Storage companies are feeling the pain of companies cutting IT costs, but the move to server virtualisation is driving some demand, according to NetApp CEO Dan Warmenhoven.

"The market is not robust, but it's not dead either," he said in an interview.

The economic downturn has changed the character of projects companies are undertaking, with them now trying to keep down costs and improve efficiency. "Right now there is only one thing on anybody's mind: I got to cut my budget and how are you going to help," said Warmenhoven.

CIO's will today go for projects that have a return on investment of no more than 12 months, and server virtualisation and virtual desktops are on top of the list, according to Warmenhoven.

Currently, more than 20 percent of NetApp revenue is coming from virtual server environments, which is pretty big, Warmenhoven said.

"Generally, when you move aggressively to virtual servers and virtual desktops, there is also a re-engineering of the storage infrastructure that goes with that, and that is driving some degree of demand," said Warmenhoven.

To simplify the move to a virtual world, NetApp has done a lot of integration work with VMware, in particular, to integrate NetApp capabilities under VMware's management interface, according to Warmenhoven.

The management integration includes features such as cloning and thin provisioning.

Cloning uses one physical image to create multiple virtual images without taking up additional physical storage space. It was first developed for database environments, but has turned out to be a good fit for virtual environments, and has become one of the economic drivers for virtualisation, Warmenhoven said.

Many customers are at first cautious about turning both those features on. Anything new is a little scary, so customers first want to know who else is running it in a production environment, Warmenhoven said.

But if companies want to get the full potential of their virtualised environments they need to start using more advanced storage features, according to Warmenhoven.

To achieve that, NetApp has introduced the 50 percent Virtualisation Guarantee Program for VMware, Citrix and Microsoft virtual environments - the latter two where added last week.

The notion is that customers only have to buy half as much storage from NetApp as from any other vendor in the industry. For the offer to be valid, companies have to use a list of features that include thin provisioning and deduplication, which can reduce storage utilization by eliminating redundant data.

"This is the graphic demonstration of how the combination of all these storage-efficiency technologies collectively come together to provide a much more cost effective solution," said Warmenhoven.

If NetApp fails to live up to that promise, it will provide the additional capacity at no additional charge.