Product's gross margin of 48.2% decreased about 3.5 points from Q2 FY16 and increased 1.5 points sequentially. Software maintenance gross margin was relatively flat sequentially and year-over-year, while hardware maintenance and other services gross margin increased just over 3 points year-over-year. Cost Savings: In Q3 FY16, NetApp announced plans to reduce its cost structure by $400 million gross annualized by the end of FY17. The company stated that some of those savings will be reinvested into strategic opportunities such as SolidFire and will yield a net run rate savings annually of roughly $130 million by the end of FY17. On November 3, 2016, the company initiated a reduction of approximately 6% of its worldwide headcount which will result in a one-time charge of between $50 million to $60 million, primarily in Q3 FY17. NetApp stated that this action will yield an annual run rate savings of approximately $130 million.