About NETAPP, INC.

NetApp knows storage backwards and forwards and on premise and in the cloud. The company makes data storage systems used by businesses for archiving and backup. It's moving much of its hardware and software to cloud-based storage applications. It offers products for hybrid cloud storage, extending customers' IT infrastructure to the cloud environments of Amazon, Google, IBM, and Microsoft. NetApp enables customers' use of flash storage, another relatively new market for the company. The company's FlexPod product, developed with Cisco Systems, is designed to helped customers manage applications from Oracle, SAP, and Citrix. The company mainly sells to the energy, financial services, government, health care, and IT sectors through distributors. It makes about a quarter of its revenues from direct sales.

Operations

About 54% of NetApp’s revenue comes from its product segment whiles hardware maintenance and other services bring in about 30% with software maintenance accounting for the rest. The company outsources its manufacturing to third parties in the US, Europe, and Asia.

Geographic Reach

The US is NetApp's largest market, representing around 55% of its sales. Europe, the Middle East, and Africa account for nearly 32%, while the Asia/Pacific generates 13% of sales.

Sales and Marketing

NetApp has field sales offices in 45 countries. It employs a multichannel distribution strategy, selling products and services to end users and service providers through a direct sales force and through channel partners, including value-added resellers, system integrators, OEMs, and distributors. During 2016 (ended April), sales from indirect channels represented 77% of its revenue. NetApp's major customers include  Arrow Electronics (22% of total sales) and  Avnet (19%).

Financial Performance

NetApp’s revenue declined for the second year in a row, dropping 9% to $5.5 billion in 2016 (ended April). Sales were off 18% in products, its biggest segment, on lower sales of its line of Fabric-Attached Storage (FAS) systems. Discounting and promotions led to a lower average selling price of FAS systems and the company's E-Series systems. The company had lower sales across its geographic segments.

The company's net income also fell in 2016, tumbling nearly 60% to $229 million from $560 million in 2015. Besides lower sales, NetApp had expenses for restructuring and streamlining its operations.

Cash flow from operations also fell, down to $974 million in 2016 from $1.27 billion in 2015.

Strategy

A large part of NetApp’s strategy to help its customers move their storage to the cloud computing environment. And a large part of the company’s cloud strategy is hybrid cloud, which combines premise storage and external cloud storage. The company’s research and development spending increased almost 11% from 2014 to 2015.

Instead of competing with cloud providers like Amazon’s Amazon Web Services, IBM SoftLayer, and Microsoft’s Azure, it wants to make it easier for customers to use those services. In 2015, NetApp released products to help customers extend their IT infrastructure including data management and data protection to Azure and AWS.

Customers have shown a preference for NetApp's newer FAS mid-range and high-end systems and its E-series systems as they shift from the company's entry level FAS systems. Discounts of systems resulted in lower average selling prices overall of its configured systems.

To help develop new cloud and other product offerings, NetApp operates a research and development lab in Research Triangle Park, North Carolina. The lab provides shared-services infrastructure for testing its hardware and software against conditions found in enterprise data centers and cloud environments.

In 2016 (ended April), the company reduced its worldwide headcount some 11% and took an $80 million charge for employee severance in 2016 fourth quarter. NetApp expects to complete its restructuring process by second quarter of fiscal 2017.

The company reduced its R&D spending to $861 million in 2016, down from about $920 million for the past two years.

Mergers and Acquisitions

NetApp continues to use acquisitions to add functionality to its product line, to enter new markets and, to adapt to evolving technology.

In 2016, the company acquired SolidFire Inc., a maker of all-flash storage systems based in Colorado, for $850 million. The purchase  extended NetApp's presence in the all-flash array market.

In 2014, the company purchased Riverbed Technology’s SteelStore product line for $80 million. SteelStore products support backup applications and cloud providers that give customers choices in how they extend their existing data protection infrastructure into the cloud. In 2013 NetApp snapped up mobile device software provider ionGrid, for $17 million, and storage technology provider CacheIQ, for $91 million.

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NETAPP, INC.

495 E Java Dr
Sunnyvale, CA 94089-1125
Phone: 1 (408) 822-6000
Fax: 1 (408) 743-6106

Stats

  • Employer Type: Public
  • Stock Symbol: NTAP
  • Stock Exchange: NASDAQ
  • President and CEO: George Kurian
  • Vice Chairman: Tom Mendoza
  • Chairman: T. Michael Nevens

Major Office Locations

  • Sunnyvale, CA

Other Locations

  • Scottsdale, AZ
  • El Segundo, CA
  • Irvine, CA
  • Boulder, CO
  • Thornton, CO
  • Indianapolis, IN
  • Overland Park, KS
  • Wichita, KS
  • Tewksbury, MA
  • Waltham, MA
  • Minneapolis, MN
  • Durham, NC
  • Pittsford, NY
  • Independence, OH
  • Cranberry Township, PA
  • Austin, TX
  • Dallas, TX
  • Ogden, UT
  • Salt Lake City, UT
  • Vienna, VA
  • Calgary, Canada
  • Vancouver, Canada
  • Lyon, France
  • Toulouse, France
  • Fukuoka, Japan
  • Nagoya, Japan
  • Osaka, Japan
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