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NetApp likes to describe its product strategy as "cloud-connected flash." Cloud news dominated product rollouts at the NetApp Insight user conference last week, but that shouldn't diminish the importance of flash in the vendor's portfolio.
Fueled by flash adoption, NetApp outgrew the overall external storage market by a wide margin during the first half of 2018. Gartner and IDC separately have recognized NetApp as a leading all-flash vendor, a ranking hard to imagine when George Kurian became its CEO in 2015. The NetApp All Flash FabricAttached Storage (FAS) and SolidFire arrays accounted for most of the vendor's storage growth.
Kurian and other NetApp executives hammered the cloud message at Insight. NetApp is clearly trying to redefine itself as a cloud software company, and placing less emphasis on the underlying storage hardware.
But during a private interview with SearchStorage.com, Kurian stressed that NetApp all-flash storage is a strength, particularly for hot areas like AI inferencing and machine learning.
"We made a conscious decision to pivot to growth areas of the market: flash, converged systems and hyper-converged infrastructure (HCI). We are much heavier weighted in those markets now. We also are growing and taking share," Kurian said.
NetApp's flagship storage product is now its All-Flash FAS (AFF) array, but it also has a SolidFire flash portfolio that includes its NetApp HCI hyper-converged product.
FAS systems run NetApp's flagship OnTap operating system. SolidFire is managed by the ElementOS. NetApp has integrated OnTap features such as SnapMirror replication in Element, but Kurian said the two operating systems will remain separate.
NetApp's embrace of the cloud Data Fabric may have seemed curious for a company known for storage arrays, but Kurian said it was a necessary change in direction.
"The only realistic approach to deal with data growth is a scale-out architecture, (based on) the idea that you build a very large system composed of smaller systems. As a NetApp customer, that means you can (scale) along with your data growth and avoid having to buy as much hardware upfront," Kurian said.
SolidFire flash gains momentum
When Kurian took over as CEO, NetApp was years behind competitors in flash and it had no hyper-convergence product in what was still a nascent market. NetApp's first attempt at all-flash, branded as FlashRay, never saw the light of day. After several delays, NetApp brought a single node FlashRay product to market in 2014, and it never made it to a multinode release.
Shortly after taking over, Kurian bolstered the NetApp all-flash portfolio by acquiring early all-flash vendor SolidFire, which sold scale-out flash to hyperscale data centers. NetApp scrapped further plans for FlashRay and its Mars operating system.
SolidFire's ElementOS operating system embeds quality of service and multi-tenancy, features that attracted manager service providers. Kurian said NetApp HCI extends those capabilities to data centers to create cloud-connected hybrid clouds.
"We always felt what customers wanted to (deploy) hyper-converged systems to build a private cloud. We combined the SolidFire control plane and the storage system to deliver hyper-converged infrastructure as a prepackaged system," Kurian said.
Now NetApp is trying to catch up in HCI against market leaders Nutanix and VMware-driven Dell EMC VxRail, just like it did in flash arrays.
"NetApp has had some high-profile failures," said Henry Baltazar, storage research vice president at analyst firm 451 Research. "They didn't dive into flash when they should have, but they have done a good job making up the ground. Not only with the SolidFire stuff and NetApp HCI, but they were able to adapt the FAS arrays for flash, without making too many changes for the OnTap fan base."
Nevertheless, paying $870 million for SolidFire pointed up NetApp's struggles to develop its own all-flash system from the ground up. And despite solid gains in all-flash, NetApp still has less than half the market share of leader Dell EMC in overall external storage sales.
NetApp HCI has been on the market for around a year. It has a ways to go to catch hyper-converged leaders Dell EMC and Nutanix, which combined for more than 47% of the overall HCI market in the second quarter of 2018, according to IDC.
Kurian claims NetApp's adoption of open technologies helps reduce refresh cycles and enables it to innovate faster than competitors.
"We use x86 processors in the storage system and industry-standard networking technologies," he said. "Compare that with the architecture that (Dell) EMC and Hitachi have had for many years in their storage arrays, or the proprietary processors that HPE still uses in 3PAR. That architecture is what slows down their ability to progress and innovate."
Taking aim at SAN market
Although best known for its NAS file storage, Kurian said NetApp all-flash and hybrid E-Series SANs are making inroads in block environments. NetApp claims to displace an average of 600 competing SANs a year, close to two per day.
"We started to notice the percentage of block environments on our flash systems was dramatically higher than the percentage of block on our disk-based systems. That's when we knew we are displacing competition," Kurian said.
NetApp started tracking the SAN figures about a year and a half ago, creating a special tracking tool known as the Run to NetApp program. The program requires prospective customers to declare their existing SAN vendor and send their hardware to NetApp or its partners.
To conjure elephants, dancing
Joel Reich, a NetApp executive for 16 years, took over as executive vice president of NetApp storage and software systems business units when Kurian became CEO.
One of the first things Kurian did, Reich said, was hand him a copy of Who Says Elephants Can't Dance? -- former IBM CEO Lou Gerstner's account of how he engineered a turnaround at IBM in the mid-1990s.
The main point of reading it, Reich said, was to enforce the importance of execution.
"There is a part of the book where Gerstner gets trotted out as new CEO," Reich said. "People are wondering 'Why did IBM hire a guy who doesn't know technology?' So Gerstner goes to a bunch of investor meetings. He talks to a bunch of customers. Then he comes back and tells his team, 'We don't need new strategies. We just need to execute on the strategy we have.'
"That was George's message to us: [Building] the Data Fabric and getting our IP into the cloud was the right strategy. We just had to do a much better job of executing on it."
Following a slump caused by NetApp's slow embrace of flash and problems with disruptive updates of its clustered OnTap software, NetApp has made year-over-year revenue gains for nine straight quarters.
Kurian described NetApp's strategy as "modernizing legacy storage. NetApp's cloud-connected flash enables you to invest in new innovation. We'll connect the edge to core to cloud."