NetApp’s topline revenue growth has been flat for the last 2 years and is expected to DECLINE in their current fiscal year, which ends April 30, 2015. That will mean 3 consecutive years of flat or negative growth. Put another way: In a Scale-Out NAS market with a 16% CAGR, NetApp is flat or down for 3-straight years. Oof.
Contrast that with Isilon’s growth. Isilon has grown revenues from $200M in 2010 (the year EMC acquired the company) to $1.3B in 2014. That’s over 5.5X growth in 4 years, including 26% Y/Y growth in 2014 on a $1B number (compared to 25% Y/Y growth in 2013 – which means Isilon actually accelerated growth in 2014 over 2013). The industry is moving to Scale-Out NAS and it is increasingly choosing Isilon. It is not choosing NetApp, or, as I like to think of them, NotApp.
NotApp's CEO blamed it on “sales execution issues,” among other things. I actually agree with that – his sales team isn’t winning deals. They are getting their heads kicked in by XtremIO in the AFA space – and by Isilon in the File space.
Get this, though: Their operating margin is healthier than ever. So, topline revenue is down, margin is up. What does that say? Personally, I think it means that they're losing when it's a competitive deal – but when they do an un-contested deal or an un-contested refresh, they do so on their terms at their price points. Customers doing deals with NotApp and not introducing competition are leaving a ton of money on the table.
NetApp is the Blackberry of the storage industry. They’re still alive, they have a decent product and a huge install base of largely loyal, happy customers. But they are confused, lost, no longer strategically relevant, losing share all over the place and their ultimate demise is not a question of if, but when.