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IBM to NetApp: Eat our chips

Word has it IBM has asked NetApp to port its Data OnTap operating system to an IBM chipset.

According to rumblings among Wall Street analysts, the IBM-Network Appliance (NetApp) OEM deal may have stalled due to a surprise request by IBM. Word has it IBM has asked NetApp to port its Data OnTap 7G operating system to an IBM chip. Both companies declined to comment on the rumor.

If it's true, experts say it could be at least six to nine months before the new products using IBM chips reach...

the market, and that's if Data OnTap is as portable as NetApp claims it is.

When IBM announced in April that it would OEM the majority of NetApp's NAS filers, the market applauded. Analysts say the deal would mean a significantly wider distribution channel for NetApp and finally a formidable NAS product line for IBM. However, the two companies have clamped shut on talking about the arrangement since.

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The first product resulting from the alliance, the IBM TotalStorage N3700 (NetApp's FAS 270) entry-level box, began shipping in August. IBM is expected to deliver the rest of the product line by year's end -- just eight weeks away. If the chip rumor is true, it's unlikely we'll see these products any time soon.

John McArthur, director of storage research at IDC, says the move would be in keeping with IBM's strategy to use its own components wherever it can. "IBM likes to leverage its supply chain … whenever possible, it's always looking for a way to drive its own technology, and if it can provide some differentiation between the products it's selling and NetApp's own systems, it might lessen the channel conflict," he said.

Others say NetApp might be making a strategic bet across the board to use IBM chips for better performance. "If they can get a 2X performance increase over EMC by using IBM chips, they might go for it," says an industry expert who requested anonymity.

Alternatively, Dan Renouard, analyst with R. W. Baird & Co., thinks NetApp is unlikely to make such a transition for cost reasons. "They are so focused on off-the-shelf components to keep costs low. It would be a surprise if they went down the proprietary road," he said.

For NetApp users, the move could raise support issues. For instance, will the company support Data OnTap on older models and for how long? If NetApp ends up supporting multiple chips, it will lengthen the company's engineering, testing, quality assurance and support processes.

Furthermore, NetApp might go through all this hassle for IBM to pigeon-hole the company as a NAS-only player, an image NetApp has been fighting for some time.

NetApp has made considerable headway in proving that its systems perform well enough to support Exchange and SQL Server, but will IBM sell them into these environments? More than likely, Big Blue will reserve these accounts for its own DS8000, formerly the Shark, product line.

Perhaps, like NetApp's relationship with Hitachi Data Systems Inc., the arrangement will fade away in a few years as the companies realize they are just too competitive.

If you have any comments on this story e-mail Jo Maitland.

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