IBM, NetApp team up against EMC

Posted on April 06, 2005

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By Heidi Biggar

Believing that there is more power in numbers, IBM and Network Appliance earlier this week announced that they have entered into a broad OEM agreement in an effort to fight mutual arch-rival EMC.

"Almost everyone wins--[that is,] everyone but EMC," says Andy Monshaw general manager of IBM's storage business.

The deal gives IBM full OEM privileges to Network Appliance's full line of hardware and software products, most notably its NearStore and V-Series families. In addition, Network Appliance will position IBM's Tivoli Storage Manager (TSM) software and TotalStorage tape devices as "preferred products," although NetApp will not resell any IBM products.

By reselling Network Appliance's NAS products, IBM fills a notable hole in its storage portfolio; for NetApp, the deal means a stronger channel presence. Officials for both companies say that any overlap between the two companies' distribution channels is small and that the two companies, particularly Network Appliance, have much to gain from the extended reach afforded by the agreement.

Tony Asaro, a senior analyst at the Enterprise Strategy Group (ESG) research and consulting firm, says the agreement has great potential, particularly for IBM, which has been nursing an ailing NAS lineup. "IBM has really had no presence in NAS, and to be the leader in storage you have to have it. No one knows how to sell NAS better than NetApp."

As for the tape and software products IBM brings to the table, Asaro says that that part of the deal "is more of a gesture" on Network Appliance's part. Selling tape is not one of NetApp's strong suits, he says.

According to IBM's Monshaw, users can expect IBM to begin withdrawing its existing TotalStorage NAS products from the market over the short term, although no official plans have been announced yet to formally retire the products.

International Data Corp. (IDC) expects NAS market revenues to surge from about $1.68 billion in 2004 to $3 billion in 2008.

Last year, Network Appliance had a 36.9% ($619 million) share of the total NAS market, followed by EMC with 33.8% ($567 million), according to IDC. (Hewlett-Packard and Dell came in a distant third and fourth with 6.5% and 6.2%, respectively).

Also looking to grow its piece of the NAS pie, Hitachi Data Systems last week announced that it is making "a full-scale assault on the NAS market." The company introduced embedded NAS blades for its TagmaStore Universal Storage Platform (USP). Last year, Hitachi's NAS revenue totaled $25 million, representing a 1.5% market share, according to IDC.


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