NetApp's customers resisting Clustered ONTAP transition

Clustered ONTAP adoption key to revenue growth

So Georgens sees Clustered ONTAP adoption as the key to revenue growth, with an investment in training and migration services for both direct and channel engagements "to unlock the tech refreshes that are waiting for clustered ONTAP upgrades".

The company will also boost its direct sales capacity and invest in the channel to get new customers and improve its migration ability. The strategy is twofold; Clustered ONTAP and the Data Fabric idea of ONTAP users having a seamless private/public cloud storage resource.

Revenue trend line added

The outlook? Net revenue is expected to be in the range of $1.275bn to $1.375bn, an 11 per cent decline at the mid-point and a GAAP loss per share in the range of $0.11 to $0.06 — so the revenue engine slows again and income/share turns into loss/share. Oops Tom, that's a crossed border investors will not like.

NetApp doesn't see revenue improvements in the second half of fiscal 2016 but does see itself improving things such as free cash flow and costs.

In Ader's view: "We see this [outlook] guidance as blindly ambitious at best and irresponsible at worst." Wow, he really has it in for NetApp management.

The company has put virtually all its eggs in the Clustered ONTAP basket and has mostly no other offering to sell them, for the E-Series and StorageGRID revenues aren't seen as rising fast enough to offset the ONTAP slowdown.

The only way is ONTAP and that's that, with Georgens saying: "Simply put, ONTAP on-premise is the story and the nut that we need to crack in the near-term."

A question is will the newer AFAs, hybrids and hyper-converged system startups grow their sales at NetAp's expense? Georgens' company thinks not; the startups disagree, seeing NetApp floundering. While they grow revenues and NetApp's decline, it looks like they may have the best of the argument. ®