Businessmodel of NetApp

Customer Segments

NetApp has a mass market business model, with little differentiation between customers. The company targets its offerings at enterprises, governmental organizations, and service providers.

Value Proposition

NetApp offers four primary value propositions: accessibility, innovation, performance, and brand/status.

The company creates accessibility by making its products easily usable by the disabled. It incorporates standards into its products specified in the Voluntary Product Accessibility Template (VPAT), which enables its offerings to conform to the U.S. Rehabilitation Act.

The company has a long history of innovation. It is responsible for many industry firsts, including:

• First network-attached storage appliance (FAServer 400)
• First space-saving, no-performance-impact data protection technology using Snapshot copies (Snapshot)
• First network-based data-backup protocol (NDMP)
• First NAS appliance to integrate storage with Oracle applications
• First to enable a converged 10Gb Ethernet network that supports storage protocols and workloads on a single wire
• First to extend data center agility by enabling scale-out across low-, mid-, and high-end unified NAS and SAN systems

• First to offer clustering for nondisruptive operations, resource provisioning, and rapid application commissioning across low-, mid-, and high-end unified NAS and SAN systems The company has demonstrated strong performance by achieving tangible results for customers. Specific examples include the following:

• Helped IP QL achieve 85% service subscription renewals from cloud customers
• Helped Teva Czech Industries manage production of six billion pills a year
• Helped RFA remove 100% of performance issues for transaction processing
• Helped Invesco reduce server and storage infrastructure ten-fold over two years
• Helped Photobucket successfully migrate 17 billion videos and photos The company has established a strong brand as a result of its performance. It is one of the largest manufacturers of data storage systems. It has many prominent clients, including Citicorp Securities, Merrill Lynch, Lockheed Martin, Oracle, Texas Instruments, and Yahoo! Lastly, it has won many honors, including a “Best of Show” award for Customer Innovation by IT Brand Pulse (2015) a TechTarget Quality Award for Technical Support (2015), selection as a 5-Star Storage Vendor by CRN (2015), and placement for 13 consecutive years on *Fortune *magazine’s “100 Best Companies” list.

Channels

NetApp’s main channels are its direct sales team and channel partners. Channel partners include value-added resellers, original equipment manufacturers, system integrators, distributors, service providers, and technology partners. In its most recent fiscal year sales through channel partners represented 77% of revenues. The company promotes its offering through its website, social media pages, summits, and conferences.

Customer Relationships

NetApp’s customer relationship is primarily of a personal assistance nature. It assists customers in the following ways:

Training Services – These include the following:

• NetApp University – A set of free online, instructor-led courses and learning resources
• Certification – Exams that confirm takers have the knowledge to deploy NetApp solutions
• Authorized Learning Partners – Instructor-led training provided by company partners Support Services – These include a three-year hardware warranty, a software support plan, and SupportEdge, a program offering extensive service (remote troubleshooting, on-site support)

Professional Services – These include strategic consulting services, design services, deployment services, transition services, and optimization services

Personalized Services – NetApp provides a NetApp Support Account Manager (SAM) who works directly with a client’s staff to gain a deep knowledge of their NetApp data storage environment

Despite this orientation, there is also a self-service component. The company’s website features a “Library” section that includes analyst reports, data sheets, technical reports, white papers, and “how-to” videos. There is also a community element in the form of a forum for peer interaction.

Key Activities

NetApp’s business model entails designing and developing software, systems, and services for its customers. The company outsources manufacturing to third parties in Tennessee, California, Mexico, Texas, The Netherlands, Hungary, China, Taiwan, and Singapore.

Key Partners

NetApp has over 8,000 partners worldwide; they fall into the following categories:

Alliance Partners – IT infrastructure and application technology partners who build and deliver integrated enterprise storage solutions. Specific partners include Actifio, Quantum, and Cisco.

Resellers – Companies that deliver NetApp technology consulting services, outsourced solutions, and managed services. Specific partners include CDW Logistics, Insight Enterprises, and SHI.

OEM Partners – Companies that develop and sell their own offerings based on NetApp products, services, and solutions. Specific partners include HP Enterprise Services and IBM Tivoli.

System Integrators – Firms that integrate NetApp products into solutions for large enterprises, including outsourced solutions and managed services. Specific partners include Wipro and Unisys.

Service Providers – Companies that help NetApp customers deploy services. Specific partners include Applied Computer Solutions, Datalink, Sentinel Technologies, Atos, Quest, AT&T, and Verizon.

Key Resources

NetApp’s main resources are its human resources, who include its engineering employees that design and develop its products, its training and consulting staff that provide instructional and advisory services, its sales staff that sells its offerings, and its customer service staff that provides support. The company places a high priority on intellectual property, with 1,900 issued and 680 pending patents.

Cost Structure

NetApp has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements. Its biggest cost driver is sales/marketing, a fixed expense. Other major drivers are in the areas of cost of revenues, a variable expense, and research/development and administration, both fixed costs.

Revenue Streams

NetApp has three revenue streams:

Product Revenues – Revenues generated from the sale of software and systems

Software Maintenance Revenues – Revenues generated from contracts for product upgrades and enhancements, as well as phone and Internet access to technical support centers

Hardware Maintenance and Other Service Revenues – Revenues generated from hardware maintenance services, professional services, and training/educational services