Last week, ahead of the acquisition, we gave suggestions to NetApp on what it should do if it acquires SolidFire. This week NetApp moved forward with the purchase, and now $870 million later owns one of the better all-flash array platforms on the market. This is a win-win deal for the two companies. NetApp didn’t overpay, and the core SolidFire team has a nice present under the tree. The problem is that the initial statements out of the combined companies seem to indicate that they are doing the exact opposite of the lean and mean strategy I articulated in my prior column. Instead, they are trying to appease everyone. While predictable, a strategy of appeasement will fail.
The NetApp Plan
NetApp is playing it safe by trying to slot SolidFire into their existing storage portfolio instead of letting SolidFire cannibalize it. Eventually, every technology product will be cannibalized. A company has to decide if it will do the cannibalization or let one of its competitors do it.
In my plan, SolidFire becomes the centerpiece of the NetApp storage portfolio. In the NetApp plan SolidFire is told to stand in the corner and play nice. The NetApp plan is to position the EF series for application specific performance problems. The all-flash version of the FAS series is NetApp’s answer to a traditional organization’s demand for a data center-wide performance cure. The SolidFire product is NetApp’s solution for web-scale and third platform data centers.
The Problems With Appeasement
This plan is much less disruptive than my plan from my previous column. As a result, the current NetApp customer base feels good, the development team working on the next version of OnTap feels good, but this strategy will fail just like the acquisition of Spinnaker. With Spinnaker they had a chance to jump off the OnTap ship and be years ahead of their competition. Instead, they tried to integrate it into OnTap and finally delivered Clustered Mode almost a decade later. NetApp is in position to do the same with SolidFire and in a few years, NetApp shareholders will look back and wonder why NetApp spent that $870 million.
The problem is that NetApp’s focus will still be on trying to sell FAS and they will continue to get their clock cleaned in the market. FAS is a 20-year-old architecture. It’s true that web-scale and third platform get all the media hype but the meat of storage purchasing is still in the traditional enterprise. NetApp is using its $870 million to cover what today is a niche market. SolidFire knows this too. Look at its blog. While it does spend a lot of time on Next Generation Data Center topics like OpenStack, it also spends a lot of time talking about Oracle and VMware. Traditional data centers I’ve spoken with that have SolidFire love running VMware and Oracle on the platform. If NetApp sales guys are smart, they will ignore what HQ is telling them and lead with SolidFire.
Victory Belongs to the Focused
At the end of the year, we’ve seen two major acquisition announcements: Dell buying EMC and NetApp buying SolidFire. Given NetApp’s strategy and just the pain involved in a deal the size of Dell/EMC, the real winners are going to be companies like Pure Storage, Tintri, and Tegile. These companies are not trying to organize three different flash storage offerings into a cohesive strategy; they are focused. They also benefit from the confining of one of their biggest competitors, SolidFire, to a niche market.