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Technology Stocks : Network Appliance

NTAP 99.08

-1.4%

12:54 PM EST

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To: mariner who wrote (2042)	1/9/2000 11:06:00 PM
From: dwayanu	Read Replies (1) of 10934

however I don't see the cache biz as important as NAS for NTAP. Merrill writeups constantly emphasize the importance of NTAP's cache. My understanding of why is that cache would sharply raise switching costs, helping cement NTAP into the NAS market. NTAP filer equivalents could (at least theoretically) be functionally duplicated by any competitor with a lot of money and a couple of years. Competing filers could be installed incrementally alongside or in place of NTAP filers with little disruption to the enterprise's business. But with NTAP-specific cache, enterprise data that is by definition constantly in use, would be distributed and duplicated over a nationwide web of filers. Much much more difficult and technically dicey to add other filer brands to the mix. The danger of disrupting the business would be high. With NTAP cache established in the market, customer loyalty is, um, encouraged :-), and NTAP competitors down the road would be forced to provide "NTAP-cache-compatible" solutions with their filer hardware, thus raising a barrier to entry into NTAP's market. - Dway

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