NTAP:
Re stock drop today, I would guess that the market sees today's Orca announcement as indicating that NTAP will attempt to go head to head with EMC (which I don't see).
NTAP's price reaction to Sun's announcement was 8 or 10 days ago, immediately following the Sun announcement, NTAP price held steady for a couple of days while everything else shot for the sky.
Some Merrill Lynch comments from Steve Milunovich about NTAP in general and the Sun and Orca announcements:
========== 6/6/00 "NAS Goes Mainstream - A Wave of NAS Announcements"
New entrants into network-attached storage truly do legitimize the market. Network Appliance's biggest challenge has been educating users about the benefits of NAS. Just as increased competition hasn't hurt EMC, more rivals shouldn't cause NetApp significant problems. Leaders need followers.
...The company's accelerating growth rate attests to increased adoption and excellent execution. The NAS market is too immature for NetApp to be disrupted from below.
...Recent NAS announcements from IBM, HP, Sun, Veritas, and Seagate/Cobalt, as well as renewed focus from Dell and Compaq, are meant to challenge Network Appliance and EMC. We expect the leaders will stave off the onslaught with their reliability, performance, and experience in NAS.
The good news is that NAS is crossing the chasm and becoming a mainstream technology. The NAS market could increase from less than $1 billion today to almost $10 billion in five years.
We expect NetApp to maintain its lead based on focus and top-notch engineering. ...
EMC's Celerra NAS product is nearly twice the price of the nearest competitor. ...
These announcements are another indication that Gigabit Ethernet and IP are making waves in the networked storage space. The Fibre Channel SAN approach continues to grow, but GigE NAS is on its tail.
...Sun Microsystems' storage group seems to be working against its CEO Scott McNealy. By announcing its first NAS box to support both generic NFS and CIFS, Sun has demonstrated that storage is a market not a feature as McNealy has argued. Sun's new N8000 product line will support Microsoft's Windows NT/2000 as well as Unix variants. The price point of $54,000 for a 200Gb system puts Sun right in the middle of the NAS market. Sun must achieve three objectives: (1) overcome the perception that it does not take the storage market seriously, (2) demonstrate that it understands the nuances of NAS design, and (3) establish a track record.
...In our opinion, Network Appliance is particularly well positioned to take advantage of the market validation these new entrants have provided. As the leader in this space, NetApp will now garner more visibility and should be brought into sales competitions as Sun, IBM, and HP's sales forces push the NAS concept. NetApp claims that Cisco's sales exploded when IBM introduced its own router. As discussed in our Storage Futures report, NAS has a number of compelling attributes; these new entrants have demonstrated their agreement by moving into the market. NAS will be less of a missionary sell.
In a head-to-head competition, NetApp Filers should win. ...
========= 6/12/00 Morning Notes - Technology
...an economic slowdown is not good for technology given a positive correlation between capital spending and technology outlays. Two mitigating factors are (1) when corporate profit margins narrow, tech spending does well, and (2) spending on Internet infrastructure is unlikely to slow in a soft landing.
In addition to the defensive services group, we see a few places that should be buffered [from slowdown effects]: (1) optical buildout..., (2) e-commerce applications growth..., (3) Internet infrastructure..., and (4) storage demand is insatiable, where we like EMC and Network Appliance.
========= 6/14/00 "Network Appliance - Playing in the SAN Box"
...The acquisition of Orca Systems puts Network Appliance on the road to support the VI clustering technology on Fibre Channel SAN's.
...We believe VI clustering will improve performance and enable NetApp to sell into the previously uncharted markets of Fibre Channel SANs.
...more efficient because large blocks...and because they are file system blocks not disk blocks. This approach allows NetApp's custom WAFL file system to continue to run on the filer and optimize access. ... another rung in George Gilder's storewidth ladder.
...With this new approach, NetApp Filers will be able to connect into existing Fibre Channel SANs. The application server would need to run the new VI-based software (replacing NFS/CIFS) and the NetApp Filer would have a new Fibre Channel interface card, but the rest of the SAN would not need to change. ...VI Architecture is being backed by Intel, Compaq, and Microsoft... Since VI works on both IP and Fibre Channel, this move hedges NetApp against being on the losing side of the protocol wars, just as we think EMC is doing with its support of IP.
...The Orca acquisition will accelerate the use of VI and Fibre Channel in interesting ways. However, the products that will come out of this acquisition will likely be in development for nearly a year. |
