IBM to Stop Reselling NetApp Storage

According to a report from Bloomberg, IBM is ending their reselling relationship with NetApp. The report indicates that IBM will stop selling NetApp units tomorrow, opting instead to try to drive sales of the rebadged IBM N series arrays to something else within the IBM portfolio. IBM was the largest OEM customer of NetApp accounting for roughly 2% of NetApp's revenue; the deal had been in place since 2005. The move comes at a time where both companies are struggling to keep pace with the market, IBM in particular is hurting the worst. Despite their claims around investing $1 billion in flash and deploying niche products like SSD storage in the memory channel, IBM's product lines aren't resonating with the enterprise at large. 

According to a report from Bloomberg, IBM is ending their reselling relationship with NetApp. The report indicates that IBM will stop selling NetApp units tomorrow, opting instead to try to drive sales of the rebadged IBM N series arrays to something else within the IBM portfolio. IBM was the largest OEM customer of NetApp accounting for roughly 2% of NetApp's revenue; the deal had been in place since 2005. The move comes at a time where both companies are struggling to keep pace with the market, IBM in particular is hurting the worst. Despite their claims around investing $1 billion in flash and deploying niche products like SSD storage in the memory channel, IBM's product lines aren't resonating with the enterprise at large. 

IDC's latest numbers show how bad it's been for IBM in the last year, losing more than 10% market share in the fourth quarter 2013, compared to the fourth quarter 2012. IBM's loss has primarily been EMC's gain, though HP is also seeing significant year over year growth. 

Just why is IBM struggling so badly? Part of it has to do with product mix, but the other part is a blend of marketing issues and complacency. Just compare the attendance figures of the recent EMC World and IBM Edge events along with the upcoming HP Discover. EMC saw over 11,000 attendees this year, HP historically has put up similar numbers and those respective conferences grow in scale. IBM's Edge event, held just a few weeks after EMC World, draws under 5,000 attendees.

IBM also continues along their path of being closed off, refusing to be open to independent evaluation of their products. IBM prefers instead to control the messaging which both causes concern and makes them an easy target. This is especially true in the midmarket, where there are a plethora of options not just from the large storage companies but from the host of other hybrid array vendors playing in the sub $100k space. This competition is much more vocal than IBM and they have a clearly defined communications strategy in most cases. While cutting off the NetApp deal makes sense from a revenue perspective, why not keep more of the pie, it remains to be seen if their Storwise products will resonate with the previous buyers of N series arrays.

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