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Are you sure Amazon, Google and Microsoft don't have this competitive stack because they don't want to enter that market or are in that market solely for themse

Are you sure Amazon, Google and Microsoft don't have this competitive stack because they don't want to enter that market or are in that market solely for themselves? Storage may be a multi-billion dollar market - but it's also razor thin margin compared to where those brands focus their R&D spend. I'd argue those you've named don't have interest selling storage to the enterprise in the form of legacy boxes. They make far more revenue leasing storage to the enterprise. Cloud storage is also recurring revenue where enterprise storage is considered perpetual. The latter is generally frowned upon from the Street's perspective these days (good, bad or otherwise).

tw04 6y ago
>Are you sure Amazon, Google and Microsoft don't have this competitive stack because they don't want to enter that market or are in that market solely for themselves They have "competition" in the market, it's just horrible. Because storage is hard. >Storage may be a multi-billion dollar market - but it's also razor thin margin compared to where those brands focus their R&D spend. I'm going to let you go back and review the earnings reports from the aforementioned companies. Razor thin margins? You wouldn't survive in the market with razor thin margins. > I'd argue those you've named don't have interest selling storage to the enterprise in the form of legacy boxes. I'd argue Azure Stack, AWS Outpost, and Google Anthos readily prove you wrong. > Cloud storage is also recurring revenue where enterprise storage is considered perpetual. Just... no. Enterprise storage has a shelf life of 3-5 years before maintenance or technology make it obsolete. >The latter is generally frowned upon from the Street's perspective these days (good, bad or otherwise). https://www.google.com/finance/quote/NTAP:NASDAQ https://www.google.com/finance/quote/NTAP:NASDAQ 5 years ago they were at $20/share, today they're at $69/share. Reality doesn't appear to match your claim as to the street's opinion of enterprise storage.
- windexh8er 6y ago
  First, if you review the financials of the storage companies compared to earnings of all cloud companies they're abysmal. Yes, razor thin margins - comparatively. The cost of buying physical storage is commoditized. I've worked in technology from the pre-sale engineering side for a number of years. Margins on hardware are fractional compared to software and subscription offerings. Stack, Outpost and Anthos are not revenue drivers today. They're vendor lock in tools. 3-5 years is a horrible argument in the position you're attempting to make considering it's an eternity in technology. Consider that you sell the storage once in that 3-5 years. Your cloud provider bills you monthly and you don't own it. It's recurring revenue vs a singular sales event. NTAP over 5 years is a decent return. 215% over that timeframe. Amazon returns 543% in the same timeframe. And let's use a hot space that's 100% subscription based, like Crowdstrike: 265% in less than a year. Software and subscription margins crush the legacy perpetual hardware model. Storage is an old, stable, and commoditized market. There's no huge growth (any storage earnings report show that very clearly). And while the demand for storage continues to increase, the NetApps of the world aren't capturing where that growth is.
  - tw04 6y ago
    >First, if you review the financials of the storage companies compared to earnings of all cloud companies they're abysmal. I'm sorry but you're just flat out wrong and didn't bother to look up margins like I suggested you do. NTAP 2020 margins: 66% https://www.macrotrends.net/stocks/charts/NTAP/netapp/gross-margin https://www.macrotrends.net/stocks/charts/NTAP/netapp/gross-... AMZ 2020 margins: ~41% https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit-margins https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit... An all time high... and not even close. >Storage is an old, stable, and commoditized market. Which is why... per my original post... the cloud providers struggle to provide basic features in 2021 that have been available to enterprise storage customers for 20+ years.
    - windexh8er 6y ago
      Your chart takes all of Amazon into account, not just AWS. You'll have to actually dig into earnings to understand that. Second thing is gross margin is not the same thing as net margin. Net margin is a far better indicator in the case of pure profitability / revenue. Just because a company shares $1.42B in revenue doesn't mean they have $1.42B in profits. If you look at NetApp net profit margin it's off 45% year over year. Latest net profit margin is 9.68%. So on that 1.42B we have $137M in profit. Not too hot. The reality is hardware sales have thin margin (comparatively) and NetApp's software model is much weaker than comparative storage offerings in the cloud. It's very expensive to design, build, ship and house inventory of hardware for purchase. There's no way around this, which chews through that profit margin.
      - tw04 6y ago
        >Your chart takes all of Amazon into account, not just AWS. You'll have to actually dig into earnings to understand that. Yes, I'm aware Amazon continually buries their AWS profitability. It's 57% of the overall margin, it's not significantly better than NetApp. >Second thing is gross margin is not the same thing as net margin. Net margin is a far better indicator in the case of pure profitability / revenue. Net margin is a dial they can and do turn by shifting money in and out of R&D and sales staff. Furthermore you can't simultaneously say that for Amazon we only take into account AWS and not the rest of the business... which is a part of the engine that drives the AWS business. That's no different than saying we shouldn't account for hardware in NetApp's number because they also sell software. >It's very expensive to design, build, ship and house inventory of hardware for purchase. There's no way around this, which chews through that profit margin. What exactly do you think Amazon's datacenters are full of? Hardware they design, build, and ship inventory around the country for. They are working with the exact same ODM's that NetApp or any other storage vendor works with to design their custom hardware variations.

tw04 6y ago

>Are you sure Amazon, Google and Microsoft don't have this competitive stack because they don't want to enter that market or are in that market solely for themselves They have "competition" in the market, it's just horrible. Because storage is hard. >Storage may be a multi-billion dollar market - but it's also razor thin margin compared to where those brands focus their R&D spend. I'm going to let you go back and review the earnings reports from the aforementioned companies. Razor thin margins? You wouldn't survive in the market with razor thin margins. > I'd argue those you've named don't have interest selling storage to the enterprise in the form of legacy boxes. I'd argue Azure Stack, AWS Outpost, and Google Anthos readily prove you wrong. > Cloud storage is also recurring revenue where enterprise storage is considered perpetual. Just... no. Enterprise storage has a shelf life of 3-5 years before maintenance or technology make it obsolete. >The latter is generally frowned upon from the Street's perspective these days (good, bad or otherwise). https://www.google.com/finance/quote/NTAP:NASDAQ https://www.google.com/finance/quote/NTAP:NASDAQ 5 years ago they were at $20/share, today they're at $69/share. Reality doesn't appear to match your claim as to the street's opinion of enterprise storage.

windexh8er 6y ago
First, if you review the financials of the storage companies compared to earnings of all cloud companies they're abysmal. Yes, razor thin margins - comparatively. The cost of buying physical storage is commoditized. I've worked in technology from the pre-sale engineering side for a number of years. Margins on hardware are fractional compared to software and subscription offerings. Stack, Outpost and Anthos are not revenue drivers today. They're vendor lock in tools. 3-5 years is a horrible argument in the position you're attempting to make considering it's an eternity in technology. Consider that you sell the storage once in that 3-5 years. Your cloud provider bills you monthly and you don't own it. It's recurring revenue vs a singular sales event. NTAP over 5 years is a decent return. 215% over that timeframe. Amazon returns 543% in the same timeframe. And let's use a hot space that's 100% subscription based, like Crowdstrike: 265% in less than a year. Software and subscription margins crush the legacy perpetual hardware model. Storage is an old, stable, and commoditized market. There's no huge growth (any storage earnings report show that very clearly). And while the demand for storage continues to increase, the NetApps of the world aren't capturing where that growth is.
- tw04 6y ago
  >First, if you review the financials of the storage companies compared to earnings of all cloud companies they're abysmal. I'm sorry but you're just flat out wrong and didn't bother to look up margins like I suggested you do. NTAP 2020 margins: 66% https://www.macrotrends.net/stocks/charts/NTAP/netapp/gross-margin https://www.macrotrends.net/stocks/charts/NTAP/netapp/gross-... AMZ 2020 margins: ~41% https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit-margins https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit... An all time high... and not even close. >Storage is an old, stable, and commoditized market. Which is why... per my original post... the cloud providers struggle to provide basic features in 2021 that have been available to enterprise storage customers for 20+ years.
  - windexh8er 6y ago
    Your chart takes all of Amazon into account, not just AWS. You'll have to actually dig into earnings to understand that. Second thing is gross margin is not the same thing as net margin. Net margin is a far better indicator in the case of pure profitability / revenue. Just because a company shares $1.42B in revenue doesn't mean they have $1.42B in profits. If you look at NetApp net profit margin it's off 45% year over year. Latest net profit margin is 9.68%. So on that 1.42B we have $137M in profit. Not too hot. The reality is hardware sales have thin margin (comparatively) and NetApp's software model is much weaker than comparative storage offerings in the cloud. It's very expensive to design, build, ship and house inventory of hardware for purchase. There's no way around this, which chews through that profit margin.
    - tw04 6y ago
      >Your chart takes all of Amazon into account, not just AWS. You'll have to actually dig into earnings to understand that. Yes, I'm aware Amazon continually buries their AWS profitability. It's 57% of the overall margin, it's not significantly better than NetApp. >Second thing is gross margin is not the same thing as net margin. Net margin is a far better indicator in the case of pure profitability / revenue. Net margin is a dial they can and do turn by shifting money in and out of R&D and sales staff. Furthermore you can't simultaneously say that for Amazon we only take into account AWS and not the rest of the business... which is a part of the engine that drives the AWS business. That's no different than saying we shouldn't account for hardware in NetApp's number because they also sell software. >It's very expensive to design, build, ship and house inventory of hardware for purchase. There's no way around this, which chews through that profit margin. What exactly do you think Amazon's datacenters are full of? Hardware they design, build, and ship inventory around the country for. They are working with the exact same ODM's that NetApp or any other storage vendor works with to design their custom hardware variations.