Storage remains a relatively vibrant market despite the difficult economic environment. The reasons underlying this phenomenon are well known: 1.) storage purchases are not “nice to have,” they are “must have” in order to handle unmanageable data set sizes; 2.) storage consolidation reduces TCO; and 3.) of course, SOX in the backdrop.

While these macro trends are great for all players, we have noticed an incremental shift to EMC’s favor for a number of reasons all related to EMC’s size (the “force” so to speak): 1.) EMC’s show of muscle in purchasing DDUP puts NTAP on its heels with fewer opportunities to build good product differentiation; 2.) EMC’s ability to discount more deeply (and, as one of our experts noted, EMC is discounting off a higher markup) cuts NTAP out of deals; and 3.) EMC’s larger sales force creates barriers for NTAP in emerging geographies.

That said, our checks indicate that NTAP is hanging on to its core SMB customers and this ultimately might be where the market is headed.  We will certainly continue to follow this epic “Storage Wars” saga in the quarters to come!

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