Cisco may be looking to scoop up NetApp to boost its storage play, according to Summit Redstone analyst Srini Nandury.

Barron’s last week quoted Nandury as saying that Cisco is “likely to acquire NetApp rather than Pure Storage, given that NetApp will be immediately accretive ($5.8 billion revenue for 2018).”

It might be a smart move for Cisco. Despite all of its recent software startup acquisitions, the networking giant doesn’t have a competitive data center storage portfolio. And it already partners with NetApp on its converged infrastructure system FlexPod. The latest version uses NetApp SolidFire all flash-storage.

Neither Cisco not NetApp would say whether a deal is in the works. Spokespersons from both companies said they “don’t comment on speculation and rumors.”

But as far as Silicon Valley rumors go, it’s not that far fetched.

IDC analyst Ritu Jyoti told SDxCentral that both Cisco and Lenovo are in the market for a storage play.

Both of these vendors are also looking to boost their hyperconverged infrastructure (HCI) market share. HCI is the fastest growing segment in the data center space, and software-defined storage plays a key role in this technology.

Cautionary (Whip)Tail

“Cisco has been toying around with this for a while,” Jyoti said.

Case in point: Whiptail, an all-flash array vendor that Cisco acquired for $415 million in cash. Cisco bought the company in 2013; the resulting product line is now dead.

“Whiptail was a complete disaster,” Jyoti said. “It was a combination of the technology not being up to the mark, and internally Cisco struggled with how to make the best go-to-market with that. Storage is a complex beast.”

But if Cisco wants to compete against Dell EMC, Hewlett Packard Enterprise, and IBM in the software-defined storage and data center infrastructure space, it needs to acquire a storage company, she added.

“Absolutely Cisco has to compete in this world and have a sustainable, competitive play in the data center market,” Jyoti said. “It needs a storage play, which is something that it’s badly missing.”

This will require more than just buying power. Cisco must do due diligence on the technology, as well as the sales force, go-to-market strategy, and transition plan.

From this perspective, both NetApp and Pure Storage are “definitely interesting plays,” Jyoti said. “My thinking is both Lenovo and Cisco are in the market to acquire someone. And who does what with which one is going to be determined by market cap, what they can digest, and what they can integrate.”

NetApp vs. Pure Storage

NetApp’s an attractive prospect. It’s all-flash storage arrays have been a major boon to business since the company acquired SolidFire, an all-flash storage vendor, for $870 million in 2016.

In August, NetApp reported better than expected earnings with net revenues for the first quarter topping $1.33 billion, up 2 percent year-over-year. CEO George Kurian said the company’s growth shows that NetApp’s “transformation” from a legacy storage appliance maker to a hybrid cloud company is working.

“NetApp is growing,” Jyoti said. “George Kurian has tried to turn things around. He has a positive, data-driven strategy. Customers speak very highly of NetApp. But having said that, NetApp has some legacy baggage.”

This included bringing the sales force up to speed on “talking the new language” and selling the product to the new data center buyer, she added. “Cisco or Lenovo, whomever picks them up, it can be a good acquisition but at the right price and with the right trimming strategy.”

Pure Storage isn’t quite as appealing. “It’s not the best product out there but it’s good enough,” Jyoti said. “It doesn’t have the baggage NetApp has, but it also doesn’t have the reputation NetApp has.”

Jyoti says her sources tell her both NetApp and Pure Storage are shopping themselves. “They are both going to be picked up. It’s just a matter of who gets what, with the right strategy at the right time.”

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