NetApp announces big Q2 revenue gains

Network Appliance on Thursday announced double-digit second-quarter revenue growth and said it continued to grab market share in the network-attached storage (NAS) market. Network Appliance said its revenue for the quarter was up 29 percent, or US$483 million, over the same quarter last year and up 8 percent from the previous quarter. That 29 percent growth rate was roughly four times the growth rate of the overall storage market.

Dan Warmenhoven, CEO of NetApp, attributed much of the revenue gains to the company's new FAS3000 line of midrange arrays, which offer four times the capacity of previous models and double-disk failure protection, or RAID 6.

"The FAS3000 had a whopping 250 percent increase in units shipped and accounted for almost 30 percent of all systems sold. It also had very strong software attach rates," Warmenhoven said.

Steve Gomo, NetApp's chief financial officer, said the company plans to spend US$650 million to repurchase its own stock this year.

According to Kaushik Roy, an analyst at Susquehanna Financial Group, Network Appliance will continue to gain NAS market share, particularly because of its OEM reseller agreement with IBM. "Yes, EMC is also getting traction in the NAS market, but not at the expense of NetApp," Roy said.

Network Appliance has hit a sweet spot in the market with its midrange NAS boxes, Roy said, an area that EMC has only recently moved into.

According to research firm IDC, the company's share of the NAS market grew 3 percent this quarter over last, giving it 44.6 percent of the NAS capacity on the market. Network Appliance also continues to lead its competitors in iSCSI storage market share, accounting for 45.2 percent of the capacity shipped. Network Appliance also said it had its strongest year-over-year increase in Fibre Channel SAN revenue, with a growth rate of 130.2 percent.

"Midrange NAS [systems sales are] growing in the high teens, but NetApp is growing much faster than that because they're... getting into new territories," Roy said.

Warmenhoven also touted his company's purchase of storage network security vendor Decru Inc. this past quarter as a new inroad to contracts with government agencies and enterprises focused on regulatory compliance issues.

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