"A terabyte doesn't go very far in a world that sees 3 million new Web pages a day and stores info-rich medialike music, photos and video."
Thanx, tekboy, for the Forbes hyperlink on Storage. I read it last week, and the information therein, together with the powerpoint presentation from EMC that I posted a week or two ago, together with gut instinct, pushed me to modify my portfolio this week.
Although it took 3 weeks to convince my wife, we elected to sell half our position in INTEL. Intel remains a strong company with very good management. It remains a steady buoy in stormy and volatile seas.
I am cautious about Intel for the following reasons:
1. They have had several miscues with processors or chipsets in the last year, as though management is a little sloppy, or distracted what with the push of processors into non-PC areas.
2. Intel is doing great in the server market, and notebook markets. Its getting legitimate heat from AMD in retail PC, and is losing money at this point with appropriate forays into networking and handset chip markets. So the bread & butter remains PC processors, a market which is destined to slow over time.
3. Intel is pushing its superior microprocessor development and fabrication capacity into other areas, like servers, networking needs, handsets, etc, in search of higher growth opportunities. But Merlin pointed out to me a few weeks ago that as Intel does this, it competes in a royalty game, not a gorilla game, perhaps losing some advantages it enjoys in the PC setting.
Storage:
Six months ago, I read that there were 1 million new web pages each day posted on the WWW. Now, I knew it would grow, but are there really 3 million new web pages/day?
Most of those bits and bytes need to be stored. And the storage tornado is likely, IMHO, to be underestimated in its depth and duration. So we reinforced our EMC & NTAP holdings this week, for the long haul. In the EMC presentation I posted previously, EMC estimates annual PC growth at ~ 6%, networking growth at 8%, and Storage growth at 18-21%. So the thinking is to redistribute from slower growth areas to faster growth areas.
EMC is the only dedicated Storage provider to play in each of 6 different submarkets, all of which are growing rapidly with storage in general. EMC has proven management, and a distinguished and lengthy track record the past 10 years.
NTAP is the leader in one submarket, NAS, with management that is younger, hungry, and becoming proven. It may have a disruptive technology in WAFL software facilitating NAS. EMC, whose leaders I am sure have read all the same books we have, may react accordingly and co-opt the NAS market by hook or crook, and even by hurting its own margins, or they may play like IBM and move upstream per the Innovator's Dilemma.
I think both will do well for years to come.
I think Storage is even more important now than I thought when I first bought EMC in June '99.
I think the Internet will grow, and Storage demands with it, more rapidly than anybody appreciates.
I think the oil stuff will affect old economy stocks, but will serve to accelerate Internet conferencing and transactions even faster.
In short, I love Storage. It's not glamorous, but it's high growth and internet enabling.
Apollo |
