NetApp knows storage backwards and forwards. The company makes data storage systems used by businesses for archiving and backup. Its devices are used in network-attached storage (NAS) Fibre Channel and IP-based storage area network (SAN) settings. NetApp's OnCommand software product enables storage systems management while other applications focus on data loss (MetroCluster) and protection (SnapProtect). The company mainly sells to the energy, financial services, government, health care, and IT sectors through distributors including Arrow Electronics and Avnet ; direct sales account for less than one quarter of total revenue. Clients have included Deutsche Telekom and Boeing.
NetApp took an early lead in the NAS market, but the rise in popularity of the relatively inexpensive devices attracted a host of competitors. Never content to cede market share for any storage offering, industry leader EMC sells NAS products. Companies such as Sun Microsystems used acquisitions to crack the market, and even former customer Dell now makes its own NAS devices. Dell is one of a number of companies that make Microsoft Windows-based NAS products.
However, NetApp moved beyond the role of pure-play NAS vendor. Responding to customer demand, it expanded the functionality of its storage filers to work within more complex SAN configurations. The company also provides data security appliances and controllers for storage virtualization. Its products are branded with yet another three letter designation, FAS, which stands for fibre-attached storage, which denotes a storage system connecting to an IP network via a Fibre channel connection.
NetApp continues to add functionality to its product line to enter new markets and adapt to evolving technology. In 2011 the company bought Massachusetts-based Akorri Networks, a developer of data center management software. The deal was intended to better position NetApp to offer products to the growing market for outsourced data management and give it a leg up in the areas of data capacity and network performance planning and management.
Also that year NetApp purchased the Engenio external storage systems business of LSI in an all-cash transaction valued at around $480 million. The company made the acquisition to address emerging segments of the storage market, namely video (including video capture and video surveillance) and high-performance computing (used in genomics sequencing and other scientific research applications). It also benefited from the unit's established OEM business for server-attached and embedded storage products.
NetApp's sales rose 22% in fiscal 2012 due to healthy demand for its storage efficiency and data management products; the company also saw sales of hardware maintenance contracts rise. Profits, however, shrank for the year compared with 2011 due to lower margin products (E-Series) and the impact of discounting; reduced manufacturing costs offset those decreases to some degree. NetApp's revenue has grown steadily over the past decade, as has its net income, with the exception of 2009, when profits dipped.
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