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
. 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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