NetApp – Transformation, Bifurcation or Re-invention?

NetApp – Transformation, Bifurcation or Re-invention?

Chris Evans Cloud, Cloud Field Day 13, Cloud Practice, Cloud-Native, Data Management, NetApp, Opinion

NetApp has purchased Fylamynt, a start-up working on cloud automation and incident response.  The acquisition represents one of a long line of technology purchases that join the Spot side of NetApp’s cloud business.  As we witnessed at CFD13, the company is rapidly changing, but is this an ongoing transformation or a bifurcation into two separate entities?

Background

NetApp initially acquired Spot, a cloud optimisation start-up, in June 2020.  The technology developed by the company enables customers to optimise the use of cloud resources, scaling both long-term and on-demand instances to meet business requirements. 

Spot is one of many acquisitions that started in earnest in 2017 with Greenqloud.  Since then, NetApp has added StackPointCloud, Cognigo, Talon, CloudJumper, CloudHawk, Data Mechanics and CloudCheckr to the roster.  All these vendors are cloud infrastructure-related, and only one specifically focuses on storage.  It’s also no surprise that these acquisitions followed the hire of Anthony Lye in March 2017. 

Pivot

In April 2018, we wrote about NetApp’s pivot towards the public cloud, focusing on data services and the Data Fabric concept.  At the time, NetApp only had a small number of cloud-based services grouped under the Cloud Data Services Business Unit.  The presentations from Cloud Field Day 3 demonstrated the capabilities at the time.

Four years later, the Cloud Field Day 13 presentation from Nick Howell shows a portfolio of services divided into Compute Operations, Cloud Storage, Cloud Controls and Data Services & Analytics.

NetApp Cloud Service Portfolio

While the data services features make sense for a company with NetApp’s history, the Compute Operations features don’t directly align with the company’s core storage appliance history.  It’s interesting to note that in 2019, NetApp attempted to join the Kubernetes rollercoaster with StackPointCloud and an in-house Kubernetes distribution (NKS).  The idea of NKS was quickly shelved in preference to supporting cloud-based Kubernetes through the Spot technologies. 

Bifurcate

With the latest acquisition, NetApp’s strategy (or perhaps Mr Lye’s) seems to be focused on cloud operations management, aka CloudOps.  Anthony Lye now runs the Public Cloud Services BU at NetApp – no reference to data in there at all. 

The cloud optimisation services stand out as separate from the rest of NetApp’s cloud business.  Initially, we thought that the acquisition of the Kubernetes focused start-ups was there to integrate with data services.  One aspect to this was to consider whether, in a Data Fabric, it might be better to move the “compute to data” rather than the “data to compute”.  Now it looks like the cloud optimisation solutions are a separate business entirely.

The Architect’s View®

Nearly eight years ago, we suggested that NetApp had reached a critical inflection point in the business.  ONTAP was the solution for any problem, while the market was experiencing a growth in new storage vendors.  It’s interesting to note of the companies mentioned in that article, NetApp acquired SolidFire, Coho Data never went the distance, Nimble was acquired by HPE, and Tintri rose like a phoenix from the ashes of bankruptcy to be acquired by DDN.  Storage continues to be a tricky business in which to get established.

NetApp did diversify through acquisition (SolidFire in 2015), then pivoted towards the public cloud two years later.  Today, the company portfolio is increasingly cloud-focused, with storage an important but slower growing component.

The 3Q22 financial figures (published yesterday) show a 98% year on year growth for public cloud services, up to $469 million.  While we don’t know how much the Spot business contributes to this figure, the Compute Operations services are clearly positioned for a future with less dependency on on-premises hardware. 

NetApp 3Q22 Cloud ARR

Has NetApp become two separate organisations?  In one respect, yes, as many of the services offered today are not directly storage related.  However, if the future of IT is in a hybrid cloud model, why stay focused on the part of the business that will increasingly move towards a commodity model?  Many companies reinvent over time; rather than bifurcation or transformation, NetApp could be reinventing. 

For more information on our coverage of NetApp, visit our dedicated NetApp Microsite. NetApp is a tracked vendor for Data StorageData Protection, and Cloud Storage


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