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LAS VEGAS -- The magnitude of the $67 billion Dell-EMC acquisition created most of the buzz at the NetApp Insight conference this week.
NetApp partners and customers spent a lot of time wondering about the deal's potential impact on NetApp and the rest of the storage industry. Many among the estimated crowd of 5,000 attendees expect the acquisition to spark further consolidation of storage and other infrastructure vendors. NetApp is the largest storage-only company left standing.
"I think it's going to help the industry. It's going to further push the convergence of storage functionality and servers. That will be a good thing for customers," said Bradley Lauritsen, director of exploration applications at Houston-based oil and gas company Apache Corp., which uses NetApp storage only to manage nearly 25 PB of production data.
Apache Corp. has been a NetApp customer for 13 years, currently using NetApp storage with Cisco Unified Computing System servers. Cisco is often mentioned as a possible suitor of NetApp, as well as EMC and other smaller storage vendors. Jim McHugh, Cisco vice president of product and solutions marketing, said Cisco's primary storage strategy has been to partner, rather than to acquire.
"Our estimates tell us that 85% of all data touches at least one Cisco appliance," McHugh said. "We're in the storage business on the back end, in that we build hardware that any storage vendor can plug into. We're much more comfortable partnering with storage vendors than buying one."
Industry insiders at NetApp Insight said Dell taking a majority stake in EMC-controlled VMware is the most compelling aspect of the blockbuster transaction. Jim Bowman, a video producer at VMware, was setting up at NetApp's conference when he learned the two sides formally agreed to merge. Like most observers, Bowman said he was surprised by the financial scope and timing of the deal.
"The speed of the deal was stunning. What banks are open Sunday?" Bowman said, a reference to Dell and EMC confirming the deal early Monday morning.
"I don't think it will have an overly great impact on VMware, at least, not in the day-to-day operations side of things," he said.
Sean McCarry, vice president of worldwide sales for storage management software vendor Data Dynamics Inc., in Teaneck, N.J., said NetApp stands to benefit from the uncertainty around EMC and Dell in the nine months or so until the deal closes. Data Dynamics software works with any storage, including NetApp and EMC.
"No matter how much EMC may say this deal won't impact customers, everybody knows it's going to have some impact," McCarry said. "NetApp has an opportunity to take advantage of the uncertainty. Let's say you're an EMC customer coming up for a refresh. You might decide to hold off on EMC and see what else is out there."
Ranajit Nevatia, CEO of application I/O analytics software startup Datagres Technologies Inc., attended NetApp Insight to demonstrate how his company's product augments Data Fabric. Nevatia said he believes EMC becoming part of Dell paves the way for an eventual sale of NetApp.
"It's not a matter of if NetApp gets bought, but when," he said. "I think Dell buying EMC exemplifies the blurring of data center lines between server and storage, and is good for the industry. NetApp has a highly integrated architecture -- from Data Ontap operating system up the infrastructure stack. That could make NetApp an attractive asset to be bought."
Storage analyst Mark Peters of Enterprise Strategy Group Inc., in Milford, Mass., said server or platform vendors may consider countering Dell's move by buying their own storage vendor.
"They're looking at Dell buying EMC for $67 billion, and then they look at NetApp as one of the last remaining storage vendors that hasn't been consolidated," he said. "They could step back and say, 'Hmm, Dell bought a storage vendor, maybe we need one, too.' A deal like that would primarily be about that vendor acquiring market share, and NetApp has a lot of happy customers."
NetApp executives tried to keep the focus on their company and technology, declining interview requests to discuss Dell-EMC and its potential impact on NetApp. It has been a rocky year for NetApp, which changed CEOs in June from Tom Georgens to George Kurian in the wake of disappointing sales. The closest new CEO Kurian came to talking about the merger of his rivals was a reference to "consolidation taking place in the IT industry," during his opening keynote Tuesday.
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