UPDATED 23:37 EDT / DECEMBER 22 2015

NEWS

NetApp/SolidFire deal won’t be a game-changer, Wikibon says

NetApp Inc.’s $870 million acquisition of flash storage outfit SolidFire Inc. should help it to fend off challengers hoping to erode its market share, but the move won’t be a game-changer and will not help the company resolve its fundamental problems, Wikibon analysts say.

NetApp announced the acquisition yesterday, saying it hopes to wrap up the deal by April 2016. When that happens, NetApp plans to incorporate SolidFire’s products into its Data Fabric strategy over time, thereby “delivering seamless data management across flash, disk and cloud resources”, the company said.

But if anything, the acquisition was somewhat overdue, said Wikibon co-founder and principal analyst Dave Vellante in an interview. He noted that NetApp was trailing its competitors in Flash and really had no choice but to make a move if it wants to remain competitive.

“Other major storage players have had their strategy baked for years, and NetApp has finally realized it had to take action or fall further behind,” Vellante said.

Vellante explained that SolidFire is a good fit for NetApp because the former was struggling to shop its products in the enterprise due to a lack of what he called “distribution juice”. However with NetApp’s distribution channels it should be a lot easier to find buyers.

“This changes that dynamic and the Solidfire product should do very well,” Vellanted predicted. “If NetApp can rapidly begin selling the Solidfire product it should get very fast uptake.”

That’s still a pretty big “if” though, considering NetApp’s recent history with acquisitions. Stuart Miniman, senior analyst and principal research contributor at Wikibon, pointed out in an interview that NetApp has a reputation for handling its acquisitions somewhat “poorly”, citing its purchases of Spinnaker Networks and Decru as examples of this.

“I’ve got a lot of friends at SolidFire. They’ve got solid technology and an excellent team,” Miniman said. What NetApp has to do is “to take a page from what EMC has done [with acquisitions], which is to let the products have a bit of independence,” Miniman added.

Still, the deal is a great one for SolidFire because the startup has been desperately seeking an exit before the market cooled off and all the buyers dried up, Vellante said. With Dell Inc. and EMC Corp. more focused on their upcoming merger, SolidFire’s options were scarce – which means NetApp’s interest came along at just the right moment.

“It’s a nice exit for Solidfire. I think if anyone five years ago said to Dave Wright you’re going to have a nearly $1 billion exit, he’d have been thrilled to take it,” Vellante said.

But although the deal is good for SolidFire, it won’t necessarily be enough to turn NetApp’s fortunes around. As CRN.com (which first broke news of the acquisition) notes, NetApp has struggled with its financial situation over the last year and lost a number of important executives. Vellante for one, doesn’t see the SolidFire buy as a game changer.

“NetApp missed getting in early on a mega wave and while SolidFire will help solidify its position against competitors, it doesn’t magically solve the company’s fundamental problems,” Vellante warned. “The market is consolidating toward converged infrastructure and it’s extremely challenging to go it alone as a storage pure play.”


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