When we last heard from Tom Georgens, he was reaching for the cloud to bring NetApp out of its long slump. While he was doing that, Georgens' blind spot for flash arrays and other new storage technologies cost him his job.
NetApp Monday replaced Georgens as CEO and chairman, promoting George Kurian to CEO and lead independent director Mike Nevens to chairman.
The move was a surprise but not shocking. NetApp has foundered for two years, with revenue slipping and key executives leaving. People in the industry -- and investors -- say NetApp was not aggressive enough in acquiring new technologies and it failed to innovate.
NetApp has been stung by moves that have not worked out, stretching back more than a decade. Tom Georgens inherited some of these problems when he replaced Dan Warminghoven in 2009, while other problems happened under his watch.
NetApp's revenue has decreased year-over-year for seven straight quarters, and its stock price dropped from $41.68 per share at the start of this year to $33.26 at the opening of business June 1. Last month, NetApp said it would lay off around 500 people, which follows a larger layoff two years ago. Few expected Georgens to be the first to go in this latest round of cuts.
Competitively, NetApp is caught between behemoth EMC and successful smaller players such as Nimble Storage, Nutanix, Pure Storage and Tintri. EMC buys any new technology it cannot quickly develop itself, and the smaller vendors have more modern technology at a more attractive price than NetApp.
Cluster faux pas
NetApp has been embarrassed with its development misses on Clustered Data Ontap and its FlashRay all-flash system.
NetApp leadership realized it needed clustered NAS back more than a decade ago and acquired startup Spinnaker Networks in 2003 for the technology. What it didn't realize was how difficult it would be to merge Spinnaker's code with Ontap. NetApp finally shipped a version of Ontap with clustered capabilities in 2008, but its clustered version did not reach feature parity with basic Ontap until late 2014.
Moving to the clustered version requires data migration and downtime, however, and many NetApp customers haven't had the time or the will to upgrade. During the 12 years it took for NetApp to cluster Ontap, Isilon (now part of EMC) and object storage moved to the forefront for scaling NAS.
Flash follies were too common
When rivals began building arrays to take advantage of solid-state drives (SSDs), NetApp's stance was that providing flash acceleration in the server was the better way to go.
In Nov. 2012, NetApp CTO Jay Kidd said the vendor saw no need for an all-flash storage array. A month later, Kidd said the need for all-flash arrays was accelerating and NetApp would have its own in 2013. Two months after that, NetApp revealed plans to develop its FlashRay all-flash platform from the ground up, to be released in beta in mid-2013 and become GA in 2014.
NetApp finally released a one-node FlashRay for select customers in Sept. 2014, but has yet to make it generally available. NetApp does have all-flash versions of its FAS and E-Series arrays, but those systems were designed for hard disk drives and not for SSDs.
NetApp has stayed on the sidelines for other emerging technologies. It announced support for VMware's EVO:RAIL hyper-convergence, but has yet to deliver a product.
The vendor has had its share of bad luck as well. EMC torpedoed NetApp's attempt to buy Data Domain for $1.5 billion in 2009 when Data Domain had the best disk backup product and customers were switching from tape to disk backup in droves. EMC outbid NetApp to acquire Data Domain for $2.1 billion. NetApp stayed out of the backup market until acquiring Riverbed's SteelStore cloud backup appliances in 2014, re-launching the product last week as AltaVault.
NetApp also took a hit in 2014 when IBM ended its nine-year OEM deal to re-brand FAS as the IBM N Series.
On the plus side, Georgens acquired LSI's Engenio storage division -- which he ran before joining NetApp -- in 2011. That became the E-Series, which gives NetApp extra revenue and a block-only storage platform, but is designed more for high-performance computing than mainstream storage.
Tom Georgens: All about the cloud
During NetApp's earnings call two weeks ago, Georgens made it clear he saw the cloud as the key to winning in the storage market. He called the cloud "the biggest transactional force in the industry" and said the cloud "dwarfs the impact of any of those other technologies."
NetApp's strategy has been to tweak its products for the cloud. Its cloud offerings include Cloud Ontap, Private Storage for Cloud and OnCommand Cloud Manager, plus the new AltaVault.
But that may not be enough to win the cloud race when EMC has spent billions of dollars on cloud vendors Virtustream, Cloudscaling, TwinStrata, Maginatics and Spanning over the past year.
What's next for NetApp?
We don't know what NetApp's strategy will be in the post-Georgens era. NetApp has not made Kurian available to discuss that. There have even been mixed signals about his status. While he is not referred to as an interim CEO, new chairman Mike Nevens said he will conduct a CEO search. When asked to clarify, a NetApp spokesperson called Kurian "the leading internal candidate" for the job.
Before we can determine where to expect NetApp to go next, we have to find out who will be setting that course.
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