NetApp Means to Fill Gaps with SolidFire Acquisition

acquisition puzzle

NetApp acquired SolidFire for the not inconsiderable sum of $870 million cash, NetApp’s largest-ever acquisition. SolidFire is a dynamic web-scale storage product that simplifies customer operations and supports fast application deployment, which makes it ideal for service provider offerings in multi-tenant environments cloud data centers. The company is also prominent in the cloud infrastructure community and actively develops integration with cloud frameworks including VMware and OpenStack.

NetApp’s Past Acquisitions

NetApp has some acquisitions but they are more unusual than at acquisition-intensive EMC. NetApp’s preferred strategy is in-house technology development centered on Data ONTAP and the FAS product line, including block storage access. Even when they acquire companies the results are mixed to say the least – although the Spinnaker acquisition is over 10 years old, people still talk about its painful post-acquisition death.

This reliance on in-house development resources put them behind their major storage competitors in terms of all-flash arrays. NetApp has them: the EF540 is based on software acquired from Engenio, and FAS and EF-series both have all-flash models. So why the major acquisition of SolidFire?

Expanding Service Provider Portfolio

Because the acquisition has less to do with the all-flash array part and great deal to do with the service provider and cloud infrastructure parts. NetApp wants and needs to expand into these areas from its limited portfolio. Granted that its portfolio is a good one: they are the essential creator of NAS and still one of its leading providers.

Yet as good as their technology and customer base are NetApp is too limited and narrow for a company of its size and reputation. Its continued focus on its sweet spot traditional NAS has kept it from leveraging sea changes in storage: cloud, virtualization, scale-out storage, hyperconvergence. Their plunging market numbers — annual revenue fell 3% as of April 2015 — have proven the short-sightedness of a venerable yet vulnerable company.

No one can foresee the success or lack thereof of a new acquisition, which is dependent on many factors including technology integration, the acquiring company’s true goals, culture fit, team retention, customer decisions, and more. At present NetApp is keeping the SolidFire team, customers and channel intact, and has tapped SolidFire’s CEO Dave Wright to direct the new NetApp SolidFire product line.

What does this mean for SolidFire?

NetApp says that it plans to incorporate SolidFire technology what it terms its “flash, disk and cloud resources.” To be honest, although its flash and disk offerings are strong enough in NetApp’s traditional NAS world, they have not had the all-flash success of competitors EMC, IBM or HP. And NetApp also has little in the way of cloud resources, which was an important acquisition driver given SolidFire’s cloud infrastructure position. SolidFire gives them this capability if they will capitalize on it. NetApp is brilliant at their core competency yet reluctant to invest in major new product areas, which has led them close to missing the innovative storage technologies train. Buying startup SolidFire will help – if NetApp will put its internal support and development money where its mouth is. They have a reputation of greatness and I wish them all the best over the next crucial 12 months.