IBM to stop selling NetApp storage in preference to its own products

IBM seeks to arrest hardware sales slump by focusing on own technology

Systems giant IBM is to stop reselling storage hardware from NetApp as part of a plan to sell its own-developed products instead.

The move follows a two-year 25 per cent decline in IBM's hardware sales as the company is pinched by the shift to cloud computing and software-as-a-service.

IBM has stopped selling NetApp's N-series systems as of today and discontinued development on the products. Customers will instead be encouraged to buy IBM's own designed and branded storage products, according to a memo that newswire Bloomberg has acquired.

The IBM v3500, Storwize v5000 and Storwize V7000 Unified are similar products to, and will replace, the N3000 Express, N6000 and N7000 from NetApp that IBM has been reselling.

The decision will have an immediate impact on NetApp, which achieves about two per cent of revenue from the IBM deal, its largest OEM relationship. However, the company did not disclose news of the end of the deal when it presented its fourth-quarter and annual results last week. In fiscal 2014, it achieved revenue of $6.325bn, down marginally on the previous year.

NetApp's core network-attached storage business is potentially challenged by cloud computing competitors in the form of storage-as-a-service, of which Dropbox is just the least sophisticated alternative.

In a conference call, NetApp chief financial officer Nicholas Noviello said that he expects the company's OEM business to decline by as much as 40 percent in current financial year.