NetApp’s moment of Engenio?

NetApp’s acquisition of the external storage division of LSI yesterday was a bit of a shock; for me, it was who acquired as opposed to Engenio being acquired. I’ve been expecting the acquisition for some time but I was expecting it to be someone like Dell or even IBM but not NetApp.

In general, I think that the acquisition is a good one for the industry; whether it turns out to be a good one for NetApp, time will tell but I suspect it’s a bit of curate’s egg driven by necessity and realism within the NetApp ranks.  But like EMC’s DG acquisition; the benefits will probably be  realised in the longer term.

NetApp are still growing fast that’s for sure but I think that they want to accelerate even more and doing this purely organically is quite hard; you get the feeling when talking to some of the guys that they are pedalling as hard as they can but they are struggling to keep up with themselves.

Also, I think OnTap 8 is the beginning of a story which will long term lead to a very different appliance long-term and one which shockingly may not be completely built on WAFL and RAID-DP. The LSI acquisition is possibly part of the picture.

But there are a few places where LSI makes sense today

Bycast; the combination of Bycast and OnTap appliances is not especially attractive to the core audience for Bycast’s object storage technology at the moment. The costs do not really stack and I wonder if like EMC; NetApp have come to the conclusion that they need some ‘cheap’ and relatively dumb RAID arrays to put behind it. LSI’s disk would fill this role for them very nicely. The DE6900 disk enclosure particularly is made for that sort of application.

High Density Filers; yet again, the DE6900 and Engenio 7900 makes a lot of sense here. If OnTap 8.1 manifests some significant improvements in both aggregate size but also c-mode operation; this sort of density becomes a must. And certainly in the HPC and Media applications which NetApp wants a piece of,  there is a need for this sort of density.

IBM: IBM have sold a lot of nSeries gateways with rebadged Engenio disk; NetApp can get their hands on all of this revenue.  It also means that this relationship could end up being more healthy than it is currently; it could extend the lifetime of the relationship some-what. It may also hasten it’s end!

VNXe: NetApp’s current low-end offering is expensive when compared to the cost of a VNXe. LSI gives NetApp the potential to engineer their own VNXe killer.

Direct Attach: There is still an awful lot of direct attach disk sold; NetApp really don’t have an offering in this space. This will enable them to have the conversation and look at owning the whole of the storage estate.

So there are quite a few reasons to do the deal but….NetApp are not great at acquisition and the Engenio acquisition comes with complexities as it has a rich channel and OEM customers who compete with NetApp. If these relationships are not maintained, the acquisition could quickly turn into a nightmare.

And what happens to the Unified Storage message? That’s not as clear as it was.