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I suspect that NTAP's prospective Gorilla advantage may reside in its proprietary Write Anywhere File Layout (WAFL) system, which could ultimately become embedded into the network storage architecture like Cisco's IOS protocol.

The advantages of a NAS over a SAN also include the capability to remain OS-agnostic due to the fact that it runs its own embedded file system, enabling the storage and retrieval of data from a variety of client-side operating systems.

The embedded file system described above is WAFL, which you can read more about here (and elsewhere in the technical library on NTAP's website):

NTAP filers are able to serve data without regard to whether the application servers that will be using this data are Windows or Unix based. If you get deeply into it, you'll see lots of diagrams where WAFL is a layer in the network storage environment just like other protocols (HTTP, CIFS, NFS). The key for Gorilla Gamers is that WAFL is proprietary to NTAP. This makes it very much like the diagrams in the Gorilla Game of an enabling architecture which becomes embedded into a particular technology or value chain. In short, I think that NTAP could leverage WAFL into an “open, proprietary architecture with high switching costs” once NTAP's file servers and caching appliances became predominant in web-based applications.

Here's a post from SI which alludes to this possibility:

Merrill writeups constantly emphasize the importance of NTAP's cache. My understanding of why is that cache would sharply raise switching costs, helping cement NTAP into the NAS market.

NTAP filer equivalents could (at least theoretically) be functionally duplicated by any competitor with a lot of money and a couple of years. Competing filers could be installed incrementally alongside or in place of NTAP filers with little disruption to the enterprise's business.

But with NTAP-specific cache, enterprise data that is by definition constantly in use, would be distributed and duplicated over a nationwide web of filers. Much more difficult and technically dicey to add other filer brands to the mix. The danger of disrupting the business would be high.

With NTAP cache established in the market, customer loyalty is, um, encouraged :-), and NTAP competitors down the road would be forced to provide "NTAP-cache-compatible" solutions with their filer hardware, thus raising a barrier to entry into NTAP's market.

So how does NTAP become predominant? It requires a belief both in NAS' advantages over general purpose servers, as well as in NTAP's ability to raise barriers to entry and preserve its market share (double that of its closest competitor) in the NAS market.

Advantages of NAS servers over general-purpose servers:

NTAP's servers are relatively cheap, simple to operate and easy to install. Their streamlined ONTAP operating system and hardware configurations are optimized to do only one thing: serve data more efficiently. Perhaps most importantly, NTAP filers support access to shared data in heterogenous environments, whether the users are operating in an NT, Unix, or other environments. The latter is a key advantage over SANs connected to general-purpose servers, which will lose certain file system attributes if the client accessing the data has a different operating system than that of the server. NTAP's advantage in heterogenous computing environments was emphasized repeatedly in the last conference call.

NTAP's ability to raise barriers to entry against competitors:

Personally, I'm not aware of any specific barriers to entry other than general patent and trade secret protection over NTAP's specific implementation of NAS. However, NTAP's management has said again and again that the development of the proprietary ONTAP operating system, WAFL file system, and specific hardware configurations are difficult to replicate, and many companies have languished trying to create a viable NAS product. This includes Sun, which apparently was forced to abandon its offering of a dedicated file server in the NAS market. Auspex doesn't seem to be doing very well, either. EMC's current NAS offering, Celerra, apparently doesn't pose much competition to NTAP's filers, and a smaller, scaled-down NAS product through EMC's DGN acquisition is supposedly still 12-18 months away. (However, EMC is certainly a competitor to watch closely.) Also, NTAP's win rate over competitors (I've heard it quoted from 70%-75%) is certainly encouraging.

FWIW, Here's the NAS market share information, showing NTAP in the lead with 45.9%. I'm really not sure how EMC came out with 18.2%, since it hasn't yet announced a product from the DGN acquisition and its Celerra server I understand not to be such a hot seller. Anyone know where the 18.2% is from? Interestingly, Auspex (which I believe pioneered the NAS concept) only has 10.7% market share.

Although I think it's too early to crown NTAP as a Gorilla, DownSouth on the SI board has already written two installments on why he believes NTAP to be a Gorilla:

Part I:

Part II:

In short, I believe that NTAP's management is shooting for much more than a commodity-type NAS appliance. Their model definitely is not similar to Dell, for example, relying solely on strength of execution in order to maintain market share. I believe that NTAP's management is well acquainted with the Gorilla Game. I think it was Dan Warmenhoven who, at the CC six months ago, dropped a line about NAS adoption rates depending upon “how much pain the customers were in.” This comes straight out of the Gorilla Game regarding customer adoption in the bowling alley. NTAP also states that its business model is similar to Cisco's and its goal is to repeat Cisco's success in the network storage area.

It's still much too early, IMO, to characterize NTAP as a Gorilla. But if you believe in the cost, time, speed, and heterogenous data sharing advantages of NAS, and you believe that NTAP will maintain its market share lead in NAS into the future, then it is possible to envision a future in which NTAP would become the Gorilla of data storage, and maintain its proprietary advantage through the WAFL file system.

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