How Crucial Is Hardware Maintenance To NetApp’s Product Sales?

-5.01%
Downside
102
Market
96.70
Trefis
NTAP: NetApp logo
NTAP
NetApp

As evidenced from the table below, NetApp’s hardware maintenance and services revenues have risen from about 28% of total storage hardware product sales to about 48% in 2015. We expect the figure to rise to over 53% in the next three years.

Maint_NTAP

Reasons for growth in hardware maintenance revenues as a percentage of storage hardware revenues:

  • Integrated storage architecture requires higher maintenance compared to traditional storage boxes.
  • A slowdown in global spending on IT hardware led to low product sales in 2014 and 2015.
  • Correspondingly, customers spent more on maintenance due to low expenditures on buying new hardware.
  • High renewal rate of maintenance contracts also due to large installed base of products among clients.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for NetApp
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