Editor’s note: NetApp’s earnings report earlier this week shows that revenue acceleration marks a turning point for the tech firm’s storage and other product portfolio, says Technology Business Research Analyst Stephanie Long. Plus, watch a video about NetApp’s all-flash storage array. NetApp operates one of its largest campuses in Research Triangle Park.

HAMPTON, NH. .- NetApp recorded $1.48 billion in revenue in FY4Q17 (CY1Q17), or 7% year-to-year revenue gains. On NetApp’s earnings call, CEO George Kurian noted the achievement of this second quarter of year-to-year revenue gains and indicated NetApp is shifting into its second phase of restructuring. Its first phase was marked by resource reallocation and increasing internal efficiencies.

The second phase of this restructuring includes increasing revenue streams without sacrificing margins, in many cases by investing in strategic areas such as hyperconverged infrastructure (HCI) and leveraging acquired assets, new and old, including Plexistor and SolidFire.

In 1Q17 NetApp was able to achieve revenue gains in its strategic solutions that were significantly greater than the 7% year-to-year revenue declines experienced by its mature solutions. In 1Q17 strategic solutions made up 70% of NetApp’s net product revenue.

TBR believes this product mix positions NetApp well for long-term gains, especially as NetApp continues investing in key areas of its portfolio, including in HCI, cloud and all-flash solutions.

  • VIDEO: Watch a video about NetApp’s all-flash array at https://www.youtube.com/watch?v=v8anYPGPnSk

Despite NetApp’s successes in 1Q17, TBR notes the market for storage vendors remains highly competitive, and recent acquisitions within the space make the market more volatile.

However, NetApp is uniquely positioned as one of the few remaining major pure plays in the industry, enabling the vendor to target investments at multiple strategic areas of the storage space simultaneously. NetApp’s investments in HCI, object storage and all-flash among other strategic growth areas may hinder profitability from achieving its full potential in the near term, but TBR believes these investments will position NetApp (Nasdaq: NTAP) to maintain long-term revenue and profitability gains.