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Shane Greenstein traces the evolution of the Internet from government ownership to privatization to the commercial Internet we know today. The product line consisted of network data storage appliances or "filers," devices that were developed to contend with specific market requirements of data-intensive network environments.
Unlike other file servers on the market, NetApp's devices were not burdened by general purpose operating systems or file system overhead. The devices performed one task, and they executed the task well.
NetApp's proprietary software architecture enabled the company to use industry standard hardware rather than specialized hardware, providing its customers--a corporate clientele--with a universal and versatile solution to storing and retrieving their data. Said Hitz, in an August 22, interview with the San Francisco Chronicle, "We built a box to do just one thing, and it goes a hell of a lot faster than a general purpose server. NetApp's first years in business were fraught with the typical problems experienced by a start-up company.
NetApp met with a certain amount of skepticism during its formative years in the corporate storage business--often the reaction to an industry pioneer.
The approach was novel, and corporate customers, particularly the largest, "blue-chip" companies, were wary of entrusting their all-important data to a new type of storage device developed and marketed by a new company.
Sales were slow initially and overhead expenses were high, resulting in several years of hefty losses. Further, the company's growth was held in check by the nascence of corporate networking and the Internet. Toward the end of the s, the use of the Internet and networking as means to share information mushroomed, fueling the growth of the corporate storage industry, but as NetApp set out in , the use of the Internet and corporate networking was far from widespread.
Considering the obstacles NetApp faced during its formative years, it was not surprising that its annual financial totals were weak. NetApp's fiscal year ended in April, which meant no revenues were collected for the year because the company did not ship its first products until June From there, the company's financial health decidedly improved, as NetApp quickly became one of the fastest growing companies in the United States.
NetApp's dramatic turnaround was presided over by a new leader who arrived in Daniel Warmenhoven, like David Hitz, was a graduate of Princeton University, where he earned a bachelor's of science degree in electrical engineering in Warmenhoven spent 13 years working for IBM in the company's communications products division.
He joined NET in and resigned as the company's president, chief executive officer, and chairman on the first day of the year in , citing a "disagreement of strategies" as the reason for his departure, according to an August interview he gave to Communications News. Meanwhile, at NetApp, there was a need for a new leader. The company was attempting to complete a second round of financing, but one stipulation of the financing was that the company replace Michael Malcolm as chief executive officer.
Malcolm stepped down and Warmenhoven took his place, joining NetApp in October Under Warmenhoven's guidance, the NetApp enterprise began to flower. Shortly before the IPO, the company adopted a new marketing strategy, one that was credited with contributing to the company's dizzying rise during the latter half of the s.
Initially, NetApp marketed its products almost exclusively through indirect sales channels. In fiscal , at roughly the same time Warmenhoven arrived at the company, NetApp began developing a direct sales network. The company rapidly built up a direct sales force and began opening selling locations, which frequently were one- or two-person sales outlets.
Internationally, the company continued to rely primarily on indirect sales, operating offices in London and Paris. Armed with a new marketing strategy and supported by a growing corporate storage industry in which networking and the Internet were playing increasingly important roles, NetApp enjoyed robust growth. The financial growth recorded in was the beginning of NetApp's impressive transformation into one of the most successful computer companies in the nation.
Following the IPO, the company racked up 20 consecutive fiscal quarters of revenue growth in excess of 70 percent. Between and , NetApp's annual revenue growth eclipsed 90 percent, while the value of its stock nearly quadrupled between and As the company's financial growth suggested, its file servers were becoming fixtures in the corporate workplace. NetApp's storage devices, which were connected directly to a network on the Internet, provided fast, easy access to computerized information in a variety of applications.
Coworkers were able to share a word-processing document saved to a server. Oil companies used large NetApp servers to store seismic data. Internet service providers and web sites such as Yahoo used NetApp systems to store e-mail messages generated by their customers. A NetApp server was used to store all the special effects for the film Titanic.
As the initial skepticism of NetApp's novel approach to storage waned, with wariness giving way to confidence, NetApp's roster of customers began to include some of the most well known names in the corporate world.
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