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NetAppDataPelago deal ups AI data management ante

The acquisition strengthens NetApp's support for distributed data management, a key challenge for enterprises seeking to adopt AI.

Beth Pariseau
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Published: 17 Jul 2026

NetApp's purchase of an AI data infrastructure company this week paves the way for it to move data processing closer to storage repositories, expanding the choices available to enterprises facing AI cost and data management challenges.

The acquisition of California-based DataPelago for an undisclosed amount this week will push NetApp further into AI data management. NetApp began its move away from AI-ready data storage into the data management layer with the launch last year of its AI Data Engine, a set of software tools that collect, curate, sync, protect and prepare data for use by AI applications. It also shipped a new AFX all-flash array that represented a first foray into disaggregated storage, which decouples storage controllers from storage capacity.

DataPelago will help NetApp build on that foundation and move deeper into an area also sought after by competitors including Dell, Nutanix, Everpure and Vast, according to Rob Strechay, founder and principal at Smuget Consulting.

Rob Strechay, founder and principal, Smuget ConsultingRob Strechay

"I believe this could evolve into the connective layer between NetApp's file and object storage platforms, multimodal enterprise data, and modern compute engines such as Apache Spark and other open analytics frameworks," Strechay said. "By bringing GPU- and CPU-accelerated processing, which is the direction Nvidia is pushing with its stack, directly to the storage layer, organizations should be able to execute analytics and AI data preparation without constantly copying data into separate compute clusters."

That appears to be NetApp's intended direction with DataPelago and its Nucleus data processing engine, according to a company press release. Processing data at the storage layer rather than moving it to external compute clusters reduces infrastructure costs by up to 80 percent and delivers performance up to 10 times faster, the release said.

AI data management heats up amid enterprise challenges

Data management has emerged as a key challenge for enterprise AI, alongside security and governance, amid an industry shift toward agentic AI over the past year. Enterprise AI agent deployments at scale remain elusive, and data management is a key culprit, according to market research.

A majority of 449 IT leaders surveyed by Omdia in September 2025 -- 68% -- identified data management as the most challenging aspect of a production AI implementation, according to Simon Robinson, an analyst at Omdia, a division of Informa TechTarget.

As data storage vendors rush to seize that opportunity for expansion into a new market, "the Venn diagram of 'storage management' and 'data management' is increasingly overlapping," Robinson said. "All the other storage vendors are making similar moves."

NetApp's longevity in storage management could be a strength as it makes the jump between specialties, he said.

"They understand, store and manage a huge amount of unstructured data at scale," Robinson said. "Customers are looking to unite data across their distributed environment, and NetApp has a good story here. DataPelago potentially strengthens that."

While competitors such as Vast and Dell share that vision, "DataPelago's architecture and potential integration across NetApp's broader ecosystem could provide a more open, broadly integrated execution model, provided NetApp can deliver on that vision," Strechay said.

At least initially, DataPelago will operate as a wholly owned subsidiary of NetApp, according to the company's press release.

DataPelago "is very much focused on the data processing layer -- they are not a storage engine, so they appeal to a different persona that NetApp has been looking to target, so it makes sense to keep it separate, at least for now," according to Robinson. "But we'll be looking for how NetApp plans to bring the technologies together."

Beth Pariseau, senior news writer for Informa TechTarget, is an award-winning veteran of IT journalism. Have a tip? Email her or connect on LinkedIn

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