Network Appliance CEO Dan Warmenhoven puts data in its place.
by Richard R. Rogoski, Contributing Editor
Storing and managing huge amounts of data over a network should be as simple as going into the kitchen and fixing a snack, says Dan Warmenhoven, CEO of Sunnyvale, CA-based Network Appliance Inc. (NetApp). “The issues around data management were complex. But they needn’t be,” he asserts. “We built a data refrigerator. Open the door. Take something out. Close the door. It’s a simple, dedicated, data appliance.”
Warmenhoven’s comparison of his product to a kitchen appliance is not as crazy as some may think. NetApp actually pioneered the concept of the network appliance as a new generation of dedicated, specialized products that perform a single function.
By separating out the storage and management components from the traditional computer server, NetApp was able to develop a separate, nonprogrammable server on which all of a network’s data can be stored and managed. “You can consolidate all the storage under a single management scheme,” Warmenhoven explains.
In one respect, he admits, this is a throwback to the days when a mainframe served as the central data repository. In today’s network-centric environment, however, where links to the Internet are essential, a network appliance is typically installed within a dedicated Gigabit Ethernet network. Because the data is shared between Windows and Unix systems, “It’s a true multiprotocol data server,” he notes.
It is also scalable, Warmenhoven says, adding that a single system now can support up to 12 terabytes (TB) of storage capacity. Yet, when individual units are linked together, the storage capacity can be infinite. Yahoo!, which is NetApp’s largest customer in terms of installed bytes, uses 300 TB of storage solely for its mail system.
DANCING WITH HEAVYWEIGHTS
While NetApp is meeting the storage and data management needs of a growing number of Internet service providers and telcos—including Lycos, EarthLink, AT&T WorldNet and Deutsche Telekom—it continues to broaden its client base. Among its customers are: Cisco Systems, Chase Manhattan Bank, Deutsche Bank, Citicorp Securities, Chevron, Conoco, ExxonMobile, BMW, Continental Airlines, Siemens, Motorola and Texas Instruments.
NetApp’s success in landing so many large accounts is largely due to the company’s direct sales strategy, which exposes potential customers to new solutions, says Warmenhoven. Having a global presence also helps. NetApp now operates in 70 countries worldwide and has more than 1,500 employees in 50 of those countries. “We got around the globe serially,” he says.
In the four years after its founding in April 1992, NetApp established a solid enough customer base in the U.S. to begin the first phase of its global expansion. Between 1996 and 1997, the company opened offices in Europe. In 1998, it entered the Far East market. Between 1999 and 2000, it began a push into Latin America.
Ripples in the global economy have not shaved off much from NetApp’s bottom line. For FY 2001 ended April 30, the company posted revenues of $1.006 billion, reflecting a 78% growth rate over FY 2000.
Still, the current dot-com bust did have an effect, he admits. “We had a flat quarter to finish on,” Warmenhoven says. “A year ago, our business was 40% to the Internet, including traditional companies that had an e-commerce initiative.” Now, that business has dropped to 25% of overall revenues.
Interestingly, NetApp’s attractiveness to companies on the Internet actually helped it weather some major storms in the online retail market. Over Christmas 1999, the heaviest traffic was being recorded by e-toys. By Christmas 2000, Toys-R-Us was the dominate online player. Yet, he says, “We were the storage and caching solution for both.”
PUNCH FOR PUNCH WITH THE COMPETITION
Although many companies are taking a second look at the role of the Internet in their day-to-day business, Warmenhoven remains both optimistic and realistic. “I don’t see the Internet going away. A lot of new ideas as to how the Net could be used didn’t pan out. And I really think there was an awful lot of hype to it.”
He says, however, that the Internet will continue to evolve into a major connection point for business-to-business and business-to-customer transactions. This will take some time, he adds. “It’s a transition, not a revolution.”
To make up for the drop-off in Internet business, NetApp is shifting some of its focus. “Our strategy is to diversify,” Warmenhoven explains. “Oil and gas companies make up 10% of our business. We need to open up more verticals.”
So far, NetApp has not had much competition from data storage companies, but the competition it does have is formidable. “We actually compete with the server vendors like Sun Microsystems, Compaq, Hewlett-Packard and IBM, who control 75% of the storage market,” Warmenhoven says. As competition among these companies heats up, he undoubtedly will have to face new challenges—but, these are the kinds of challenges that brought Warmenhoven to NetApp in the first place.
At 51, he joined NetApp in October 1994, after serving as chairman, president and CEO of Network Equipment Technologies (N.E.T.), a telecommunications manufacturer. Warmenhoven candidly admits that he resigned from N.E.T. on Jan. 1, 1994, due to a “disagreement of strategies.”
He then decided to take some time off. “I was unemployed, and I did nothing—intentionally—for nine months,” he says. Those nine months also were a time of reflection. “I spent a lot of that time figuring out what I wanted to do,” he says, “and I decided I wanted to look for a company in a rapidly changing environment.”
CLAIMING THE TITLE
Warmenhoven certainly was no stranger to the changing environments of the tech sector. Prior to being hired as president of N.E.T. in 1989, he spent four years at Hewlett-Packard (HP), where he held a number of senior management positions. By the time he left HP, he was general manager of the information networks group.
Prior to his stint at HP, Warmenhoven was a 13-year veteran of IBM Corp., working in the communications products division. While at IBM, he served as the engineering manager who helped bring that company’s token-ring technology to market. Being hired as NetApp’s CEO, though, took a little networking.
As Warmenhoven recalls, Kurt Jaggers, N.E.T.’s former marketing director, had left the company to become a venture capitalist—and he became an early investor in NetApp. By the time NetApp’s second round of funding was to close, a shakeup was taking shape.
NetApp was founded by Michael Malcolm, David Hitz and James Lau. Malcolm was the CEO, but, Warmenhoven says, one of the conditions to completing the second round of financing was to “find another CEO.” Once named to the position, Warmenhoven hit the ground running. Looking at NetApp from a business perspective, he built an executive team and formulated a strategy for growth.
Warmenhoven led the company’s initial public offering in November 1995 (NASDAQ: NTAP) and, subsequently, through 20 straight quarters of 70%+ growth. In 1999, NetApp was added to both the S&P 500 and NASDAQ 100. The company also has been ranked fourth on Fortune magazine’s “100 Fastest Growing Companies” list for two years in a row. In January, Business Week magazine named Warmenhoven one of its “Top 25 Managers of the Year.” Most recently, in June, he was selected by Ernst & Young as an award recipient in its Entrepreneur of the Year program. Warmenhoven is scheduled as a keynote speaker at next month’s NetWorld+Interop 2001 Atlanta conference.
A CHAMP’S WINNING STRATEGY
In growing the company, Warmenhoven also has kept his sights on potential takeover targets. Last year, NetApp acquired Orca Systems, a Waltham, MA-based developer of virtual interface (VI) architecture software for clustering Unix and Windows NT enterprise-class systems.
The company also acquired WebManage, a Chelmsford, MA-based provider of management and distribution software. This particular acquisition made NetApp the only end-to-end data management and content-delivery provider for Web hosting and streaming media customers. While these acquisitions have given NetApp additional technologies, Warmenhoven continues to build on the company’s core technology.
At the heart of NetApp’s product lines are its content-delivery platforms—filers and NetCache appliances—and its distribution and reporting software.
NetApp filers are designed for consolidating data and simplifying data management. The multiprotocol heterogeneous data sharing provides simultaneous file system access to Unix, NT, and Web-based servers and clients.
File-level data management tools, data protection solutions, high-performance client access and system management are provided by the Data ONTAP operating system and the patented NetApp WAFL file system.
To meet the open storage challenges for large enterprises, the NetApp F820c and F840c filers can support up to 12 TB of information. The architecture integrates multiple processors in an active/active clustered failover configuration to provide high availability and scalable performance to multiple networks. The 3 TB raw-data capacity of NetApp’s F820 filers—designed for small to midsize enterprises—allows for the consolidation of heterogeneous data for Internet, application and storage service providers, and commercial, as well as, scientific applications.
STANDING CENTER RING
NetCache appliances constitute a scalable suite of content-delivery appliances designed to solve the complex content-delivery problems faced by enterprises, content-distribution networks, ISPs, content providers and e-commerce businesses. They span an entire network, from central headquarters to remote points of presence and local offices worldwide.
Additionally, they deliver high-quality audio and video streams, enabling a host of network services and applications, such as online training, executive broadcasts and large-scale video-on-demand services.
NetCache appliances—as with NetApp’s filers, designed to fit individual needs and budgets—range from the entry-level where there may be limited local technical expertise, to the high-end series, which adapts to large data centers and maximum-bandwidth locations.
The C1100 series supports multiple T-1 connections, while the C6100 group supports 155+ Mbps, for HTTP environments. Large content libraries of up to 2 TB also can be stored and accessed with the latter. For streaming applications, the C1100 supports T-3 connections, and the C6100, 622+ Mbps.
A number of software solutions extend the system management capabilities of filers and NetCache appliances. For example, DataFabric Manager can help an enterprise use existing resources through remote, centralized management of hundreds of appliances, NetApp filers and clustered configurations. Administrative complexity is reduced, even as data infrastructure continues to grow.
More than just managing these appliances, FilerView enables IT administrators to use Web browsers to access a graphical user interface for everyday filer administration tasks. Administrators can set up and remotely control any NetApp filer from any computing platform without disruption to business-critical operations. Monitoring status, satisfying requests for additional storage capacity or making changes to file system configurations can easily be accomplished.
With ContentDirector, administrators can securely distribute content from storage appliances across global networks to multiple content-delivery appliances. In addition, it provides the tools necessary to fully automate distribution of Internet content, including streaming media and graphics.
Another application supplied by NetApp is its ContentReporter, which provides network administrators with a method to gauge the effectiveness of their content-delivery systems. Analyzing content usage, performance and infrastructure load across the entire content-delivery network, enterprises, ISPs and content providers can gain visibility to file usage patterns, activity levels and error rates for both streaming and Web-based content.
According to the Gartner Group, the market for network-attached storage is growing at a rate of 65% a year. Warmenhoven agrees, saying the trend toward network storage is becoming a major thrust in the industry. He adds, however, that data management is becoming just as important. “Data has the highest value when it’s closest to the person who needs it,” he says. “You have to have a center-to-edge distribution strategy. Centrally managed, distributed data. That’s the next major driver.”
Name: Dan Warmenhoven