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Technology Stocks : Network Appliance

NTAP 111.96

+1.3%

3:59 PM EST

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To: DownSouth who wrote (2762)	3/22/2000 1:02:00 PM
From: HDC	Read Replies (1) of 10934

DS, Hi! RE:Disruptive Technology Watch! I also felt the ground tremble when I read the "looking for a partner for a low-end NAS product" statement. EMC CEO MIke Ruettgers spent 2 days with Clayton Christensen a few weeks ago to discuss their competitive threats. As you know, Christensen wrote "The Innovator's Dilemma" book which covers the Disruptive Technology subject in detail. Merrill Lynch thinks EMC is "working on a product that will run both block level and file level commands over IP." This is how EMC could take their current specialty behind the server and deliver it users on the other side of the server. This appears to me to be how they plan to continue moving "upscale" with their product offering while outsourcing a low-end NAS product. This is classic "Innovator's Dilemma" material. I think they've tried but couldn't make Celerra or the Data General technology work sufficiently to compete with NTAP and they've decided to move their SAN technology to the front end and outsource a low-end NAS product. (They've had Data General and DG's technology for about a year now.) This is how they plan to hold their existing extensive customer base. EMC is good and time will tell if they can hold their base. They are now bragging about their Celerra sales being approx. $300 million in 1999. I recall a statement from someone claiming they "were the fastest growing NAS supplier". However, this $300 million figure includes the required Symmetrix storage system boxes as well. Again, time will tell if this strategy will work. This may be all EMC can do to leverage their strengths and face a "disruptive NTAP (NAS) force" from below. My opinion, Duncan

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