(Disclosure: most of the vendors mentioned are clients of the author.)
There should be no doubt that the current trend surrounding personal computing is to move the loads and the cost from the desktop to the cloud, where there are better economies of scale for things like updates, security, and performance-on-demand. The barriers against this move are past poor experiences with thin clients; excessive costs associated with some vendor solutions; and network access, capacity, and latency — all of which are being mitigated by 5G.
Microsoft’s Windows 365 moved desktop cloud computing to the mainstream, and NetApp just wrapped Windows 365 with a cloud PC offering called Spot PC. It looks really good on paper but will be hampered by the fact that NetApp is the wrong company to deliver a desktop solution. Just as IBM and Cisco failed at their Apple sales efforts, NetApp is likely to fail with this one.
Let’s talk about why.
International Harvester example
I grew up on a farm and a ranch. On the ranch we had both a Jeep and an International Harvester Scout to get around. In several ways, the Scout was the better farm vehicle, because it had a bed like a pickup truck and a hard-topped, enclosed cab that you could heat in the winter. But the Scout failed in the market, while the Jeep brand and vehicles, which aren’t that different than what I had back then, continue today.
The issue with the Scout was that the sales and service capability of International Harvester were designed for farm-targeted vehicles like harvesters and tractors. The Scout was a personal transportation vehicle traditionally sold in car or truck dealerships that catered to a far wider variety of buyers. Farm equipment is usually serviced at the location where it is in use, and if you need to take it into a shop, the equipment is picked up, taken to a central repair facility, and then trucked back, a process that is not at all like how you service a personal transportation vehicle. If you took your Scout in for service, there was no waiting room or any consideration for an owner who could wait for the repair, because these things weren’t needed for the industrial equipment that was mostly serviced there.
When Honda brought out its first car, it ran into something similar. Even though motorcycle shops were far more like car dealerships than International Harvester was, to be successful, the company still had to create a sales, service, and distribution system unique to cars before it could succeed.
Examples in tech
Sony vs. Dell is an early example of this issue in tech. Sony built better PCs than Dell did, but it wanted to leverage its existing audio channels and support structure. While sales were similar (at least at the consumer level), support wasn’t. For PC support, you need a vastly more robust service organization, which Dell had but Sony lacked. Sony PCs may have broken less often, but when they did, the experience was so much worse that Sony got a bad rep for support, and people avoided the product even though it was arguably better looking and better built.
Apple, which has always struggled with enterprise sales because it lacks an enterprise sales and support channel, thought it could use Cisco and IBM to build its products. But neither of those companies sell PCs. Two problems resulted in the failure of these efforts. First, the firms lacked a sales and support channel consistent with the product class, and second, Apple refused to build a product that would be more acceptable to the channels these firms already had.
If you look at how IBM successfully, at least initially, addressed this problem back when there was an IBM PC, it built a company within a company that had its own sales and support channels. This worked but was still so different from the rest of IBM’s business (which is more like NetApp’s) that it had to sell the IBM PC company to Lenovo, which has been more successful with it.
Citrix has been around for decades, with a focused similar offering to the Spot PC, but it lacked the economies of scale that traditional PC makers had. This forced it to charge more for the offering than most of the market was willing to pay, and it didn’t control enough of the infrastructure to make its solution broadly viable either.
NetApp: Wrong vendor for this well-timed product
With a cloud offering, you’d think at least the support issues would go away. But how often does NetApp deal with the end user problems a PC vendor typically deals with and that IT wants them to deal with? In addition, for user support, the process that involves the OEM is well established in most enterprises. So a vendor like Dell, which is already embedded in that process, could provide a Spot PC solution that is relatively painless to adopt, because its services are already linked to IT’s services, and the sales team is talking and working with IT’s personal technology support group.
A solution from NetApp would not only disrupt this, but it wouldn’t easily fit into a process that was built around a different vendor that has decades of experience supporting end users. And, at the other end, NetApp isn’t a major cloud player, either, which means it must either spin up that capability or partner with AWS, Azure, or Google to provide it.
This increases the risk to the buyer in both the short and long term, because NetApp lacks the support structure IT expects for timely support initially, and eventually, there is a high risk that this effort will fail, leaving its customers in trouble.
And finally, what will NetApp use for desktop hardware long term? Short term it can use aging PCs, but long term it’ll need a more dedicated hardware platform — and NetApp isn’t in the PC business.
One final, painful example is Steve Ballmer’s Zune effort. On paper, Zune was vastly better priced than the iPod. It was more robust: it would play videos, and it came with a music service long before Apple Music. But Microsoft looked at the market requirements for the offering, which included massive marketing expenses, a video service (none existed at that time), and a way to migrate iPod playlists to the Zune, and it decided to skip the hard parts. So, Zune failed.
On paper, NetApp has a product that looks both complete and well timed. But NetApp isn’t currently an end user-focused desktop computing company for either hardware or software. Thus, it lacks the critical aspects to make the complete solution that the market will require. With the other enterprise PC OEMs spinning up their own competing offerings also based on Windows 365 and mostly Azure, NetApp will be increasingly overmatched by these better-positioned and better-supported offerings.
So while on spec, the Spot PC looks to be the right product at the right time, having it come from the wrong company doesn’t bode well for its future.
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