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NetApp disputes IDC NAS numbers

NetApp claims IDC should not be counting CAS as part of the NAS market, but in doing so, draws attention to a gap in its product line.

Network Appliance Inc. (NetApp) is disputing IDC's methodology for tracking NAS revenue, which for the first quarter of 2005, put its arch enemy EMC Corp. in the lead.

In previous quarters' reports, NetApp maintained both a revenue and capacity market share lead over EMC in the NAS category. In IDC's new and revised report, NetApp claims EMC leads on revenue due to the inclusion of content-addressed storage (CAS), or object-oriented storage, in the NAS figures.

According to IDC, the NAS market grew 17% year over year and EMC led with a 37.9% revenue share, followed by NetApp with a 34.2% share.

In its taxonomy notes at the bottom of the report, IDC states that it has adjusted historical estimates of EMC performance in the NAS market by $115 million from the third quarter, 2002 to the fourth quarter, 2004. Previous IDC estimates of EMC's performance did not include the company's Centera product, which IDC categorizes as NAS.

NetApp is furious about this change in the methodology. Founded in 1992, NetApp beat EMC to market with the first NAS box and has led the market since then. Or at least it did, until these numbers came out. "We dominate the NAS market in terms of capacity shipped after the change in the methodology," blasted a company spokesperson in an e-mail.

NetApp's inflammatory response to IDC's report highlights the increased competition in the NAS market and also NetApp's lack of a CAS product. EMC's Centera, Permabit Inc.'s Permeon, Hewlett-Packard Co.'s Reference Information Storage System and Storage Technology Corp.'s (StorageTek) soon to be introduced archiving system, code-named Trinity, are all CAS or fixed content appliances.

These systems provide a digital fingerprint, generated by a hashing algorithm, for every unique object or piece of data stored. The fingerprint (also known as an ID or logical address) ensures the integrity of the data. No duplicates are ever stored, which is a radical departure from traditional file systems used for general purpose storage.

To date, NetApp has positioned its NearStore secondary storage appliance against products like Centera. Used in conjunction with the company's SnapLock software, it provides write once, read many capabilities for regulatory compliance. However, it doesn't offer the single-instance storage feature offered in CAS products.

Brad O'Neill, senior analyst with the Taneja Group, said he'd be "very surprised" if NetApp didn't move into the CAS market within a year. "They need to do this for several reasons," he said. "First, to get the capacity optimization leverage that naturally falls out of this approach, and second, because object-model disk storage is ideally suited for long-term, high-scale archiving across application platforms." He added, "The advantages they will get from leveraging CAS in that market are too big for them to ignore permanently."

O'Neill said he was surprised by IDC's decision to include CAS within the NAS category. "That strikes me as something one might do if one were completely out of touch with how end users think about and deploy CAS," he said.

Steve Duplessie, founder and senior analyst with Enterprise Strategy Group, said he thinks counting CAS as NAS is ridiculous. "Why not lump in all the burgers that McDonalds sells, too?" He said they are entirely different markets. "EMC is clearly dominant in the CAS space and Network Appliance in the enterprise NAS space … I can't see how munging the two numbers does any good for anyone."

Similarly, Yankee Group has a separate category called "content storage," which includes object-oriented storage systems and storage systems purpose-built for storing reference and archived data. Yankee Group does not include CAS or other content storage systems in its NAS category.

However, Stephanie Balaouras, senior analyst with Yankee Group, gives NetApp points for its SnapLock software, which is completely integrated with the company's Data ONTAP operating system and can run on all its filers. "There is a clear advantage to having the same operating system across both your primary and nearline storage offerings," she said.

Still, should NetApp decide to enter the CAS space, there's some immediate low-hanging fruit. Permabit is expected to lose its only OEM deal with StorageTek once the tape giant launches its own CAS product later this week.

When asked about its strategy for the CAS market, a company spokesperson said: "NetApp does not comment on product road maps or future plans related to any products."

IDC did not respond to calls for comment on this story.

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