June 15, 2005, 1:52 PM — If you think Network Appliance Inc.'s (NetApp) recent partnership with IBM Corp. was about getting the storage server vendor into the enterprise, Dan Warmenhoven wants you to think again. The Sunnyvale, California, company is already there, and enterprise customers are helping to fuel the company's extraordinary sales growth says NetApp's chief executive officer.
Like many high flying Silicon Valley companies, NetApp was hit hard by the dot-com bust, but the company's revenues are now growing at about 30 percent per year. The company, best known for selling NAS (network attached storage) storage servers that can easily be added onto the network, is looking for new areas to grow, and it clearly has one competitor in mind: Hopkinton, Massachusetts-based EMC Corp.
Warmenhoven, a former IBMer himself who has run the company since 1994, met with IDG News Service recently to discuss the role of open source and virtualization software in Network Appliance's strategy and to share his thoughts on the blossoming relationship with IBM. Following is an edited transcript of that interview.
IDGNS: Though many of your competitors base their products on an open-source operating system, NetApp does not. What has been the effect of open source on your company?
Warmenhoven: It's been huge, not as a competitive threat, but as an opportunity. In the server world, open source really means Linux, and we believe that the adoption of Linux and Lintel style computers provides us with another one of those change opportunities... in the marketplace.
So we have been very heavily involved in the maturation of Linux as a server technology. We have been contributing to the development of the Linux/NFS (Network File System) infrastructure through funding of projects in the University of Michigan. We now have on our payroll the maintainer, (of the Linux NFS client) Trond Myklebust.
We're very involved in the Xen virtualization stuff because we think there's an opportunity for us there.
IDGNS: Tell me more about that.
Warmenhoven: I can't, but you get the idea. Open source comes in certain categories and rather than viewing it as a threat, we really view it as an opportunity.
IDGNS: So what is NetApp's plan when it comes to virtualization? EMC bought VMware and it seems that virtualization is going to become a much more important aspect of the storage business.
Warmenhoven: What VMware does is to take a large server and break it up into multiple small servers. That's really what they're good at. I think the next wave, though, is to take multiple small servers and aggregate them into a single virtual machine. And that, to us, is where the future of blade computing goes.
You can see the genesis for that kind of stuff in the... IBM Blade Center. But the real generic version is coming out of the early stage companies like Virtual Iron. Xen is probably going to do the same kind of thing in open source, we'll see.
The whole idea is that I want to treat CPUs (central processing units) as a commodity resource, and I want to be able to build a computing capability for a particular application that is truly flexible. If the application only runs for a couple of hours every day, I want to be able to deploy it when it runs, and I want to be able to deploy it to something else when it's done.
IDGNS: With EMC it's pretty clear that VMware is going to be the enabling technology for that. How are you going to achieve this at NetApp?
Warmenhoven: Open source and partnering. I don't have to own it to capitalize on that. EMC's acquisition of Legato was a great demonstration of that. They bought a 10 percent market share. My view is that it facilitated our partnering with the other 90 percent.
The day before that announcement, Veritas was in a position where they had a close partnership with Network Appliance, but they also had a close position with EMC, and they had to keep them relatively balanced. If they played favorites, they could wind up with a problem in the market sense.
As soon as the EMC announcement of the purchase of Legato went down, our relationship with Veritas went from good to great. There was no more ambiguity as to who the right partner was.
IDGNS: So are you thinking this virtualization technology is eventually going to be part of the operating system?
Warmenhoven: I'm actually thinking that VMware is not going to be the market leader in the next generation.
IDGNS: Another company you've developed closer ties with is IBM, which is now selling your products. Was the IBM deal really about getting NetApp into larger accounts?
