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NetApp acquisition of SolidFire expands all-flash portfolio

NetApp spent $870 million to buy SolidFire and scrapped work on FlashRay, its storage system designed exclusively for flash. FlashRay never made it to general availability.

Some industry analysts said the $870 million NetApp acquisition of all-flash array vendor SolidFire was long overdue after NetApp's failure to deliver its long-promised FlashRay product.

Like FlashRay, which never made it to general availability, SolidFire's all-flash array (AFA) was built from the ground up for flash. The NetApp acquisition of SolidFire leaves NetApp with three all-flash platforms, including the two it sells, which are based on its long-standing disk product lines.

"They should have done this about four years ago," said George Crump, founder and president of Storage Switzerland LLC.

SolidFire deal fits NetApp portfolio

Others see the NetApp acquisition of SolidFire as a well-timed purchase that will fit nicely into NetApp's broader all-flash portfolio, which also includes the All Flash FAS and EF-Series arrays designed originally for spinning disks. They share NetApp's view that the All Flash FAS, EF and SolidFire arrays will appeal to different types of customers. They see the scale-out SolidFire line as an extension of NetApp's flash reach to cloud service providers and enterprises interested in distributed, private cloud architectures.

"This is an opportunity for NetApp to go into a market where they haven't had a lot of successes," said Randy Kerns, a senior strategist at Evaluator Group in Boulder, Colo. "SolidFire is designed for service providers, and has established a presence in that market."

The NetApp acquisition of SolidFire leaves NetApp with three all-flash platforms, including the two it sells, which are based on its long-standing disk product lines.

NetApp outlined a multiproduct flash strategy that it said would address the three largest AFA market segments: the SolidFire line for "next-generation" infrastructure buyers who want to deploy an Amazon-like, distributed, "Web-scale" architecture; the All Flash FAS for traditional enterprise infrastructure customers who value storage services; and the EF-Series for application owners focused on performance and consistent low latency.

"This is clearly a good move for NetApp. They didn't really have a good play in the scale-out arena, despite all the marketing verbiage they tried to put around scaling out the [clustered Data OnTap] cDOT environment. That was clearly just clustered. It wasn't scale-out," said Eric Burgener, a research director for IDC's storage practice. He added that it was "time to cut their losses" on FlashRay.

NetApp acquisition shutters FlashRay

NetApp CEO George Kurian said the company would discontinue the FlashRay program and not bring the product to market. Kurian said AFF would cover the majority of the use cases for which FlashRay was planned, and the complementary SolidFire line would handle the remainder, as well as new use cases, such as NoSQL databases, Hadoop and DevOps deployments.

"It's a horrible strategy," Crump said.

He said SolidFire's distributed, cloud-centric architecture was a great acquisition, but NetApp would be better served if it made SolidFire its main all-flash platform. He predicted that NetApp would instead waste the $870 million, and "fight tooth and nail to keep FAS going, because they're just too bought into that architecture and unwilling to move on.

"If you look at EMC, they buy companies that cannibalize their existing product offerings all the time, and they're incredibly successful at most of their acquisitions," Crump said. "NetApp is the polar opposite. They buy companies and do everything they possibly can to let cannibalization not happen. The problem is cannibalization is a fact of life. As a big company, you have to choose if you're going to cannibalize your own products, or if your competitors are going to do it."

Stu Miniman, a senior analyst at Wikibon in Marlborough, Mass., said NetApp has not done a lot of acquisitions, and holds firm to a strategy that "everything has to run [Data] OnTap," the company's storage operating system.

Miniman said the SolidFire acquisition is by far NetApp's largest, providing a "needed piece" that will significantly bolster the company's flash portfolio. But, he said, it could take 12 to 18 months before the SolidFire acquisition has a significant positive impact on NetApp's financial results.

Sign of new NetApp strategy?

Arun Taneja, founder and consulting analyst at Taneja Group, said the SolidFire acquisition showed him that "maybe there's somebody thinking differently than the previous management team," whose approach tended to be "if it's not inside NetApp, it can't be a good strategy." NetApp's board replaced CEO Tom Georgens in June following a string of disappointing financial results and executive departures.

"This is a great indicator that somebody inside the company gets it and is willing to place bets that are entirely different than the bets that were placed in the past," Taneja said. "Not having a strong all-flash array offering is not conducive to good health today. You cannot take an existing product that was designed for [hard disk drives], and stuff it with [solid-state drives] and say, 'I have an all-flash array.'"

Taneja pointed out EMC moved into the AFA market by acquiring market-leading XtremIO, and IBM bought Texas Memory Systems to build its FlashSystem platform.

"SolidFire is designed from the ground up to be scale-out, and it will instantly differentiate them from some of the other AFA products in the industry," Taneja said. "NetApp badly needed a scale-out all-flash array."

NetApp-SolidFire deal seen as costly, yet effective

Marc Staimer, president of Dragon Slayer Consulting in Beaverton, Ore., said SolidFire's key capabilities are petabyte-level scalability and volume-level quality of service to enable service providers to guarantee service-level agreements.

Staimer said he can foresee the EF-Series going away over time, but he thinks the AFF and SolidFire products will live on in NetApp's flash portfolio.

"SolidFire is a smart acquisition by NetApp. It fills a gaping hole in their portfolio," Staimer said. "Despite the fact they can do OnTap all-flash today in their scale-out cluster mode, they did not have a performance offering at the price point that the market demands."

"Better late than never," said Tim Stammers, a senior analyst at 451 Research. "Yes, it's cost NetApp a fistful of change and dented its reputation, but it does now genuinely have a decent flash offering. That's at the very least. If you throw in the AFF and EF-Series, arguably, NetApp now has one of the strongest portfolios out there."

Next Steps

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Dig Deeper on SSD array implementations

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Should NetApp position its newly acquired SolidFire all-flash array as its main solid-state storage product line?
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