STORAGE: Growing on, Simply

Storage is perhaps the most complex as also the most dynamic component of the

IT infrastructure of any growing organization today. Without doubt, storage has

come to signify much more than the literal sense of the term. CIOs can't have

a good night's sleep just by storing and backing up data safely somewhere.

They must also ensure that the data is always managed in a way that makes it is

available all the time without any disruption to whoever its users are, whether

inside or outside the organization. What makes the job of a CIO tough is the

pace of growth of data. In every growing business organization, data is growing

at a hitherto unimaginable pace and is also acquiring new dimensions. In this

backdrop, organizations face the challenging task of planning and deploying a

storage system that takes care of current requirements, simplifies management,

and provides them with the capability to scale up at will and also continuously

achieve cost-effectiveness. More than all this, they need a storage system that

not just integrates well with their core business strategy but also keeps pace

with changes in the business. Unfortunately, not many storage systems can ensure

this.

California-based storage solutions company Network Appliance appears to

realise all this well and that is the reason why it is working on to eliminate

some of the key problems-low capacity utilization, lack of transparency, slow

processing time-that most storage systems face today. Building unified storage

solutions and eliminating islands of storage, which make manageability

difficult, is also one of the key goals of the company.

The Growth Strategy



Addressing an analyst conference in New York last December, CEO Dan

Warmenhoven emphasized that the company's growth strategy is built around

anticipating customer needs, innovation, partnership with industry leaders,

world-class support services and investments in people, processes and systems.

Warmenhoven stressed that these would be the key to Network Appliances growth.

"We aspire to be the fastest growing company in storage,'' Warmenhoven

said.

Among other things that Warmenhoven emphasized was the Network Appliance's

strategy of providing unified infrastructure for storage that would facilitate

better economies of scale. This is what customers are looking for, he said and

added that unification will fuel growth. Warmenhoven also said that

virtualization would be another key component of Network Appliance's strategy.

"The goal of virtualization at Network Appliance is to solve multiple

problems with the same storage infrastructure and drive utilization up and

management costs down," Warmenhoven emphasized.

Betting on Data ONTAP 7G



Network Appliance's latest version of enterprise storage software - Data

ONTAP 7G is a manifestation of what Warmenhoven said. Data ONTAP 7G provides a

dynamic virtualization engine, capable of aggregating physical storage

components into intelligent, self-optimizing capacity pools, while enabling data

management functions to be tailored to individual application datasets.

According to the company, customers using Data ONTAP 7G and its advanced

virtualization capabilities can double their storage utilization, dramatically

increase I/O performance for enterprise-class applications, and significantly

reduce storage management costs for multi-application environments. "Data

ONTAP 7G simplifies data management, and delivers what our customers are asking

for a flexible storage infrastructure that offers high performance, massive and

rapid scalability, and minimal management overhead-all to achieve maximum

value from enterprise data," said Paul Albright, senior vice president of

marketing at Network Appliance. "It is also the first storage software to

provide dynamic virtualization, a real breakthrough and industry achievement in

not only virtualization but also in laying the groundwork for the world's most

powerful Storage Grid architecture," Albright claimed.

Winning the Numbers Game



That the company's strategy is paying off is clearly reflected in its

growing market share. According to IDC's Worldwide Quarterly Disk Storage

Systems Tracker, year over year Network Appliance grew revenue in the FC SAN

market 95 percent, versus the market growth of 16.3 percent. The company also

grew revenue in open systems networked storage or FAS market with 24.6 percent

y-o-y growth, versus overall market growth of 17.5 percent and 2.9 percent

sequential growth, versus an overall market decline of 1.2 percent. IDC said

Network Appliance maintained a strong lead in the iSCSI SAN storage market for

the third quarter of 2004 (3Q04). In its core NAS market, the company

demonstrated continued leadership in NAS hardware for 3Q04 in both revenue and

terabytes shipped. Also according to IDC, the company posted a 36.3 percent

revenue market share, with a 13.8 percent increase in revenue y-o-y (vs. the

third quarter of calendar 2003). "Customers are increasingly turning to

Network Appliance to solve complex data management issues for their tier one,

data center, and mission-critical applications. IDC's market figures confirm

that trend," said Suresh Vasudevan, senior vice president, product

management, Network Appliance. The company claims that the market share figures

demonstrate that customers continue to demand simple, scalable, and affordable

technology for their networked storage requirements.

Source: Network Appliance

Analyst firm Piper Jaffray recently said, "The company's unmatched

organic revenue and earnings growth profile, continued market share gains,

strong alignment with almost every positive industry trend (iSCSI, storage

software and services growth, virtualization, small and medium business

opportunities) and probably the most elegant product design (common file system,

operating system, and architecture across all of its products) in the markets

that it serves."

The company, which entered Indian in 2000, has gained a strong position in

the Indian external storage market. 2004 was a good year for the company. It

gained several large customers including Aviva, GE Capital, HDFC Standard Life,

and Sasken Communications. The company attributes this growth to strong

partnerships.

Network Appliance is looking forward to a 36 percent increase in revenues to

$1.6 billion. Dan Warmenhoven, CEO believes a revenue goal of $7 billion in FY

2007 is possible. Given the way the company is currently growing and its strong

positioning in all the fast growing storage segments, Warmenhoven's optimism

isn't unreasonable.

Ravi Shekhar Pandey in

New York