Aug. 21--With the worst months of the recession behind them, and a new era of tech competition ahead, longtime NetApp CEO Dan Warmenhoven says the time was right to hand over control of the Sunnyvale data storage company to new chief executive Tom Georgens this week.

"I think we've found an economic floor," said the 58-year-old Warmenhoven, who has run NetApp since it was a start-up in 1994. "Now it's a matter of climbing our way back up the hill."

The company's strategy for that climb includes taking advantage of new trends in server virtualization and cloud computing, added Georgens, a storage industry veteran who was NetApp's chief operating officer before being named CEO on Wednesday. He and Warmenhoven spoke with the Mercury News in a joint interview Thursday.

Tech giants such as Hewlett-Packard, Cisco and IBM are increasingly promoting the idea that they are best suited to provide business customers with a full range of closely integrated data center hardware and software, including storage systems that compete with NetApp's products. Even the software company Oracle, which is buying Sun Microsystems, has entered the storage market. But Georgens maintained that stand-alone vendors like NetApp will appeal to customers looking for lower cost and higher performance.

"That's how companies like NetApp got created in the first place," he said, arguing that NetApp, which had $3.4 billion in sales last year, can focus on developing better storage

products because it's not also selling other types of servers and software.

Sales were down in each of the past three quarters, compared with a year earlier, and NetApp joined the ranks of other cost-cutting companies when it laid off 500 employees, or 6 percent of its staff, in February. Over the summer, NetApp sought to expand its business by attempting to acquire Data Domain, a smaller company that makes specialized storage systems. Rival EMC outbid NetApp to win that prize.

But analysts say NetApp's future looks good. Demand for data storage capacity has grown steadily in recent years with the explosion of e-mail, digital documents and video. Some believe storage will be one of the first tech segments to rebound as businesses and government agencies resume spending.

"The company is well-positioned in the growing mid-range segment of enterprise storage," investment analyst Brian Marshall of Broadpoint.AmTech reported this week.