Dear tekboy:
Feature Story
Thursday, August 31, 2000
Printer-Ready Version
Network Appliance Sets Its Sights
On Kingpin EMC Over Data
Storage
By Steve Watkins
Investor's Business Daily
Pundits call it the most "disruptive" technology out there.
Network Appliance Inc.'s computer data storage products
are so disruptive, analysts say, that they may pose a
challenge to venerable EMC Corp., the data storage
leader and a longtime darling of Wall Street.
"We think it could be another EMC," said Steven
Milunovich, analyst at Merrill Lynch.
How? Network Appliance's products change the way
business is done in its field, watchers of the Sunnyvale,
Calif.-based company say. Its storage devices are
separate appliances from the main server. That allows for
more efficient storage without slowing the rest of the
system.
"We do for local-area storage what Cisco (Systems)
does for wide-area networks," said Tom Mendoza,
Network Appliance's president.
Image: Company In The News
In fact, analysts say the only other area of storage that's
as hot is the ability to keep data on the Internet one click
away, says Robert Gray, research director of storage
systems at International Data Corp. Known as caching,
that's Network Appliance's other area of expertise.
"They're in leadership positions in two of the hottest parts
of the storage market," Gray said.
Network Appliance and EMC are duking it out for the
attached storage market, one of two major types of
housing data on networks. Sun Microsystems Inc. also
is becoming a key player there, Gray says.
EMC is the biggest player in computer storage. It
dominates storage area networks, the other part of the
market, and has 10 times the sales of Network
Appliance.
Geoff Keeling, co-portfolio manager for the AIM Large
Cap Growth Fund, which owns Network's stock, says
Network Appliance wins most contracts when it goes
head to head with EMC. That's about 25% of the time. It
has a better product and the advantage of being the
pioneer in the field. But competition is a big challenge.
"The market's growth has really attracted a lot of
competitors," Keeling said. "EMC is really focusing on
it."
Rather than keeping its eyes on the competition,
Network Appliance is focusing inward.
"We have a strong culture, with a belief that we're going
somewhere," Mendoza said. "When you're hiring a lot of
people, you have to keep that."
Network Appliance pioneered attached storage when it
was founded in 1992. That market reached $860 million
in sales last year, Gray says. He expects it to nearly
double this year to $1.7 billion and reach $6.6 billion in
2003.
Network Appliance won't branch out too far from its main
business, Mendoza says. Instead, it will likely expand in
content management, where it already has one product,
known as NetCache.
"I think it would be a mistake to get defocused,"
Mendoza said.
The rise of streaming video on the Internet and other
growth on the Web has driven the storage boom.
The two key types of network storage work separately
from the main server. Combined, the two hold just a
small part of the data storage business, says Dane
Lewis, analyst at Robertson Stephens.
"Both are an improvement over the direct attached
model," he said.
Direct attached storage refers to the practice of storing
data and processing power on one server. Many
companies still do that.
Network Appliance's stock fell by 28% in one week
earlier this month. Computer-memory company stocks
plunged along with most tech stocks amid interest-rate
concerns. But it's since rebounded to within 10% of its
high.
Network Appliance handles Yahoo Inc.'s e-mail system,
the world's largest. That shows it can handle a vast
amount of data. The system also costs less than direct
attached storage. It cuts down on the number of servers
and tech pros a company needs to employ.
"That says a lot about our reliability," Mendoza said.
investors.com
Regards,
Lynn, with a 14.1" notebook screen |
