EMC and NetApp Comments
When EMC debuted its new entry level storage platform VNX SMB and VNXe, it was squarely aimed at NetApp‘s prime business. Now targeting SMBs with VCE, NetApp could be looking at a difficult road ahead. EMC has had a massive push into this market and is working with big partners Avnet and Cisco on this joint venture.
While storage is not necessarily a zero sum game since new customers are appearing every day and old customers are constantly growing their storage needs, I believe EMC is still hurting Netapp’s bottom line. It’s a growing market but new ties could make a difference a year from now.
On January 24th when EMC released full year 2011 numbers, Mid-range EMC storage products grew 24% year over year, with EMC VNX gaining over 2,000 new customers in the fourth quarter. Netapp will report earnings this Wednesday and if earnings are not to the upside, this could be a difficult long term setback. I don’t think that NetApp in the short term is going to lose a lot of business to EMC because of the growing market, but if NetApp cannot outpace EMC investors could start looking elsewhere. Also to note, NetApp’s Leverage Debt to Equity Ratio is .31 versus EMC at .01.