NetApp 2021
A few years ago, NetApp saw that selling storage arrays to enterprise data center users would no longer be a high growth opportunity. This realization came about as customers began to move applications and workloads to the public cloud as well as instantiate new cloud-native applications. Both of these shifts reduced the incremental need for data center storage – a trend that continues today. But unlike its data center storage competitors who encouraged their customers to resist this migration, NetApp decided early-on to not only follow its customers to the cloud but meet them there when they arrived. Today, NetApp regards the public cloud as a peer to on-premises customer data centers and defines itself as a cloud-led, data centric software company.
NetApp’s Cloud Strategy
CEO George Kurian, seeing that clouds were disruptive to a data center-centric business model, decided that there was a profit to be had by regarding the disruption brought-on by cloud computing as more of an opportunity than a threat. The three major public clouds – AWS, Microsoft Azure and Google’s Cloud platform – were targeted. Anthony Lye[1], currently NetApp’s Senior Vice President & GM Public Clouds, was brought-in from the software and cloud services industries to head-up the cloud business initiative with a mandate to explore the business possibilities presented to NetApp by public cloud exploitation. The cloud services division he oversees has grown from a small team to over hundreds of employees and continues to grow. It now accounts for $237M in annual recurring revenue (ARR), growing at 186% Year/Year, with a target of $1B by 2025.
[1] See EG Video Insight: NetApp on Cloud Data Management, Astra and Digital Transformation
Public Cloud-Based Subscription Services
From a product perspective, NetApp now offers more subscription-based storage services available in public clouds[1] than any other enterprise storage infrastructure vendor. These include:
Cloud Volumes ONTAP – a software-only, enterprise-grade storage appliance that runs ONTAP storage and data management services in the cloud, currently supported on AWS, Microsoft Azure, and Google Cloud Platform public clouds.
Cloud Volumes Service – a fully managed file storage service resold by Google Cloud Platform and available for AWS.
Azure NetApp Files – a file storage service offering three services levels – Ultra, Premium and Standard – for use in Microsoft Azure’s public cloud.
Additional subscription-based cloud data and management services include:
Cloud Backup – an add-on service for Cloud Volumes ONTAP and on-premises ONTAP for backup and restoration
Cloud Manager – centralized management of NetApp cloud storage services (Cloud Volumes ONTAP, Azure NetApp Files) within hybrid, multicloud environments
Cloud Compliance – data privacy and compliance service used in conjunction with Cloud Manager
Cloud Insights – cloud infrastructure monitoring using advanced analytics to analyze cloud infrastructure use, identify abandoned and unused cloud resources and right-size workloads
Cloud Sync – for migration of data to and from a wide range of sources and targets, in the cloud or on-premises
Cloud Tiering – for automatic tiering of inactive data on NetApp’s data center-based storage resources to the public cloud object storage
SaaS Backup for Office 365 and Salesforce – SaaS offering for backup of O365 and Salesforce data to Amazon S3 and Azure Blob storage
[1] For a discussion of public cloud storage shortcomings, see EG Technical Insight: Public Cloud Storage – Going Beyond the Big 3
Cloud-Native Solutions
In addition to cloud-based data services, NetApp has developed internally (Astra) and acquired software (Spot) that expand its offerings for customers engaged in cloud-native transformation projects. Astra[1] is a data management service that can be used with any Kubernetes cluster – private, public or hybrid cloud-based. Astra provides a data management services overlay that facilitates and automates data protection, disaster recovery and application migration scenarios for Kubernetes clusters. Kubernetes has become a critical path enabler of container virtualization management for enterprise IT seeking to deploy workloads that take full advantage of public cloud services.
Spot by NetApp is aimed at commercial public cloud users who seek to cost-optimize their cloud deployments by continuously analyzing on demand, reserved instances and spot instances availability in real time at run time, allowing customers to make the most economical choices for spot instance provisioning and rebalancing. The overall objective of Spot by NetApp is to aid customers in their quest to drive up the efficiency of public cloud-related spending.
[1] For more information, see EG Industry Insight: NetApp Astra
Evaluator Group Comments
We see from this portfolio of services and software solutions that NetApp is approaching new revenue opportunities afforded by the continued growth of enterprise cloud adoption – and doing so from multiple directions. File storage services (Cloud Volumes ONTAP and Azure NetApp Files) capture revenue from the sheer volume of data now stored in public clouds. NetApp does so in a way that will attract enterprise users looking for the same adherence to storage best practices as they see in their on-premises file storage systems. The subscription services noted above enhance the enterprise cloud user experience by filling-in data management gaps. These include data protection for both cloud computational workloads and SaaS applications, compliance, data migration and tiering of on premises data to the cloud. And the cloud-native solutions for Kubernetes (Astra) and spot instance management (Spot by NetApp) can be utilized by both enterprise IT operations managers as well as DevOps teams.
We can also see NetApp reaching-out to new constituencies. NetApp’s Anthony Lye believes that enterprise is moving away from a paradigm where existing data center infrastructure drives application composition to one in the cloud where the application – and consequently application developers – drive the demands of the infrastructure. This viewpoint makes application developers a constituency well worth cultivating. Beyond that, he has also taken note of the fact that the public clouds, led by AWS, have “retailed” computing. Vast computational resources are now leverageable by anyone with a talent for coding and a credit card. The public cloud gives NetApp a way to realize new sources of revenue from this expanding, world-wide group of cloud users as well.
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