Tech Industry

Network Appliance's storage server will cost megabucks

The company will unveil a new high-speed file server. In its most basic configuration, the F840 will cost about $110,000, but high-end systems with 12 terabytes of storage will cost just over $1 million.

Network Appliance will unveil a new high-speed file server tomorrow that brings the company into uncharted territory: a million-dollar product.

NetApp's new F840 server in its most basic configuration will cost about $110,000, but high-end systems with 12 terabytes of storage will cost "just over a million dollars," a first for the company, said Eric Brown, senior hardware marketing manager.

The company, based in Sunnyvale, Calif., makes special-purpose file servers that attach to networks for a booming technology category called network-attached storage (NAS) that expands the storage capacity on corporate networks. The systems, for example, power Yahoo's free Internet mail, calendar and Web site hosting services.

The new product will help NetApp speed up and benefit from the convergence of NAS with a higher-end strategy of centralizing data storage called storage area networking (SAN), Salomon Smith Barney analyst John Dean said in a recent report.

Bigger companies such as Sun Microsystems, EMC and Hewlett-Packard eyeing NetApp's string of successful quarters are moving into the NAS market. Sun in particular has been pushing storage products hard and recently unveiled its T3 "Purple" server. By cramming 72 hard disks in 32 cabinets, the T3 can hold as much as 168 terabytes of data.

NetApp can manage the competition just fine, though, Goldman Sachs analyst Laura Conigliaro said in a recent note. "Sun continues to be NetApp's primary competitor with its file servers. However, we believe that Sun has an extremely full plate and should not pose a large problem," Conigliaro said.

Another competitor is Auspex, a company that in the past month named a new president and chief information officer, as well as a "turnaround team" of new sales executives. NetApp is competing more frequently with Auspex's higher-end customers, Conigliaro said.

NetApp isn't standing still, though. It's in the midst of a push to expand into "caching" servers that stash information on the Internet closer to the people who need that information. That expansion was bolstered by last week's announcement of the acquisition of WebManage, which improves the efficiency of that caching process.

Increasing NetApp's capacity from its current 1.4 terabytes to 12 terabytes will appeal to corporate customers who face an ever-growing need for storage room to hold assorted files, such as Web sites, and "structured" data housed in databases.

Another boost for NetApp is its new server's operating system, DataOnTap 6.0, which enables customers to take "snapshots" of their files more rapidly for easier backup. The new operating system also lets customers "mirror" data more easily to back up storage servers.

NetApp is trying to penetrate the database market, the core of the business computing market, a step made difficult by finicky information technology officers reluctant to entrust data to new systems. But NetApp's push to house databases has been bolstered by databases sellers' certification that the hardware works with the database software, Conigliaro said.

Another perk is the company's increased focus on its "clustering" product, which shows up in the F840C product, Brown said. The clustering lets one file server take over for another in less than a minute if the first crashes, he said.

The 12-terabyte capacity is available only in the clustered product, Brown said. Without clustering, the F840 can house only 6 terabytes of data. Typical customers will likely buy non-clustered systems with about 2 terabytes and clustered ones with 4 terabytes, Brown said.

Another new market for NetApp is the housing of archives such as photographs or other space-hogging media types, Brown said.

Meanwhile, some people are taking advantage of NetApp's plum position. Chief technical officer James Lau filed to sell 50,000 shares of company stock, with an expected value of $5.75 million, according to a Securities and Exchange Commission filing.