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Technology Stocks : Network Appliance

NTAP 113.34

-3.1%

3:59 PM EST

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To: 100cfm who wrote (4446)	9/20/2000 9:46:40 AM
From: DownSouth	Read Replies (2) of 10934

EMC is facing the classic "innovators' dilemma". Any new innovations in NAS are not necessarily in the interests of their installed base. That base has a whole different set of demands before their next big upgrade/addon order. Dropping prices to meet NTAP's would kill margins. Getting the sales team to call downmarket would be easier than any other move, but they'll get whipped there by NTAP. Assuming that NTAP's IPR could be worked around, it would take EMC at least a couple of years to engineer a new architecture. By then, NTAP's innovations in VI will give the EMC engineers another obstacle and value chain to overcome. In the meantime, EMC can enjoy a 50%+ growth with 55%+ gross margin by just doing what they do now. (Kinda like IBM in the '80's.)

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