Microsoft's NAS Attack

"The [NAS] market was dominated by proprietary systems like that of NetApp, which are sold in only one way," said Charles Stevens, corporate vice president of Microsoft's Enterprise Storage Division. "Now the market has a broad choice of configurations and applications that can be customized."

At least one company, Dulles, Va.-based Inline, is shipping NAS appliances based on Windows Storage Server 2003, and others,including Hewlett-Packard, Dell, EMC and Iomega,are expected to follow suit.

But solution providers last week said they are divided about the potential for Microsoft to compete against Network Appliance.

Gary Belford, vice president of sales at Lilien Systems, a Mill Valley, Calif.-based HP solution provider, said both Microsoft and HP will be better positioned to address the enterprise NAS space with the new offering. "HP's NAS offering can use some fortification," Belford said. "NetApp has a commanding lead in the NAS space, and the Microsoft relationship will be a big boost for HP."

But while Microsoft may be able to dominate the price-sensitive low end of the market, the richness of the NetApp feature set in the enterprise will present a formidable barrier to Microsoft, said Merrill Likes, president of UpTime, an Edmond, Okla., solution provider and NetApp partner. "Mirroring, snapshots,no one else has them like NetApp does," Likes said. "NetApp's latest Ontap operating system allows up to 250 [data] snapshots, which can provide point-in-time copies every hour in a mission-critical environment."

While it has seen success in the NAS market, Microsoft also has a major perception problem among many customers, Likes said. "Look at Windows Server and all the security holes," he said. "I'm not sure people are ready to trust all their data to Microsoft."

Even so, Likes said that as Network Appliance rolls out new entry-level products, the two companies will start bumping heads in opportunities for projects that are worth $50,000 or less.