Storage Hardware Will Boost NetApp
NEW YORK (
Trefis ) --
NetApp's
(NTAP) - Get Report
share of the storage hardware market has been increasing consistently over the years.
This year witnessed high growth led by the success of the company's unified storage strategy and rising demand by enterprises for high-end storage hardware via cloud computing.
NetApp competes mainly with
EMC
(EMC)
,
IBM
(IBM) - Get Report
,
Hewlett-Packard
(HPQ) - Get Report
and
Dell
(DELL) - Get Report
in the external disk storage systems market.
Although we expect NetApp's hardware storage share to rise to 13% in the coming years, Trefis members project a higher growth level reaching close to 17% by 2013, translating into upside of 38% to our price estimate for NTAP stock.
We currently have a
Trefis price estimate of $64.48 for NetApp's stock
, about 16% above the current market price of $55.35.
NetApp Benefits From Single Operating System
NetApp has a single operating system Data ONTAP which supports all of its hardware platforms such as NAS, Fiber Channel SAN and iSCSI SAN. NetApp's products offer several advantages: easier deployment of applications; easier management of storage resources; and access to many software features like data backup and retention, provisioning and automated tiering.
Increasing Demand for Virtualization of Storage Services
There is rising demand for high-end storage hardware from cloud-service providers as cloud storage becomes increasingly used by businesses. According to IDC, storage is the fastest growing cloud service, growing from 9.0% of all cloud service revenues in 2009, or $1.6 billion, to an estimated 14.0% in 2013 or more than $6 billion of worldwide IT cloud services revenues. (See "
EMC Leads In Storage Market
,"
Dailymarket.com
, Sept. 13, 2010)
More than 10% of NetApp's hardware shipped is built on Performance Acceleration Module (PAM) technology, and we believe this shift will drive growth for NetApp's high-end storage hardware in the future.
Member Forecast
The Trefis community forecasts NetApp's storage hardware market share will rise from 13% in 2011 to almost 17% by 2013, compared with the baseline Trefis estimate of an increase from around 12% to 13% during the same period.
The member estimates imply an upside of 38% to the Trefis price estimate for NetApp's stock, signifying the importance of storage hardware business for the company. This would imply a price estimate of close to $90.
Our complete analysis for NetApp's stock is here
.
Trefis members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.