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The Hunter becomes the Hunted

January 22, 2009

I recently came into a copy of Dave Hitz‘s new book How to Castrate a Bull. A full review is to come, but I couldn’t wait to serve up one delicious bit of irony. Among the book’s many unintentionally fascinating artifacts is NetApp’s original business plan, dated January 16, 1992. In that plan, NetApp’s proposed differentiators are high availability, easy administration, high performance and low price — differentiators that are eerily mirrored by Fishworks’ proposed differentiators nearly fourteen years later. But the irony goes non-linear when Hitz discusses the “Competition” in that original business plan:

Sun Microsystems is the main supplier of NFS file servers. Sun sells over 2/3 of all NFS file servers. Our initial product will be positioned to cost significantly less than Sun’s lower-end server, with performance comparable to their high-end servers.

It is unlikely that Sun will be able to produce a server that performs as well, or costs as little, for several reasons:

  • Sun’s server hardware is inherently more expensive because it has lower production volumes than our components […]
  • The culture among software engineers at Sun places little value on performance.
  • The structure of Sun — with SunSoft doing NFS and UNIX, and SMCC [Sun Microsystems Computer Corporation] doing hardware — makes it difficult for Sun to produce products that provide creative software-hardware system solutions.
  • Sun’s distribution costs will likely remain high due to the level of technical support required to install and manage a Sun server.

While I had known that NetApp targeted Sun in its early days, I had no idea how explicit that attack had been. Now, it must be said that Hitz was right about Sun on all counts — and that NetApp thoroughly disrupted Sun with its products, ultimately coming to dominate the NAS market itself. But it is stunning the degree to which NetApp’s own business plan — nearly verbatim — is being used against it, not least by the very company that NetApp originally disrupted. (See Slide 5 of the Fishworks elevator pitch — and use your imagination.) Indeed, like NetApp in the 1990s, the Sun Storage 7000 Series is not disruptive by accident, and as I elaborate on in this presentation, we are very deliberately positioning the product to best harness the economic winds blowing so strongly in its favor.

NetApp’s success with their original business plan and our nascent success with Fishworks point to the most important lesson that the history of technology has to teach: economics always wins — a product or a technology or a company ultimately cannot prop up unsustainable economics. Perhaps unlike Hitz, however, I had to learn that lesson the hard way: in the post-bubble meltdown that brought Sun within an inch of its life. But then again, perhaps Hitz has yet to have his final lesson on the subject…

11 Responses

  1. … so what you’re really implying is that Dave Hitz doesn’t know that shouting at disks will always have a far greater impact than shouting at his competition’s lawyers?

  2. 🙂 enjoyed the fishworks elevator pitch…
    Shoot, I actually started putting together a thin client appliance, now I know I probably have competition 🙂
    BTW setting up a sun ray server is a pain in the ….
    The market for thin client appliances has to grow …

  3. Post-bubble meltdown that bought Sun within an inch of its life?!
    Well, then now it should be within a milli-inch of its life.
    Dude, it’s all about marketing your product – where Sun has been consistently in the dumps.

  4. john PB,
    I know it may be hard to believe given today’s market valuation, but Sun was actually in much graver danger in, say, in 2002 than we are today. In the dot-com boom, we completely lost track of the economics of our products — and by 2002 (when we had no x86 line and when Solaris x86 had been "suspended" and when SPARC lagged considerably) Sun’s future was very bleak. (So much so that customer conversation was dominated by "ongoing concern" worries, which is a terrible disposition for a conversation about forward-looking technology.) Today, we have a product line that customers are excited about (and, more importantly, wanting to pay money for), positive cash flow and a reasonable war chest headed into a year that will be indisputably tough for everyone — and I can’t remember the last time a customer was concerned that we would go out of business. This is not to say that we don’t have significant problems, but they are largely tactic- and execution-oriented; they pale in comparison to the major strategy-oriented problems that we faced earlier in the decade…

  5. Bryan, as an ex-Sun employee from way back, I am glad to see the engineering passion still alive at Sun. What I know from looking outside in, talking to other potential Sun customers, and current Sun employees is that marketing (and to a lesser extent Sales) is in a worse shape than it was, oh, 10 years back during my tenure. Lots of dead wood, execs just concerned about keeping their own and their cronies’ seats warm …
    I’m pretty sure that the all the turn-around you talk about is in spite of the marketing folks in there.
    Well, you’ve surely heard this all before and quite likely experienced it as well …

  6. It’s truly amazing how often the marketing issue is coming up of late, and rightly so. Surely the top layers of Sun management must be aware that there is a problem in this regard, and it must change urgently?

  7. There may be marketing issues at sun, but theese blogs do an excellent marketing job!
    Posts like the "don’t scream at disks post " are worth more than expensive ad campaigns…
    Keep on blogging

  8. I’m actually a competitor in the storage industry, though not one of the Dave Hitz’ mob. I have to say I’m seriously impressed with the fishworks technology. But you need to broaden the portfolio, there’s nothing really in the middle and application integration is key. Maybe given SUN’s marketing woes sign with an OEM.

  9. >In that plan, NetApp’s proposed differentiators are high availability,
    >easy administration, high performance and low price — differentiators
    >that are eerily mirrored by Fishworks’ proposed differentiators nearly
    >fourteen years later.
    "eerily mirrored" ? Oh please, those "differentiators" are so "big picture" and nefarious you might as well say "breath by ourselves, and make money"! I swear there must be a template out there that everybody uses for a "business plan" that is intended to impress investors rather anyone technical.
    You got a great product there, but can you please sell with technical excellence and customer examples instead of hyperbole? The snake oil is starting to leak out.

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