NetApp Picks Up SolidFire; Should Someone Pick Up NetApp?

A week later than some people predicted, the news has broken. NetApp has bought SolidFire for $870M. This continues the trend for established storage companies to acquire start-ups with great flash products rather than building their own. SolidFire initially targeted the service provider market with its scale-out all-flash array. In the last year or so, SolidFire has taken aim at enterprise data centers as well. In both of these markets, NetApp is well established as a vendor of disk-based storage arrays. However, it has been losing market share due fundamentally to a lack of a modern solid-state product. The FlashRay product that NetApp developed has failed, leaving NetApp no option but to acquire.

NetApp doesn’t have the best track record for acquisitions. This one appears to be its largest and is definitely critical to future success. I believe that a key success principle will be to keep the SolidFire product engineering separate from the existing FAS lines. Customers deploying all-flash arrays want products that are designed to get the most out of flash, without any legacy disk-based thinking. Trying to shoehorn SolidFire into a FAS architecture is likely to be painful—as painful as clustered ONTAP coming from the Spinnaker acquisition.

On a personal note, I have a lot of friends at SolidFire. A larger company buying a start-up can easily fall apart because the cultures are different. I hope NetApp treats the SolidFire team as a success and keeps its start-up ethics and approaches. I hope it also tries to keep the SolidFire team together rather than integrating everything into existing NetApp units. Further, I hope the company is revitalized by the new ability to address the solid-state opportunity.

NetApp’s purchase of SolidFire is likely to be the last acquisition in the IT infrastructure industry in 2015, but we can expect some more activity in 2016. I have to think that Cisco is looking at the market. Its problems with the Whiptail purchase will make it a bit gun-shy. If it wants to compete against the Dell/EMC machine, then it needs storage. I think Cisco needs to make a couple of storage acquisitions to show the market it is serious. A hybrid array, an all-flash array, and a scale-out hard disk array would make a portfolio. Of course, Cisco could just buy NetApp and get a full storage portfolio, which would then include a great all-flash array. Buying NetApp has the advantage of a huge number of loyal customers, with storage teams that want NetApp products. NetApp has a market capitalization of around $8 billion. It would be a big acquisition, but nowhere near as large as Dell’s purchase of EMC.

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