The CIO surge toward virtualization and NetApp's "50% guarantee" are driving the company's powerful growth, says CEO Tom Georgens.

Bob Evans, Contributor

August 30, 2010

5 Min Read

"It's not like they've rejected us or anything," Georgens says, "but they're still making up their minds."

And at its heart, that NetApp approach is built on three fundamental promises that weave together to enable the guarantee of 50% less physical infrastructure: NetApp says that CIOs who move to the virtualized storage model will find that they can reduce cost, reduce complexity, and increase business flexibility.

"We're enabling them to achieve those objectives at a macro level," Georgens said, "because virtualization is fundamentally changing the way data centers are designed: instead of individual infrastructure around individual apps, they're building one single infrastructure that's independent of the apps. And now they want the same with storage because customers are seeing that virtualization is the way to dramatically improve the flexibility of the business as well as IT costs."

On top of that, when the global recession settled in two years, many CIOs were already managing brittle and outdated infrastructure so that in today's significantly more demanding business environment, those systems are barely able to hold up.

"In 2001, on the heels of the Y2K buildout, a lot of infrastructure was new—but now, the infrastructure is about as old as it's ever been so simply refreshing it isn't enough," he said. "Instead, CIOs know that today they have to rearchitect their data centers and that's tough because CIOs are under a lot of pressure to keep holding down the cost of IT but at the same time they've got this antiquated infrastructure they've got to replace—the evolution of the data center is a conversation we're hearing about everywhere we go.

"And I don't mean it just in the abstract—I have that same sort of business relationship with my own CIO because we're growing 30%, which is significant, and we're moving into new geographies and we're establishing new channel partnerships and we're driving new efficiencies in the organization and I'm insisting that we make our people more productive and all of that involves IT.

"So the list of demands on my CIO are mounting, and we can't afford to be in a situation where IT is the long pole in the tent—the ability for us to stand up robust new apps quickly is really really important."

That's particularly true as the competitive landscape in the storage sector continues to be reshaped via acquisitions, with a couple of the latest ones being IBM snatching up Storwize and Dell (or is it HP??) winning the bidding war for 3Par.

As those and other deals take place, Georgens said, the major challenge for NetApp will be the need to continue to distinguish itself as best-of-breed innovator and storage specialist, whereas broad-portfolio giants IBM and Hewlett-Packard tend to focus more on their extensive capabilities in integration.

"This is a big industry, and specialty companies can stake out some niches and exploit that, and I'm sure we'll see more of those," he said. "Whether those niche companies can reach a billion in revenue, that's another question.

"For business apps in big enterprises or for mission-critical business operations in the leading Web 2.0 companies, the big mature players are gonna keep dominant share. And then the very big full-line suppliers like HP and IBM are going to attempt to compete not on innovation so much as on integration, whereas for us and the same holds true for EMC, we'll have to compete on continuing to deliver best of breed storage solutions and innovation," Georgens said.

"It's incumbent on us to keep doing that. And, both EMC and us have to work on closing that integration gap where those other companies have more resources than we do, and we need to do that through partnerships and alliances, such as our partnership with VMware and Cisco around multitenancy."

Asked to describe what some really aggressive customers are doing with NetApp's products to create significant competitive advantage, Georgens laughed and then, while I'm not sure exactly what sound is made when a person intentionally bites down on his tongue, I think that's what I heard.

"We've got some customers doing some truly wild things and we're incredibly excited about that but we can't talk about it because they feel the competitive advantage they're gaining is so significant," he chuckled.

"But at the high level, whether customers are dealing with aging infrastructure, or it's the emergence of virtualization, or the emergence of new options on a service basis, all of these things are forcing CIOs to think differently about IT infrastructure. And more and more, they're turning to an architecture that's shared—that's virtualization—and that's what's fueling our growth."

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About the Author(s)

Bob Evans


Bob Evans is senior VP, communications, for Oracle Corp. He is a former InformationWeek editor.

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