No-one really wants to buy NetApp. There are five possibles but none of them has a problem that buying NetApp would solve better than any alternative. Really. That's NetApp CEO Dan Warmenhoven's view.
He listed the five possible suitors in a question and answer session at NetApp's Sunnyvale HQ this morning. In reverse order, beginning with the least likely candidate first, he named EMC, NetApp's foremost competitor, to gasps from the gathered employees and customers. He said EMC would love to consolidate the storage industry but anti-trust concerns would pose an insuperable obstacle with every EMC competitor making anti-trust complaints. Exit EMC.
Next up was Dell. He said Dell was struggling right now and it doesn't have the market capitalisation and market fire power needed. It's doing well with its EqualLogic acquisition. It's committed to that. And anyway, its problems are bigger than its storage product line. Drop Dell.
Then Warmenhoven named IBM as a more likely acquirer. But IBM already has pretty full access to NetApp products and technology through its OEM and reselling deal. It's also got too many storage product lines already. Ignore IBM.
Fourth on the list was HP. Mark Hurd has said he's pretty happy overall with HP's storage products and any development would probably be organic, so HP gets the heave-ho.
Which leaves...Cisco. It needs a storage product line to fill out its unified computing system but a likelier buy is EMC, because Cisco would get a broader set of businesses and a jewel in EMC's crown that it also needs for servers: VMWare. Count Cisco out.
Warmenhoven said: "I like being independent." And he and vice chairman Tom Mendoza both said NetApp would would be similarly bold and decisive in the future as it has been over the Data Domain acquisition. The signals are that NetApp wants to grow from a$3bn corporation to a $5bn one, and then on to a $10bn one. The way it's decided to do that is to buy complementary businesses to NetApp and win two ways.
The first way is by selling the bought company's products to NetApp's customers, getting a larger share of their spend. The second is by selling NetApp's products to the acquired company's customers. With the bulk of the top 5000 global storage buying customer accounts not yet NetApp customers, there is plenty of market headroom for growth.
What about EMC? Warmenhoven said EMC was vulnerable. It's main strength is its incumbency in accounts and that's not sustainable. Watch out Joe Tucci, Dan and Frank (Slootman) are starting out on a crusade to eat your lunch. ®