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NetApp, Inc.
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About NetApp, Inc.

NetApp knows storage backwards and forwards and on premise and in the cloud. The company makes hardware and software for storing, managing, accessing, and analyzing data. Its products extend customers' IT infrastructure to the cloud environments of Amazon, Google, IBM, and Microsoft. The company’s Data Fabric platform is designed to simplify and automate data while its 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.

Operations

NetApp gets revenue from the sale of products and providing software maintenance and hardware maintenance. Products provide about 55% of revenue while hardware maintenance accounts for nearly 30% and software maintenance, about 15%.

The company sells configured systems, which are bundled hardware and software products, as well as add-on flash, disk and hybrid storage and related operating systems, original equipment manufacturer products, and add-on hardware and software.

The company’s products include flash storage systems and the software for running those systems. Hardware and software fall under the company’s Data Fabric platform designed to help customers store, manage, and access data. Hardware products include all-flash and hybrid flash arrays. Software systems include NetApp Cloud Sync, NetApp Private Storage (NPS) for Cloud, AltaVault Cloud-integrated Solutions, the NetApp Software Portfolio, and the ONTAP Storage Operating System. The ONTAP Cloud storage data management service runs on Amazon Web Services and the Microsoft Azure public cloud.

NetApp outsources the production of its hardware to third parties operating in the US, Mexico, Europe, and Asia.

Geographic Reach

NetApp has customers that it reaches directly or through partners in some 140 countries. The US is the company’s largest market, with 55% of sales. The Europe, the Middle East, and Africa region accounts for about 30% of revenue, while the Asia/Pacific region generates the rest.

The company is headquartered in Sunnyvale, California, and has operations in North Carolina, Kansas, and India.

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. Distributors handle a significant amount of NetApp’s sales with Arrow Electronics Inc. and Avnet Inc. each accounting for some 20% of revenue.

Financial Performance

After three years of declining revenue, NetApp’s sales improved in 2018 (ended April), but not to the $6 billion-level it reached from 2012- 2015. The company’s net income has fluctuated, but trended lower over the past five years.

In 2018, sales rose 7% to $5.9 billion from 2017, driven by higher product revenue from a 24% increase in its newer strategic solutions products while sales of mature products fell about 2%. Hardware maintenance and other service revenue dipped in 2018 from 2017 while software maintenance revenue was relatively flat. Sales were higher in all geographic areas.

NetApp’s net income tumbled to $76 million in 2018 from $509 million in 2017. The company set aside more than $1 billion in 2018 due to provisions in the US Tax Cuts and Jobs Act of 2017.

The company had $2.9 billion in cash and equivalents in 2018, an increase of $500 million from 2017. In 2018, cash from operations was $1.5 billion while investing activities used $21 million and financing activities used $986 million. The company made $26 million on foreign exchange.

Strategy

A large part of NetApp's strategy is to help its customers move their storage to cloud computing environments and manage data between different environments, such as between private and hybrid clouds. The company has concentrated on developing software that helps customers manage data over various systems as storage hardware has fallen of favor with companies.

That means that instead of competing with cloud providers like Amazon's Amazon Web Services, IBM SoftLayer, and Microsoft's Azure, NetApp wants to make it easier for customers to use those services. NetApp is focused on products to help customers extend their IT infrastructure including data management and data protection to Azure and AWS.

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.

Mergers and consolidation in the storage business could bring bigger competitors into NetApp’s orbit. The 2016 combination of Dell and EMC created a multi-faceted, well-resourced competitor, and the acquisition of Nimble by Hewlett Packard Enterprise provided Nimble with access to deeper resources.

NetApp is exposed to trade battles between the US and other countries. Most of NetApp’s products are made outside the US and international customers account for about 45% of revenue. Higher costs due to tariffs could cut into NetApp’s profits.

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.

NetApp acquired Cognigo, a data security firm based in Israel, in 2019. Coignigo's security offerings use artificial intelligence and natural language processing to categorize pieces of data according to regulations for specific types of data.

In 2018 NetApp acquired StackPointCloud to build out its multi-cloud management tools. NetApp will use StackPointCloud to launch NetApp Kubernetes Service, a platform that’ll work across Microsoft Azure, Google Cloud, Amazon Web Services, and NetApp hyperconverged infrastructure.

In 2017, NetApp bought Greenqloud, a Reykjavik, Iceland-based developer of technology for enterprise-scale cloud management. Also in 2017 NetApp acquired Plexistor, which provides memory-based storage.

 

Company Background

David Hitz and James Lau along with Michael Malcolm founded Network Appliance in 1992. The trio saw a market for file servers, hardware that takes the storage duties out of high-performance UNIX-based computers and speeds data flow.

Donald Valentine of Sequoia Capital invested in Network Appliance in 1994, and was named chairman. He promptly brought on board as CEO Daniel Warmenhoven, the top executive of telecommunications company Network Equipment Technologies. (It was the return of a favor -- Warmenhoven had given Valentine a tip on investing in a late-1980s fledgling named Cisco Systems.) Warmenhoven ditched the company's network of resellers and built an in-house sales and marketing unit. Network Appliance went public in 1995.

NetApp, Inc.

1395 CROSSMAN AVE
Sunnyvale, CA 94089-1114
Phone: 1 (408) 822-6000

Stats

Employer Type: Publicly Owned
Stock Symbol: NTAP
Stock Exchange: , NASDAQ
President and CEO: George Kurian
Vice Chairman: Tom Mendoza
Chairman: T. Michael Nevens
Employees (This Location): 1,600
Employees (All Locations): 10,500

Major Office Locations

Sunnyvale, CA

Other Locations

Scottsdale, AZ
Irvine, CA
Sunnyvale, CA
Thornton, CO
Indianapolis, IN
Overland Park, KS
Wichita, KS
Tewksbury, MA
Waltham, MA
Minneapolis, MN
Durham, NC
Independence, OH
Cranberry Township, PA
Austin, TX
Dallas, TX
Ogden, UT
Vienna, VA
Shanghai, China
Fukuoka, Japan
Nagoya, Japan
Osaka, Japan
Calgary, Canada
Vancouver, Canada
Lyon, France
Toulouse, France