NetApp shuns Nigeria...takes Africa Hub to South Africa

Data storage and network management company NetApp has opened its Africa hub in Johannesburg yesterday, as it seeks to capitalise on the continent's economic boom.vThe company, which already has offices in Kenya, Angola and Nigeria, says that SA is to be NetApp's regional hub that is to assist the business to focus more on sub-Saharan Africa, which the World Bank forecasts is to have strong growth domestic product growth of over 5% in 2012 and 2013.

“It's a sales office primarily,” says Mike Styer, NetApp's Africa manager. Styer says the office has pre-sales and post-sales resources, field support, project management, management resources and marketing resources. The data storage company has an indirect business model, which means its services are sold purely through its partners in most markets around the world, including Africa.

Its staff complement in SA has subsequently grown to 22 people since it started operating in the country in 2001, but Styer says NetApp's new Johannesburg office has the capacity to house 30 to 40 staff. NetApp's aim to increase its attention on emerging markets, such as Africa, comes at a time when global storage sales levels are increasing and becoming a more competitive space, according to experts.

Ironically, the sub-saharan market that will be serviced from SA is actually being controlled by Nigeria where NetApp has about 80% market share. Relying mostly on the same strategies employed by other global IT brands, the move by NetApp to take its continental hub to SA instead of Nigeria, where they have better market opportunities, is not unconnected with the fear of some of the companies about being tainted by corruption scandals that has become quite a common occurrence in the IT industry especially in Nigeria.

Research company IDC reported that overall external storage system revenue increased 7.7% year-on-year in the fourth quarter last year, to $6.6 billion.

NetApp's revenue increased from $2.352 billion in 2010 to $2.911 billion in 2011. It had the third biggest global market share in external storage sales with Hewlett-Packard (HP), as EMC's market share stood at 29.4% in the fourth quarter and its rival IBM at 15.2%.

Despite NetApp's strong growth, it was dwarfed by EMC, which marked the highest growth among the top five vendors, with revenue of $1.93 billion in the fourth quarter of 2011, up 22.4% year-over-year. Furthermore, companies such as HP, which have traditionally been more well-known for manufacturing hardware, have made strides in the data and storage markets.

But Styer is not worried about increased competition in the space. “We're not everything to everybody, and I think the guys like IBM, HP, Dell: they try to position themselves in a particular space; that they can be everything in a data centre or everything in an organisation. We don't; we do storage, we do it very well.”