NetApp on Red Alert
byteandswitch.com
Network Appliance Inc. (Nasdaq: NTAP - message board) is under attack from all corners of the market, but the looming threat of Microsoft Corp. (Nasdaq: MSFT - message board) entering this sector has the company on red alert.
A recent spat with the “benevolent despot,” as U.S. District Court Judge Thomas Penfield Jackson affectionately referred to Microsoft during its antitrust battle, has left Network Appliance under no illusions that Microsoft is a friend.
Until recently, the two firms had an amicable partnership, according to NetApp officials. “Microsoft’s Exchange Version 5.5 [mail server] supported our NAS filers and we were on the HCL list,” Andy Watson, head of strategic technology at Network Appliance, tells Byte and Switch.
Watson is referring to Microsoft’s Windows Hardware Compatibility List (HCL), a listing of hardware components that “have passed rigorous testing,” according to the company, to ensure they meet Windows compatibility requirements.
“The conflict started when [Microsoft] starting pushing Exchange 2000,” Watson says.
Unlike 5.5, Exchange 2000 does not support CIFS (Common Internet File System), a de facto file system standard that lets programs make requests for files and services on remote computers over the Internet, according to Watson.
“Microsoft wrote Exchange 2000 not to be compatible with CIFS and therefore incompatible with our filers,” says Watson. To combat the problem, NetApp wrote its own version of the iSCSI protocol to enable customers to continue using NetApp filers to run Exchange.
But this didn’t work either. According to Watson, Microsoft refuses to support Network Appliance’s proprietary alternative to iSCSI. (The proposed iSCSI standard is still a ways from being approved by the Internet Engineering Task Force [IETF]). And to top it off, Microsoft has removed NetApp from its HCL.
The problem goes higher than the clash over Exchange, says Watson. “On a strategic level, Microsoft is starting to promote its Server Appliance Kit as a storage device, and at this point Network Appliance becomes a competitor,” he says. “It’s almost a 180-degree reversal on its previous position with us.”
Watson’s message to the software giant: “Tell us what you are doing and we will work to be compatible, but if you make these independent decisions we will collide with you in the marketplace.”
Unfortunately for Network Appliance, this is precisely how Microsoft does business, and it’s the crux of the government’s antitrust case against the software giant. As has been painstakingly documented by its foes, Microsoft challenges whomever it pleases, attempting to fill every niche in the market from game consoles (Xbox) to relational databases (SQL Server), using its dominant position and brand power to force out whichever company is in its way.
Microsoft did not return calls requesting comment for this story.
In Microsoft’s defense, when it removed Network Appliance from its HCL, it issued a statement that said: "Do not store Exchange databases on any vendor's network attached storage (NAS) system," but it gave no explanation for its change of heart.
It’s worth noting that market-leading database vendor Oracle Corp. (Nasdaq: ORCL - message board) does support network-attached storage for its database products and in fact has a deal with Network Appliance (see Oracle and Network Appliance).
Financial experts agree that Microsoft’s position on network-attached storage should be a concern for Network Appliance. “Microsoft is the big fly in Network Appliance’s ointment,” says Kyle Lefkoff, venture capitalist with Boulder Ventures Ltd., an investor in several startups in the NAS space. “As NetApp scales its architecture upwards to consolidate, say, up to 100 Windows NT systems into one Network Appliance box for file and print services, Microsoft will not be a happy company.”
Increasing competition from startups in the NAS market is also likely to make life difficult for Network Appliance this year, analysts say. There are at least a dozen startups building next-generation NAS appliances, including BlueArc Corp., Exanet Inc, Lefthand Networks, Panasas Inc., Sistina Software, and Tricord Systems Inc. (Nasdaq: TRCD - message board).
But at least these companies don’t have billion-dollar market caps upon which to draw fire power. Microsoft does and will, when it eventually turns on to this market.
“How NetApp will counter a more aggressive Microsoft, especially given [Microsoft’s] strong long-term reluctance to give up control of the file system, is a problem for NetApp,” says Dan Renounard, VP of research at Robert W. Baird & Co. Inc.
— Jo Maitland, Senior Editor, Byte and Switch
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