EMC ousts NetApp from top NAS spot -- sort of

A new report from Gartner puts EMC on top when it comes to network-attached storage revenue in 2001. EMC handed NAS-heavyweight Network Appliance its hat last year, but there might be a catch to EMC's claim to the NAS throne.

Move over Dan Aykroyd and Eddie Murphy. EMC Corp., and Network Appliance Inc., are trading places.

According to a report from Gartner Inc., EMC and NetApp swapped spots in the network-attached storage market from 2000 to 2001.

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In 2000, NetApp held the lion's share of the market with 49.8% to EMC's 36.3%. But in 2001, EMC grabbed 48.6% of the NAS market while NetApp fell to 35%, according to Gartner.

EMC recorded NAS revenues of $786 million in 2001, $262 million more than in 2000. NetApp saw sales slow in 2001, reporting $566 million, versus its $720 million tally in 2000.

A market shift is partly to blame for NetApp's slowing sales. Much of the company's target customer base was made up of high-tech startups, many of which suffered budget-tightening or total collapse.

Pushan Rinnen, senior analyst for Gartner Dataquest said that 2001 was the first full year that EMC really pushed its NAS sales, but an argument can be made that EMC's numbers are somewhat subjective. Since EMC's Symmetrix can house NAS, direct-attached and storage area network configurations, it is hard to determine what portion of Symmetrix revenues can be attributed to NAS.

"EMC couldn't provide that kind of information because it's based on each user's configuration," said Rinnen.

When EMC received an order for the Celerra File Server as part of a Symmetrix configuration, it considered Symmetrix as part of the NAS revenue, she said. Upshot: The total revenue from the sale of the Symmetrix would be counted as NAS revenue, and vice versa.

"That could be questionable," she said.

Rinnen said Gartner worked closely with EMC to clear the confusion and avoid duplicating SAN and NAS results. Gartner maintains that there is no clear cut way to separate EMC's numbers, unlike filers from NetApp which are pure NAS.

As one would imagine, NetApp disputed the report, stating that the numbers are not verifiable.

Kris Newton, analyst relations manager for NetApp said Gartner only reports on hardware revenue and NetApp believes the real benefit of NAS lies in software.

"We use commodity, off-the-shelf hardware and add our software," said Newton.

NetApp said its strength is in the other numbers. For example, NetApp shipped more petabytes of NAS storage in 2001 -- 9.7Petabytes compared to EMC's 3.5 Petabytes. Newton also said NetApp shipped 5400 units versus 1900 from EMC.

Newton added that EMC charges approximately four-times as much per M Byte for its NAS hardware. NetApp is charged 6 cents per M Byte in 2001.

On a related note, NetApp reported its results for the fourth quarter and fiscal year 2002 on Tuesday. Revenues for the fourth fiscal quarter were $204.9 million, compared to revenues of $225.8 million for the same period a year ago. Overall revenues for the fiscal year 2002 totaled $798.4 million, compared to revenue of $1 billion for fiscal year 2001.

EMC and NetApp were followed by Quantum Corp., Dell Computer Corp., and Maxtor Corp., as the top five NAS-sellers in 2001.

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