On Monday, we published part one of our interview with Tiffany Pham, Netgear’s Product Line Manager for Prosumer Storage, in which we discussed the current state of the prosumer and small business storage market, and how the company is seeking to differentiate their ReadyNAS line versus an ever-growing number of competitors.
Our interview continues with a look how network attached storage products are progressing along the technology adoption cycle, consumer and small business preference towards ease of use and the product features they demand, as well as an outline of where Netgear see the opportunities to grow the category going forward.
WGS: It’s fair to say that NAS is still a niche category – it’s an evolving technology. Do you feel that Microsoft and HP have decided it’s to small for them and have moved on?
Tiffany Pham: I don’t know if they’ve completely moved on. I think they’ve maybe taken a step back to reassess the next phase of development for themselves, and whether it makes sense for them to continue to invest in the prosumer, the low end or do they want to go the route of Cisco and have OEM partnerships, focus primarily on the high end and be able to charge 3X because of their brand. I think that’s where things really are at for HP and also to some extent Microsoft. Clearly that’s what HP is doing with that relationship with Drobo, to seal off that market. Maybe we don’t have to be the player on the prosumer side, maybe we can differentiate but still have something to offer our low-end prosumer base, but it doesn’t have to be in-house development.
WGS: So gazing into your crystal ball, would you expect to see more of these kind of partnerships in the future?
Tiffany: I think so. I think the trend is to partner up. How are you going grow your pie for yourself when the pie is shrinking due to price compression? I think the way to do it is one through acquisition, two through very innovative partnerships, whether they are OEM partnerships or soft bundling partnerships that make sense. Maybe there’s a complementary product that you can pair up with – certainly it’s easier for Netgear to do that because we offer a range of products both for home users and business users. But I think for other storage vendors who are just primarily storage vendors, that’s what they’re going to have to do to be at the cutting edge or front of mind.
Most likely, once you get past the early adopter and now into the early majority phase, what you tend to see is a compression of vendors – of vendor selection. Channel partners are going to pick the top four and the top four will be their leading brands. So I think that’s also going to be in the works.
WGS: So do you think we’re in the early majority phase now?
Tiffany: I think we’re definitely at the tip of it.
WGS: The “early” early majority…
Tiffany: Yeah, because people are getting it with the whole focus on connected home. Adjacent to that is, “Oh, okay my home is now connected, I have CAT 5 wiring, everything’s up and connected, what else could I do? I have all this high-end equipment, I have all of these media files and HD videos and all that stuff – what do I do with it? Do I just store it in a box and walk away and hope that nothing happens to it and never, ever look at it again?”
But that’s not typical, right? The typical way of interacting with your media is, “I want to post them on my Facebook, I want to post them on my Flickr account, I want to have RSS feeds so every time I post a new photo my family can access it”. HP has that printer now where you can basically send it to your remote printer…
WGS: Yes, that’s cool isn’t it?
Tiffany: …and wham, you know. “Here’s a picture of the grandkids, mom and dad, happy holidays!” You have to admit with the commercials going around, with everything going online, that space, that connectivity, everybody’s starting to get that picture – starting to understand the value of having a digital life – we call our product a “digital brain”. So it’s like “OK I get it, now how do I set it up?”
I think the people who are real media enthusiasts are starting to get that, they’re starting to understand it and really understand the value of RAID is and why they need to set up restrictions on user account security, or enabling HTTPS or setting up Dynamic DNS, which isn’t really needed for our remote access, but some of our competitors require that.
WGS: But you support Dynamic DNS, right?
Tiffany: We do support it, but on our ReadyNAS Remote, we actually strip that element out and make it very simple for the user. All they have to do is install the client and if they want to see it on their phone, their iPhone, they just need to download the app.
WGS: And you handle all of the port forwarding on the router?
Tiffany: Yeah, so we take care of all the port forwarding, they don’t have to open a hole in their router, which is always scary if you don’t know what you’re doing. And we don’t charge them, unlike some of our competitors. They say, “Oh we have remote access” and then after 12 months and you’re totally hooked, you’re like “Oh now I have to pay you $20? But they’re my files!”
So I think that the prosumer space, as it becomes more commoditized, the challenge is really to be ahead of the pack – how do you get to that leadership position? Obviously Netgear has held that leadership position for a while, we have the number one market share in both US and EMEA presently. What kind of partnership can you bring? What kind of service can you bring? What kind of benefit can you bring?
WGS: As the prosumer market turns slowly into the consumer market, is the challenge for you to continue to add value through features, or is at around ease of use – where do you think is the balance required to really take the market?
Tiffany: I think that for prosumers, it will be still be features driven. They’re the geeks; they want the new features that are on the bleeding edge, never mind cutting edge technology. For the consumers that are coming online, moving from the direct attached, USB storage to a network attached storage I think ease of use is as important, which is why we have Stora – a mild versioning of the interface where it’s a little more sleek and consumer-oriented helps.
It’s like baby stuff, “Upload your files to Picasa or Flickr or Facebook, you get that concept, right? Now, what if you own that content and you don’t have to go through a host service provider to upload that? What if you could upload it directly to a storage device that you own, that’s in your house, that you know is secure and you can give access to friends and family?” Isn’t that the benefit, right? The benefit is you have the security concerns – that’s overcome. You have the flexibility to share your content – that’s overcome. And more importantly, it doesn’t confuse you when you sign on. (Laughs) It’s like out of the box – “Oh my God, you want me to spend three hours to configure my NAS? No I don’t have three hours nor do I understand enough to do it for three hours!”
So, I think it has to be simple, it has to be effective in terms of use and really the set up process is where everything is going to make a difference. On average, people’s attention span these days is around 30 minutes, for setting up a device. If you go past that point, they’ve either given up or they come back another day and you don’t quite have that same wow factor. The beauty of opening up an Apple, you know, everything is already pre-loaded, everything is ready to go – wham! I would pay a premium for that. It’s done for me. I don’t have to think, I just get to play. So for the consumer, that’s where it is.
WGS: From a segmentation point of view, for Netgear, as you wish to continue to grow share in the market where is your focus? Is it about the consumer market, the prosumer space, the SMB space, all of the above?
Tiffany: The balance for us, as I mentioned, because we started out in prosumer we went upstream. We’ve been very successful upstream in building out that space, building out that segment. Now for the past year, we’ve focused more on the prosumer whilst maintaining all of our development on the business side. On a go-forward basis, it’s really focusing on all of those segments – the consumer, the prosumer and the business. They’re slightly different audiences, the messaging has to be slightly different; the focus has to be slightly different as well. We just talked about the consumer and how ease of use is still very important to them. For the prosumer, they’re just hungry for technology – they’re still the ones that are always going to drive the feature development, all of the software development, both hardware and software. The Business customers again, that segment of the market is growing but it’s growing just because of the sheer amount of data that they have to manage on a day-to-day basis and the impact on their bottom line if they don’t get it right.
