IBM Takes On EMC

Included in the deal is NetApp's entire line of unified and open NAS and iSCSI/IP SAN products, including its NearStore and NetApp V-Series systems, as well as associated software. It does not include NetApp's NetCache series of Internet caching appliances. The first fruits of the deal are expected next quarter, with a phased rollout of products to follow.

Sunnyvale, Calif.-based NetApp leads the NAS space with roughly 40 percent market share in the fourth-quarter of 2004, compared with 0.3 percent for Armonk, N.Y.-based IBM, according to research firm IDC.

Hunt Russell, sales manager at Evolving Solutions, a Hamel, Minn.-based solution provider who works with both NetApp and IBM, said solution providers with customers that have IBM IT infrastructures will definitely see business grow once IBM-branded appliances from NetApp become available. The move will shore up IBM's technical message for NAS products, he said.

"IBM needed to do this," Russell said. "They needed to either buy NetApp or make a deal with them. NetApp has 40 percent of the NAS market. IBM's 500G [NAS appliance] is a good product, but everyone had lost faith in IBM as a NAS supplier."

Michael Fanelli, western regional manager at SSI hubcity, a Metuchen, N.J.-based NetApp partner, said the deal could mean more competition for both NetApp and its solution providers. However, Fanelli said he suspects the products will filter via IBM and its channel into the enterprise first, while NetApp's solution providers focus more on midrange accounts.

Andy Monshaw, general manager of IBM Storage, said the deal will give IBM the industry's broadest range of storage offerings and a new set of tools to take on rival EMC. "This puts IBM in a stronger position to take share from our competitors, particularly EMC," he said. "Make no mistake, this [deal] is clearly aimed at EMC."

Dan Warmenhoven, CEO of NetApp, said the deal will help IBM's channel partners compete against EMC but should have little competitive impact on NetApp's solution providers. "There's very little overlap on the channel," he said. "We are not overdistributed."

Bob Mahoney, business line executive for storage networking at IBM, said IBM will assess the future of its 500G NAS appliance, which he said will be phased out over time.

IBM also will assess its iSCSI SAN appliance line, including the DS400 and will re-evaluate how it positions its iSCSI SAN products vs. its Fibre Channel products in the wake of the OEM deal, Mahoney said.

Before selling the new products, solution providers must go through IBM's standard certification process, which requires a certain number of sales and technical personnel to be certified to a specified level of expertise. "But it won't be too strict," Mahoney said.

Patrick Rogers, vice president of marketing at NetApp, said the vendor's direct-sales force and channel partners will benefit from the credibility the OEM deal with IBM gives to its products, especially in the enterprise.

But SSI's Fanelli said he wonders how the IBM deal can give NetApp more credibility than it already has. "I don't know how it helps NetApp salespeople," he said. "But it does help IBM's sales."