On Monday, the company will announce a new low-end product, the NetCache C1100, a thin specialized server that's built around an Intel chip. NetApp's first products were based on Intel chips, but the company moved to Compaq's Alpha chips because data can be transferred into and out of the chip faster.
Using Intel chips allows NetApp to expand into a less demanding, lower-priced market, said Edward Chow, leader of the company's Internet caching products. The new products, with prices starting at less than $6,000, are intended for modest computing loads, such as those at branch offices of larger corporations, Chow said.
NetApp is benefiting from two trends--the increasing popularity of special-purpose computers called "server appliances" and the Internet's increasing demands to store and transfer information quickly. However, the company also faces ever-fiercer competition.
Intel, too, is benefiting.
Intel built its empire on the strength of the PC revolution, but now is working hard to expand into new markets such as servers. Although its high-end chips and computer designs are still too underpowered for use in the most powerful computers, there is plenty of room elsewhere in the Internet for lesser servers that shuttle information hither and thither.
Caching servers, a type of server appliance, are used to store information closer to the people who need it so it arrives more quickly. Typically, the original information is stored on a central server, then automatically pushed to the caches periodically.
NetApp, like SGI and several other hardware companies, is trying to expand its products into a hot new market for distributing streams of digital video or audio information. The new NetCache comes with support for three streaming standards, Apple's QuickTime, Microsoft's Windows Media and RealNetworks' RealSystem G2.
The C1100 is 1.75 inches thick, a measurement known as "1U" among those accustomed to bolting computers to racks. It runs NetApp's own proprietary operating system, called Data OnTap, and can communicate easily with either Unix or Windows computers.
The NetCache products compete with machines from Inktomi, Cisco, and to a lesser extent, CacheFlow and Cobalt Networks, Chow said. More worrisome, analysts say, are products from slower moving but better established companies such as Dell, Compaq, Hewlett-Packard and IBM.
Caching servers currently only account for about 10 percent of NetApp's revenues, the company has said. The bulk of its business comes from selling high-speed file servers that cost tens of thousands of dollars. That business has carried NetApp stock to new heights earlier this year, thought the company valuation has sunk back with the general decline of high-tech stocks.
NetApp also faces new competitors on the horizon for its file servers, including Sun Microsystems, which is working on a product code-named "Purple" believed to be a NetApp-like product.