seems to be working for Zerowait.

Keep your friends close, and your enemies closer. Sun-Tzu

I saw a headline today that made me think that NetApp is really starting to fear the second level storage companies who have a lower cost solution for reliable high availability storage.

3PAR(R) and NetApp(R) Form Joint Interoperability and Support Agreement

Joint customers have identified the dramatic reduction in storage capacity and management costs as the key benefit of the 3PAR and NetApp solution. Traditional datacenter infrastructures often consist of proliferating silos of block and file capacity. With this solution, both capacities can be reduced significantly through consolidation onto a single, massively scalable, tiered-storage pool. This storage pool is based on the 3PAR InServ Storage Server, with direct block access provided by 3PAR and file level access provided by the NetApp V-Series.

NetApp makes a substantial amount of its profits from selling Seagate hard disks and Xyratex storage shelves, obviously if NetApp’s salesman are going to give up the sales of disk and shelves they are going to lose some commission. And most sales folks don’t like to give up their commission to a competitors products. So how will NetApp – which is a hardware sales company going to make up the lost sales opportunities from this deal for its salesman?

Will this be a good opportunity for the 3PAR sales force? It gives them some gravitas, but how can working with a competitor be good for either sales force? A look back will show that NetApp does not play well with past partner companies like Dell, Hitachi and so many others. So it looks like they are taking Sun Tzu’s advice and keeping an eye on their enemy.

If you want to understand today, you have to search yesterday. ~Pearl Buck

NetApp has recently put on a push to engage the channel to help it ramp up NetApp’s anemic sales numbers. In the past, NetApp has used the channel as a missionary sales force and then abruptly pulled the best accounts for themselves, leaving the channel with the sales & market development costs, while taking the profits directly. Eventually the good storage channel companies get wise to this tactic, and don’t do business with folks engaged in this type of strategy.

In his new role, Morris is responsible for all NetApp channel relationships and sales strategies across Australia and New Zealand, including increasing the level of channel engagement, growing the NetApp Platinum Partner portfolio and broadening the business though the NetApp key distributor, Avnet. He is also charged with the task of managing and growing strategic partnerships with IBM and major systems integrators.

As NetApp ramps up its efforts to make friends with the storage channel just remember to read your history. Google makes it all so easy.

What good can come out of an Options probe? Can a company where the Executives are focused on short term personal gain build products that have long term value?

Backdating Fine May Set Model
Brocade Is the First to Pay
Penalty in Options Probe;
SEC Debated Punishment
By KARA SCANNELL
May 31, 2007; Page A3

WASHINGTON — Brocade Communications Systems Inc. agreed to pay a $7 million penalty to settle allegations it improperly issued stock-option grants, making it the first company to pay a fine in connection with the backdating scandal, according to people familiar with the matter.

It seems to me that the stakeholders in this settlement are being hurt in a few ways.
* The executives of companies in this scandal have squandered their ‘trust’ realtionship with their employees in this effort to pad their own wallets.
* Companies that lose their employees and customers trust end up hurting the stockholders, because it becomes harder to sell their ‘value’ to their customers when there is a taint of scandal. A harder sale is a less profitable sale, and it is hard to sell when your executives may be crooks.
* Employees may exhibit discomfort when working with customers who ask about the scandal and what the long term effect on their company & the executive staff might be. Are the executives going to be forced out? What is the transition plan?

As a consumer of technology products, I prefer to deal with companies and executives that take a long term view of their company’s and products’ value. Why should we trust that companies and executives that focus on short term personal gains will create products and support that provide long term value and return on investment? If corporate executives are looking at short term personal profits, will they be concerned with your long range plans? Options scandals have the taint of short term fast buck thinking, not long term value.

NetApp’s stock is in the doldrums – I wonder how long it will be before they reduce staff just like Dell is doing?

TECHNOLOGY ALERT
from The Wall Street Journal.


May 31, 2007

Dell unveiled plans to reduce its work force by 10% over the next year as founder and CEO Michael Dell struggles to revive the PC giant. The news came as Dell posted preliminary quarterly results. The stock surged after hours.   

Cyberwar fiction and reality.

A lot of folks have been writing about the situation in Estonia. I think the graphic above pretty much sums up the situation. People are real concerned about the security of their data, but what happens when your data becomes completely unavailable to your worldwide sales and accounting staff?
Denial of Service software that is easy to get and easy to use, it sounds like the business & world economy may be in for some rough times ahead now that we are all wed to the internet.

Which way is NetApp going to sell more product through its resellers? Will threats increase sales more than sales incentives? Won’t sales incentives merely be passed through as lower prices to customers anyway?

NetApp’s CEO said that he wants Resellers to concentrate on NetApp and not any other products.
Solution providers who do not take advantage of NetApp run the risk of being left behind as that company continues to grow rapidly, Warmenhoven said. “If that doesn’t happen, you will be a less significant partner of ours,” he said last week. “Let’s scale together.”

But the worlwide sales manager said that they will work with Resellers who sell other products without any issues as long as it is to displace a competitors products.

“If the partners sells us and Hitachi Data Systems, we don’t want them to drop Hitachi,” Iventosch said. “We talk about what it will take to take out EMC in an account. Or if the partner sells NetApp and EMC, we’ll talk about how to take out HDS. What we don’t want to do is go to a partner with a significant business and do share-shifting.”

Does NetApp want it both ways? Is what is good for NetApp good for Resellers? What is the best long term strategy for Reseller integrators and their end user customers? I doubt that short term sales incentives will ever be the best thing for end users, although it will produce lower prices.

The best solution for a NetApp customer who is looking for a new storage solution remains to call both NetApp and IBM and get competitive quotes. Sometimes NetApp salesman partner with a reseller for a sale, which means a customer can typically get a better price out of the IBM sales person, because there are less hands in the profit pie . Sometimes the NetApp salesperson and the IBM sales force partner, so getting different corporate divisions in different states to ask for similar systems can also produce large price differences, because of the way NetApp registers sales opportunities and different sales people are getting different sales incentives. If you are buying new NetApp storage – you should certainly get multiple quotes.

Another holiday weekend of catching up.

Reading the reports of NetApp’s sales problems you would think that the storage industy was in a slump. But Zerowait’s service and support contracts for NetApp legacy equipment continue to grow. There are a number of reasons for this, but most of them come down to an analysis by each individual customer that buying new NetApp equipment can’t be price justified by the nominal increase in storage performance that buying new equipment from NetApp will provide them.

Additionally, many NetApp Nearstore (R100, R150, R200) customers are coming to Zerowait for service and support because NetApp’s support prices are so high.

So when stock analysts say things like this:

“Though we subscribe to NetApp’s macro-economic commentary, and our checks do coincide with company comments that an upward trend took place in April, we believe competitors will question whether competitive headwinds are incrementally surfacing for NetApp,” said A.G. Edwards analyst Aaron Rakers, in a guidance note released today.

From our viewpoint the problems with NetApp’s hardware sales have more to do with a lack of innovation and performance to justify the cost of their new equipment. Customers may be asking ” Why not just keep the old equipment running and invest our money in our engineering staff” The enterprise storage market continues to commoditize, can NetApp compete in this market over the long term? Only time will tell.

Unlike NetApp, our business is booming & and our future is brilliant, so we will be catching up this weekend!

Are NetApp sales slumping because of their customers perception of a steady decline in customer service and support or because of slumping overall slumping IT spending?

SAN FRANCISCO, May 23 (Reuters) – Network Appliance Inc.’s (NTAP.O: Quote, Profile , Research) chief executive said lower demand for its products by U.S. corporations was hurting sales, leading the data network storage maker to forecast declining sequential revenue.

“We saw a slowdown in information-technology spending in U.S. enterprise accounts,” CEO Dan Warmenhoven said in an interview after the company reported fiscal fourth-quarter earnings on Wednesday. “We’re not confident that we are back in a normal spending pattern.”

HP seems to be upbeat on server sales, If HP’s server sales are growing – why would storage sales be slumping for NetApp?

H-P’s results, attributed to strong sales of personal computers and server-computers, had been preannounced earlier this month

Information Technology is a complex marketplace, and we are seeing two very different views of corporate IT spending patterns here.

Is new NetApp equipment more of a maintenance and support hog than Isilon?
According to this Wall Street Journal Article it might be.

For some companies, buying tech gear from a start-up is a first. Geophysical mapping firm Arcis Corp., for one, has always purchased its technology from big tech firms. But last year, it chose start-up Isilon, a Seattle-based network-storage company, to help improve how it stores and processes two-dimensional and three-dimensional images. Arcis, in Calgary, Canada, captures and analyzes images below the Earth’s surface for oil and gas exploration. Over the years, the amount and size of data the company analyzed grew until it became difficult to maintain.

Arcis initially examined gear from large companies such as Sun Microsystems Inc. and Network Appliance Inc., which both visited and conducted hour-long presentations about their equipment. But the products would have required Arcis to hire more information-technology personnel for maintenance. In contrast, Isilon’s system was newer and didn’t require much maintenance. “Their [Isilon’s] technology was more innovative than all the other things we had seen, so we took a leap of faith,” says Rob Howey, who oversees data processing for Arcis.

Many of Zerowait’s customers have chosen to maintain and upgrade their NetApp storage using our service, support and parts upgrades. I wonder what were the people and performance factors that Arcis used in its evaluation of their different storage options. Did Arcis evaluate upgrading their NetApp using third party service and support? How much more efficient is Isilon then NetApp and where did Arcis go to get reliable comparison figures? Where can anyone go to find a formula that objectively evaluates Personnel, Price, Performance, and Power consumption for a storage subsytem?