Data storage in demand

Network Appliance growing more quickly than it had expected

Network Appliance has more than tripled its local work force in two years and it isn't slowing down.

When the company bought three buildings in Research Triangle Park in August 2004, it had 154 employees in the Triangle. Last month, about 600 people worked at NetApp's local campus, which houses an around-the-clock technical support center and the California company's biggest computer labs.

It's all part of supporting NetApp's growth into one of the world's leading data-storage companies.

"This facility is now a corporate resource," said Ken Hibbard, NetApp's vice president of engineering and the senior site executive in RTP.

The company credits the region's talented workers and cheap electricity for spurring much of its expansion in the Triangle, where its head count growth is outpacing all of its other sites.

State incentives probably haven't hurt, either. In 2004, North Carolina promised NetApp up to $8.9 million for creating 361 jobs over five years and sustaining them for 10 years.

The company surpassed those hiring goals within the past year, three years ahead of schedule. The company's median annual compensation is $115,000, including benefits, in RTP.

If its growth continues, NetApp could one day join the big technology names in RTP that each employ thousands locally: IBM, Lenovo, Cisco Systems and Nortel Networks.

But like other high-tech firms, the company, based in Sunnyvale, Calif., depends on its customers' technology budgets for its sales and employment growth. As higher interest rates, soaring energy costs and other factors weigh on companies' finances, they could dial back their spending plans.

NetApp's Triangle operation has already experienced the effects of a slow economy. After a strong start in 1999 that saw the company grow from 20 employees to 90 in less than a year, the high-tech crash derailed NetApp's initial big plans for the area.

Today, NetApp's revenue is growing by 30 percent annually. The company's annual sales have increased from $93 million to $2 billion over the past 10 years.

It employs about 5,200 people worldwide, up from 265 in 1997. Managing that growth is another big challenge.

CEO Dan Warmenhoven said in 2004 that NetApp could eventually employ as many as 2,000 workers in its three RTP buildings. The company moved about 250 employees into the first building a year ago, and officials have begun planning for expansion into a second building.

NetApp expects to outgrow its current building in 15 to 18 months, Hibbard said. The company has 60 job openings in RTP posted on its Web site. There's room for another 100 to 150 employees in the first building, Hibbard said, but demand for computer server labs also could increase NetApp's space needs.

Triangle advantage

The company is concentrating its power-thirsty labs in the Triangle to take advantage of less-expensive real estate, as well as electricity that costs just half as much as in some of NetApp's other locations, Hibbard said.

Duke Energy says its rates are 20 percent lower than the national average, but NetApp also is receiving a four-year rate reduction from the utility as part of its 2004 incentive package, a NetApp spokeswoman said.

One lab slated to grow is the "Kilo Client," a group of 1,700 interconnected servers that is used by technical support employees from RTP to Bangalore, India, to simulate their customers' information technology infrastructure and problems. Salespeople and engineers also use the lab.

As businesses digitize more of their work, they are becoming "information pack-rats," Hibbard said. NetApp makes hardware and software for storing and managing that data on computer networks.