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Network Appliance: A Disruption?

For many years, EMC has been benefiting from the huge demand for sophisticated data storage. EMC considers itself a developer of electronic information infrastructures ("E-infostructures" for short). It seems to be working. The company has a market capitalization of $167 billion.

But lucrative markets always have pesky competitors. EMC's marketplace is no exception. A tough player is Network Appliance . In the world of EMC, Network Appliance is small - only a $25 billion market capitalization.

Network Appliance calls its technology Network Attached Storage (NAS), a technology it masterminded in 1992. The are a myriad of benefits to NAS. Basically, it is implemented within a local area network - seamlessly integrating with existing IT infrastructures. The technology helps to reduce costs, as well a complexity, but performance does not suffer. Net Appliance can also scale to multiple terabytes. Installation is easy, taking about 30 minutes. Administration is painless.

Take John Deere as an example. Of course, the company is a heavy user of mechanical design software, which involves massive data storage. But after installing Network Appliance technology, John Deere saw vast improvements. User productivity increased, downtime fell, and data file storage and access was much easier.

With such results, it is not surprising that Network Appliance is undergoing hyperspeed growth. In the past quarter, the company had $200 million in revenues, a 120% increase compared to the same period a year ago. There were profits, to boot: $24.5 million. During this time, Network Appliance completed one of the largest NAS systems for Yahoo! (yes, definitely a site that requires impressive technologies for data storage).

Interestingly enough, Network Appliance's solutions have been considered a "disruptive technology." The phrase is from the influential book called The Innovator's Dilemma, written by Harvard Professor Clayton Christensen. A disruptive technology can wreak havoc on existing leaders (such as EMC) and result in new dominant companies (such as Network Appliance). Of course, this is theory. But the reality is clear: Network Appliance has technology that many companies need now - and likely for many years to come.



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