With the MCDT/EMC/lock release all coming up near term do you have any thoughts on how the market/MCDT will react.
Anytime you have a large block of shares going from ownership of one to ownership by many, the volatility is bound to increase significantly. If it goes down low enough I plan to add some more to my core and trading positions. I expect that after the distribution, the stock will eventually settle down and move to strong hands who will quickly pick up on the strong parallels between EMC's very successful high-end/mid-range Symmetrix/Clariion business model and McDATA's emerging core/edge business models.
One of the things going for the storage networking industry is that the revenue growth and earnings growth have very high visibility, an exceedingly rare attribute to find nowadays in light of the continuing struggles by the global telecommunication industry confronted by the riddle of exactly how to build the deregulated global network of the future expected to be dominated by data traffic (90%) when voice traffic still accounts for more than 80% of all revenues. Needless to say, this turmoil has major ripple effects on the rest of the global electronics industry
For instance, EMC recently indicated that SANs have been deployed by only 15% of the target market. This seems to jive with the Morgan Stanley survey on IT spending in December which indicated that out of a sample of 150 CIOs, about 30+% will start to deploy their SANs in 2001 and 40+% will deploy their SANs in 2002. As it relates to McData, which controlled 85+% of the ESCON mainframe director switch market, IBM also has a major mainframe upgrade cycle underway which is probably going to inititate a major ESCON/FICON deployment cycle during the next few years since large scale SANs are typically multi-year deployments. According to Emulex, the FICON market will account for about 25% of the total market for networked storage for the next few years. All in all, there are many ways to track the progress of this technology transition and adjust one's portfolio accordingly.
On the immediate horizon after the distribution of shares to EMC shareholders, HWP, MCDT's newest OEM, is introducing some new SAN software at the end of the month. MCDT has a major product introduction in March. I think EMC also has some product introductions in the pipeline for 1Q2000. The latter is the one to watch because I think EMC is poised to go after the jugular of some of the server vendors who have very limited experience with large scale SAN deployments. Almost a year ago, Michael Ruettgers of EMC predicted that a server vendor will most likely go out of business because of its inability to keep up with the rigorous investment required for storage networking.
searchStorage: OpenView is strategic to you. Can you be more specific about timeframes and specifics for integrating storage features?
Denzel: You'll see announcements at the beginning of this year that start to leverage not only Openview but a full set of networking switches. We're excited about our policy management software, quality of service software and network management software because storage is headed toward software and the network. But you have to have a fabric and infrastructure. You'll see HP being very strong in this space.
For the hundreds of thousands of trained OpenView users, storage objects will begin to appear on their consoles. So using the same drag-and-drop capability, they can manage your storage objects. This allows network administrators to do capacity planning, logical unit management and other functions the same way they do with networks.
searchstorage.techtarget.com |
