EMC Joins Rush to Windows NAS

A flurry of Windows-based NAS announcements has industry sources asking whether big vendors should pull the blinds.

While still a tiny slice of the NAS market, Windows-based NAS has been featured in a slew of recent news: EMC Corp. (NYSE: EMC) today unveiled the entry-level NetWin 110 system based on Windows Storage Server 2003 (see EMC Launches NAS for SMBs); Dell Computer Corp. (Nasdaq: DELL) recently announced a new Windows-based PowerVault system; and sources say Hewlett-Packard Co. (NYSE: HPQ) will upgrade its Windows-based NAS line next week at Microsofts TechEd conference (see Dell Covers Its NAS).

Microsoft’s Windows Storage Server 2003 product manager, Marcus Schmidt, says other hardware and software vendors will roll out products around Windows-based NAS next week, as well.

Driving all this is Microsoft's addition of NAS support for Exchange Server 2003 email server and other enhancements last month as part of a Service Pack. Also, low-end NAS systems target the trendy SMB market that storage vendors are chasing (see Microsoft Likes Fibre Channel, Too).

But sources say the rush to open Windows on NAS is misguided. IBM Corp. (NYSE: IBM) dropped its unsuccessful Windows-based NAS earlier this year, and Network Appliance Inc. (Nasdaq: NTAP) has no plans to offer NAS built on Windows (see IBM Swings New NAS Gateway). Both offer higher-end NAS products.“That’s not the type of business we’re trying to pursue,” says Rod Matthews, head of NetApp’s Windows Storage group. “We’re going to continue along the path we’ve been on.” He agrees with analysts who say the low end of the NAS market belongs to server vendors such as Dell and HP.

At least one of these analysts says vendors like EMC should back off. “I think EMC’s low-end NAS is only going to get them in trouble,” analyst Arun Taneja of Taneja Group says. Entering the Windows NAS market puts EMC into direct competition with Dell, which has targeted lower-end NAS and also has an agreement to sell its Clariion SANs with EMC.

“They're competing with their biggest partner now, and there’s no money to be made because the margins are razor-thin with that product,” Taneja maintains.

EMC hasn’t sold many of the NetWin 200 systems it rolled out late last year. But Tom Joyce, EMC's senior director of NAS product marketing, thinks the lower-end NetWin 110 is a better fit for Windows-based NAS users and might help EMC’s push into the SMB market. Microsoft has cleared up past confusion about NAS functionality in Windows, he notes, and EMC is taking advantage of that.

From Joyce's viewpoint, the future with Dell doesn't pose a problem. The next piece of EMC's strategy will be a low-end Clariion SAN system that Dell will manufacture and co-brand with EMC (see EMC Earnings Up and EMC Lets Clariion Out of the Bag). EMC hopes customers will use the NetWin 110 with the upcoming Clariion. “They’re targeted at the same type of market and designed to work together,” Joyce says.Joyce points out that EMC's NAS will be distinct from Dell's in price. At $6,100, the new single-processor NetWin 110 will still cost more than twice as much as Dell's low-end PowerVault NAS, even though it will cost about one-third as much as the dual-processor NetWin 200.

Taneja sees other problems in the Windows NAS arena. If Microsoft gains a foothold on the low end with NAS, it will try to move up into the higher end. That would make it a competitor with EMC’s Celerra and NS700 systems built on EMC's proprietary operating system.

“Microsoft’s intention is to keep increasing the performance of its NAS products,” Taneja says. “The higher performance Microsoft’s NAS products get to be, the more they clash with EMC’s Celerra line.”

— Dave Raffo, Senior Editor, Byte and Switch