NetApp, Inc. provides software, systems, and services to manage and store computer data worldwide. It offers flash; flash arrays that support data management; hybrid arrays to deploy the speed of flash storage; hybrid cloud; ONTAP cloud storage data management service; NetApp cloud sync hybrid data management Software as a Service; NetApp private storage for cloud; and AltaVault cloud-integrated solutions. The company also provides ONTAP storage operating system for data protection and security; SANtricity storage operating system, which provides performance, reliability, and data protection for application-driven workloads; SolidFire element operating system; NetApp StorageGRID Webscale software that allows customers to store and manage massive amounts of data on premises and in the cloud; NetApp integrated data protection solutions; OnCommand management software and management integration tools; and FlexArray storage virtualization software. Further, it provides software and hardware maintenance, professional, and customer education and training services, as well as support solutions. The company serves energy, financial services, government, high technology, Internet, life sciences, healthcare services, manufacturing, media, entertainment, animation, video postproduction, and telecommunications sectors through a direct sales force and channel partners. NetApp, Inc. was founded in 1992 and is headquartered in Sunnyvale, California.
Business Analysis of NetApp
The Technology Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how NetApp compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by NetApp to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of NetApp with an interactive chart.
- Revenue Growth: NetApp reported a revenue growth of -9.4% year-on-year during 2016. Computers Systems and Peripherals Industry grew at -7.5% in the same period
- COGS share of Revenues: As a percentage of revenue, NetApp spent 39.2% of its total revenues on COGS. Computers Systems and Peripherals industry average (COGS share of revenue) in the same period was 65.0%
- R&D share of Revenues: As a percentage of revenue, NetApp spent 15.5% of its total revenues on R&D. Computers Systems and Peripherals industry average R&D spending in the same period was 5.3%
- SG&A share of Revenues: As a percentage of revenue, NetApp spent 37.8% of its total revenues on Sales, Marketing, and General Administration (SG&A). Computers Systems and Peripherals industry average SG&A spending in the same period was 8.1%
- Inventory share of Revenues: As a percentage of revenue, NetApp spent 1.8% of its total revenues on Inventories. Computers Systems and Peripherals industry average Inventory spending in the same period was 3.9%
- Accounts Payable share of Revenues: As a percentage of revenue, NetApp invested 4.6% of its total revenues on Accounts Payable (A/P) Computers Systems and Peripherals industry average Accounts Payable investment in the same period was 17.5%
- Accounts Receivable share of Revenues: As a percentage of revenue, NetApp invested 14.7% of its total revenues on Accounts Receivable (A/R). Computers Systems and Peripherals industry average Accounts Receivable investment in the same period was 13.0%
- PP&E share of Revenues: As a percentage of revenue, NetApp invested 16.9% of its total revenues on Property, Plants, and Equipments (PP&E). Computers Systems and Peripherals industry average PPE investment in the same period was 11.9%
- Intangibles share of Revenues: As a percentage of revenue, NetApp invested 33.5% of its total revenues on Intangibles. Computers Systems and Peripherals industry average Intangibles investment in the same period was 12.0%
- Net Margins: NetApp Net Margins in the year 2016 were 4.1%. Computers Systems and Peripherals industry average Net Margins in the same period were 15.9%
Sector and Industry Association of NetApp
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.
NetApp is associated with Technology Sector and Computers Systems and Peripherals Industry.
Technology sector is comprised of the following industries: Computers Systems and Peripherals; Software; Semiconductor; IT Consulting and Outsourcing Services; Networking Equipment and Services; Internet; Other. The definitions for each of the industries is as follows:
- Computers Systems and Peripherals industry includes companies primarily engaged in manufacturing of personal computers, servers, mainframes, workstations, and other computer accessories and peripherals such as storage drives, mice, keyboards and printers. It also includes manufacturers of mobile phones and tablets.
- Software industry includes businesses providing software products such as operating systems, productivity suites, enterprise software, data and analysis software, advertising and marketing software, engineering and manufacturing software, networking software, and IT management software. It also includes companies providing industry-specific software focused on different sectors such as Financials, Automotive, Telecom, Utilities, Travel, Real Estate, Media, and Publishing.
- Semiconductor industry includes companies primarily engaged in manufacturing and distribution of semiconductor products such as microprocessors, chipsets, motherboards, flash memory, and wired and wireless connectivity products. It also includes companies that provide semiconductor equipment and services to the semiconductor industry.
- IT Consulting and Outsourcing Services industry includes companies primarily engaged in providing information technology consulting and outsourcing services to other businesses. The services include IT consulting, systems integration, application development and management, IT infrastructure management, and network operations management.
- Networking Equipment and Services industry includes companies primarily engaged in manufacturing and distribution of networking and communications equipment for transporting data, voice, and video traffic across intranets, extranets, and the Internet. The key products include routers and switches for local and wide-area networks, cable modems, teleconferencing equipment, and wireless access points.
- Internet industry includes Internet-based businesses providing products and services such as search engines, social networking, web hosting, email, domain name registration, and eCommerce. It also includes industry information/services portals focused on different sectors such as Financials, Automotive, Travel, Health, Real Estate, Media, and Publishing.
- Other industry includes companies providing products such as photocopiers, fax machines, point of sale machines, audio/video technologies, and video games. It also includes technology companies that are not part of other six technology industries.
Industry Ranking of NetApp
With $5.5 billion revenues, NetApp ranked number 5 of all the companies in the US Computers Systems and Peripherals industry. There were a total of 20 public companies in the US Computers Systems and Peripherals industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Computers Systems and Peripherals industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.