Is Microsoft’s NAS 3.0 a Threat to Network Appliance?

Will Microsoft give Network Appliance a run for its money when it
releases Windows 2003 Server and Windows Powered Network Attached
Storage (NAS) 3.0 later this year?

Wall Street is worried enough about the possibility that influential
analyst Ashok Kumar of Piper Jaffray published a research note this week
calling the Microsoft offerings “a serious challenge to Network
Appliance’s crown jewels.”

Microsoft has embedded competing technology called “Shadow Copy of
Shared Folders” in its Windows 2003 Server OS, according to Kumar, and
NAS 3.0, an optimized file server based on Windows technology, is
expected to be released soon after Windows 2003 Server.

“As vendors like Dell integrate Windows 2003 technology in their NAS
products, Network Appliance will find it increasingly difficult to sell
into the higher growth Windows environment,” Kumar wrote in a research
note this week. “Impact will be seen starting late this year as word
gets out that Windows finally has an alternative offering. We believe
this is not good news when the industry gorilla (Microsoft) begins to
effectively commoditize Network Appliance’s ‘crown jewel’
technology.”

Analyst: Microsoft Not A Threat To High End At This Point

Industry analysts, however, don’t appear to be as concerned about the
Microsoft threat.

“Microsoft’s new NAS OS does have some features that will enable their
OEMs to start selling into the enterprise, however these new features
should only enable them to compete in the mid-range, and not at the high
end,” said Nancy Marrone, senior analyst at Enterprise Storage Group.
“There may be a slight impact to NetApp in the mid-range, and that will
depend on how much support the OEMs give to the new features.”

Microsoft’s current market share is strictly in the entry-level market,
Marrone said. “They have not been able to compete in the mid-range and
high end due to performance limitations and lack of ‘enterprise’-type
features,” she said.

By adding VSS, VDS and MPIO to the NAS 3.0 OS, Microsoft can now support
snaps, virtualization and multi-pathing, Marrone said. “Snap and
multi-pathing are the two key features that enable them to compete in
the enterprise,” she said. “However, neither of these is ‘plug and
play.’ The OEMs can only enable those features through code development.
VSS only works for supported applications, and MPIO only works with
drivers written by each individual storage vendor. We do expect that the
OEMs and storage vendors will support these features, but it’s not quite
as simple to do so as it may look at first glance.”

“There is nothing that I am aware of that adds enough performance
enhancements into NAS 3.0 to enable Microsoft powered solutions to
compete at the high end,” Marrone said.

Marrone said she expects Microsoft to announce support for running
Exchange on NAS, “which will play very strongly into their push for
server consolidation, so we do expect that they would pick up market
share in Exchange environments.”

Microsoft Official Speaks At HP Storage Conference

Charles Stevens, corporate VP in Microsoft’s enterprise storage
division, spoke at HP’s National Storage Days conference in Orlando,
Fla. yesterday, but he discussed neither NAS 3.0 nor support for Exchange,
despite speculation that he would do so.

Instead, Stevens spoke about Microsoft’s Enterprise Storage Division and
the expanded
relationship
announced last month between HP StorageWorks and
Microsoft Windows Powered NAS.

Back to Enterprise Storage Forum

Paul Shread
Paul Shread
eSecurity Editor Paul Shread has covered nearly every aspect of enterprise technology in his 20+ years in IT journalism, including an award-winning series on software-defined data centers. He wrote a column on small business technology for Time.com, and covered financial markets for 10 years, from the dot-com boom and bust to the 2007-2009 financial crisis. He holds a market analyst certification.

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