NetApp: Storage spending has a lot of nuance

NetApp CEO Tom Georgens captures the tug-of-war big data projects will face: "There is a natural data growth of the creation of new data, but that doesn't mean that spending goes up automatically."

The need to keep more information, big data projects and a slowdown in information technology spending are creating an interesting brew for storage spending, according to NetApp.

Speaking on NetApp's second quarter earnings conference call, CEO Tom Georgens captured the tug-of-war between IT budgets and the urge to store every bit of information. He also said that there are currently trade-offs between storage demand (never-ending) and the budget (definitely not unlimited).

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The nuance detailed in Georgens' comments highlights one of the big issues with big data---the data wonks want to keep everything, but there's only so much storage spending allowed. We recently highlighted those issues in our TechLines panel on big data in New York. Georgens was asked whether industry growth rates would catch up with storage demand.


The implication: Customers can only delay storage projects so long. Georgens said:

The simple fact of the matter is, is that storage spending at the end of the day is budget limited, it is not capacity limited. I don't know if I've ever met a customer that stored every bit of storage they wished they could store. They store what they can afford to store and when they're on the budget pressure, they will make other trade-offs. One of which is to turn on more of our storage efficiency technology.

We certainly saw that to a great extent in the last downturn and I'm certain we see it to some extent this downturn.

So that's what would be one of the things -- so it's basically fully leverage the technology they've already bought. The other side of that, clearly is that they keep data around for less periods of time or keep data on -- keep less copies of the data and the consequence of that is the utilization of the data, whether it be for data warehousing or decision making or decision support or things of that nature. Yes, there is a natural data growth of the creation of new data, but that doesn't mean that spending goes up automatically.

I could speak from a CEO's perspective, we don't sit around and say, we would love to invest in R&D, we would love to invest in sales and marketing but we can't because we have to spend money on storage. What is more likely is we invest in our priorities and then hand a budget down to IT.

I do believe that storage is a consumable and as a result, it puts enormous pressure on IT in that scenario. So I do expect that storage will outperform the other sectors within IT but I wouldn't pretend that storage can overpower IT spending indefinitely. I do believe that IT spending does modulate storage spend but I do also believe that storage would be a disproportionate amount of the IT spend.

Georgens also noted that big deals are being deferred by companies and the focus is on incremental storage spending. However, that reality only means there will be pent-up storage demand later.