Q&A with NetApp's CTO: Amazon deal, competitors, layoffs and growth

Storage isn't sexy. But NetApp's chief technology officer wants it to be, and may have a few tricks up his sleeve to entice even the most rigid of IT decision makers.
Written by Zack Whittaker, Contributor
Image: Jeff Myers/Flickr

NEW YORK — Elephant in the room: storage just isn't sexy, and it never has been. But, it can be, says NetApp's chief technology officer Jay Kidd.

After the dot-com bubble burst, NetApp begun to steadily push above and beyond its rivals in order to reclaim its former standing in the storage market. Now second in line to the top spot behind EMC, Kidd has overseen a massive amount of growth in the market in the two years he has been CTO — particularly during the enterprise cultural shift from local on-premise storage and computational solutions to the cloud.

Kidd sat down with ZDNet at the Bloomberg Enterprise Technology Summit in New York City on Thursday to discuss its arms-length relationship with Amazon, a competitor in the cloud storage market; growth opportunities, and its successes as a software company. 

On growth and industry pressures

NetApp's revenue over the past two years has been slowly climbing but remained largely flat at about $6.5 billion each fiscal quarter. Continued growth remains a concern for Kidd.

"We've been growing faster than everybody else in the industry, but it's a big industry," he said. NetApp has 12 percent market share — just less than one-third the share of EMC, the leader in the storage sector, which has 33 percent, according to research firm IDC. But NetApp's share is up from 8-9 percent five years ago. Kidd said EMC's share had been largely flat — and if you discount acquisitions, its growth has been negative.

"Our growth has been organic," he said. "We started later than EMC, HP, and the rest of them, but our growth rates have traditionally been higher. To get to number one, we need to grow faster, and for longer."

Kidd said he wouldn't rule out following in EMC's footsteps by bulking up on acquisitions in the future.

On NetApp's relationship with Amazon

NetApp announced in November 2012 a deal to connect its private cloud customers to Amazon Web Service's public infrastructure. NetApp's certified hardware connects with Amazon's compute and storage cloud more easily, making it easier to scale up and down core applications.

"Usually, heads turn, because traditionally if someone had to go to the cloud, they have to move their data and their applications," he said. Despite the worry about putting certain data into Amazon's cloud, many NetApp customers still want flexible and expandable storage and computing.

"It's an arms-length relationship with Amazon," Kidd said. "In this industry, everyone is a competitor and everyone is a partner." Calling Amazon a "very cooperative partner," he said the deal works for both companies. "But we recognize that it is very interested in pulling customers' application and storage into its own environment, as well."

He said NetApp started with Amazon because it remains "the clear market leader." And although nothing on a technological point stands in the way of expanding that relationship to Google or Microsoft, he said it was just a question of conversations.

He declined to disclose the status of any discussions — if any.

On its successes as a software company

The storage firm's secret sauce isn't in the hardware. It's the software that sets it apart, Kidd says. With about 95 percent of its engineering team focused on software, its snapshot technology stands proud on the company's portfolio mantle.

"We developed early on the concept of a snapshot. We did this early on by recognizing that the way we write data to the disk, you don't write it back in the same place. You write it somewhere else," he explained. Kidd said the company's customers all use snapshot technology to backup data, despite NetApp's competitors' arguing that it's a performance drain.

Kidd said the technology helps customers de-duplicate data, which saves space by removing duplicate data, and yet still have a virtual machine at one-third of the space with the same performance benefits. He gave one example of taking a 10-terabyte data set and creating a writeable copy in about a minute, meaning developers can have the same environment five-times over to hammer out a problem.

"That's all in software," he said. That's what sets us apart — we're smart about how we manage the disks and the solid-state drives. We knew twenty years ago that software was key to our successes, and back then that was radical thinking," he added. 

On finding nirvana for the chief information officer

Depending on the assets you have, a company might choose to outsource all, or some, of its applications to the cloud.

It's not uncommon to see mail or customer relationship software, like Gmail, Office 365, and Salesforce.com, as a service that's thrown into the cloud. Some more important apps need to stay on-premise, while others can be take the hybrid approach — by having the core app running on a server in a datacenter, with Amazon or Google's cloud plugged in to have scalable computational power.

It's not an easy task for chief information officers who have to decide which apps remain internal, external, or end up being a of both. How do you get that data across sometimes three or more clouds? That's what NetApp's customers are trying to figure out, Kidd said.

"Figuring out where to put data and making sure we still have access to that data from elsewhere in your operations," he said, would be the "nirvana" for high-level executives. "I can view these clouds like I can view another IT location that I have complete control of, but I'm operating at a lower cost without some of the hassle and pain of managing certain skill sets."

On the transition to deemphasize hardware

"We're in the flash market, and the software-defined storage market in big ways," Kidd said, noting how he was "wary" that IT is going to become purely software defined and that hardware was going to take a backseat in the coming years.

The best solution would be to use the same services that are available in hardened appliances, integrated infrastructure, combined with servers... and all the way down to the pure software layer," he said. "Traditionally, customers have bought systems — and that mixture of what those systems do changes a little bit."

On what keeps him awake at night

Last month, NetApp suffered 600 job losses, about 5 percent of its workforce, as IT spending continued to suffer. A year prior, the company cost 900 jobs. That's hitting its bottom line.

NetApp's future rests on its ability to keep up with the current IT trends, and adjust accordingly when those plains shift. 

"There's so much change coming down on the fires of IT right now — clients are shifting to mobile, application architectures are changing, servers are virtualizing, networks are changing, storage is changing — my biggest worry is how will people decide how to sequence which new technologies they embrace first?" he said.

Kidd said a stall in the IT purchasing market would affect NetApp's revenue growth, and would also cause its rivals to suffer. "Industry growth and when will that stall end — that's what keeps me awake at night.

Almost everyone else I interviewed that day said their kids or a yapping dog down the street. Each to their own.

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