Currently, the two giants of the data storage industry, EMC and Network Appliance, don't compete too much, with EMC selling expensive top-end storage systems and NetApp selling less expensive systems. On Tuesday, though, EMC will introduce a new lower-end product, code-named Chameleon, that's a direct assault on NetApp.
NetApp won't be blindsided by the new product. It launched a pre-emptive strike of its own Wednesday, announcing a move into higher-end markets that previously had been EMC's turf.
"They've been elbowing each other, but now they're going to be in each other's faces," Illuminata analyst John Webster said.
The battle will force both companies to adjust to new realities outside their current comfort zones.
For EMC, taking on NetApp will mean the company won't have the plump profit margins it has enjoyed at the high end. And for NetApp, it means trying to pull its customer base into a more expensive segment and working with finicky high-end customers who have scant tolerance for systems that operate with less than perfect reliability.
Victory depends on how future storage devices will fit into networks, Webster said. "I think, at the moment, EMC may have an advantage with their acquisition of CrosStor," a company whose technology frees EMC somewhat from worrying about which storage network technology prevails.
Countless companies have been trying to benefit from the exploding demand for data storage. IBM, Dell Computer, Hewlett-Packard, Compaq Computer and Sun Microsystems each have aggressive storage initiatives, but the biggest successes in storage hardware have been EMC and NetApp, whose products attach to all manner of computers.
A booming market neutrality as far as the type of servers customers use is only part of the story. NetApp and EMC have maintained their leads with high-performance hardware and software features that aren't easy to imitate.
But EMC and NetApp have been in different markets. EMC's biggest success has been selling refrigerator-sized storage systems that are part of special-purpose storage networks. These so-called storage area networks (SANs) are expensive to install and operate, but they offer higher performance than the ordinary computing networks.
Meanwhile, NetApp has focused on storage devices that live on ordinary networks. These network-attached storage (NAS) devices, while less expensive than EMC systems, now can cost more than $1 million.
That changes now, as the two companies become more direct competitors. "I think the battle lines between NetApp and EMC are being drawn," Webster said.
NetApp announced Wednesday that its products will attach to IBM's zSeries (formerly called S/390) mainframe computers, bastions of corporate computing and the market from which EMC launched its current successful storage business. NetApp also announced it supports IBM's DB2 database software, a further move that allows the company to tackle higher-end customers.
"That's EMC's turf," Webster said. "They'll certainly see that as an encroachment."
NetApp no doubt had the same feeling in November when EMC acquired CrosStor, a company that sells NAS software and that is working on merging SAN and NAS technology. And Tuesday's announcement will just amplify the feeling.
The acquisition had other effects on the NAS market besides just threatening NetApp. HP and Western Digital's Connex division both relied on CrosStor software to run their NAS systems, he said, but he predicts in the future they will be buying it from EMC.
"The barriers to entry just got a little bit higher because CrosStor has been taken out of the market as a place to go to get the software engine you need to drive a NAS product," he said. "I expect those customers will start looking now for other alternatives."
One likely contender is Network Storage Solutions. "My understanding is they are now getting close scrutiny from CrosStor's original equipment manufacturer customers," Webster said.
Though EMC has long had a high-end but comparatively minor NAS device called Celerra, the new battle lines will require EMC to moderate its attacks on NetApp's lower-end business.
In an October interview, EMC chief executive Mike Reuttgers disparaged NetApp's products for not being as robust as EMC's. "I see lots of companies running their business entirely on direct-attached" storage, he said. "I see some starting to run their business on storage area networks. I see none running their entire business on network-attached."