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NetApp Looks to Pivot toward High-Growth Segments

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Networked Storage

We’ve seen that NetApp (NTAP) expects its Networked Storage vertical to fall at a CAGR (compound annual growth rate) of 4% from $37 billion in fiscal 2017 to $31 billion in fiscal 2021. However, NetApp has managed to increase its market share in this declining market via leadership in the NAS (network-attached storage) space and penetration in the SAN (storage area network) space.

In the Networked Storage segment, NetApp is banking on its leadership in all-flash arrays to drive revenue growth. While disk/hybrid arrays revenue is expected to fall 13% YoY (year-over-year) in the period, NetApp expects overall all-flash revenue to rise 21% YoY from $7 billion to $14 billion.

NetApp stated that its all-flash revenue in the fiscal third quarter rose 50% YoY to an annualized net revenue run rate of $2 billion. NetApp was named a market leader in all-flash among its peers IBM (IBM), Pure Storage (PSTG), and Hewlett Packard Enterprise (HPE).

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Hyper-converged and cloud storage

In the previous article, we saw that NetApp has estimated the hyper-converged market to reach $8 billion by fiscal 2021. NetApp launched a hyper-converged service in fiscal 2Q18 and is expecting significant market share gains in this vertical.

While NetApp’s total available cloud storage market may reach $15 billion by fiscal 2021, it expects its Cloud Data Services vertical to rise at a CAGR of 46% from $0.4 billion in fiscal 2017 to $2 billion in fiscal 2021.

The Cloud Data Services vertical is in a nascent stage wherein NetApp is looking to establish technology leadership.

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