NTAP Total Cost of Ownership is 65% that of EMC, emc may have higher profit margins, that is, they charge too much, and in a price war or competitive environment, which is what the US Economy goes through after each and every recession, emc is too expensive, less efficient and will lose more market share to NTAP. Additionally there is a technology or approach difference, the most costly storage solution being what you probably have right on your own computer, that is your own disk drive, server solutions are like that, they conrol their own storage drives dedicated to storage, the next solution is SAN which is fast granted, and what EMC specializes in, Storage Area Networks SAN solution is too expensive and outdated in an evolving technology environment where you do not want to depend on large proprietary systems like SANs, instead the Open Standards or Open Storage Networks OSN protocols favor NAS over SAN, that is you can do the open standards OSN cheaper and evolve into it easier by going from NAS toward SAN than the reverse, which is what EMC found out when they have failed so far to cut into NTAP's NAS Network Attached Storage business the so called Networked Appliances that NTAP coined. NTAP's NAS solution is the cheapest, easiest to administer, modular, allows for mutiple storage and database protocols and is gaining market share. EMC is a large dinosaur company, lfighting to maintain its SAN market share with SUNW and IBM, whereas NTAP with its NAS and OSN initiatives is gaining marketshare, evolving with smaller growing businesses whose needs change as they grow into larger enterprise, has a broader customer base, and so forth. Technological innovation and thus evolution favors NTAP. NTAP has earned higher mutiples. You can say that P/E etc is high if you are an old smokestack DOW industrial investor looking for dips and thus temporary lowered P/Es to invest in, but technology companies do not strictly follow the P/E rule, the better rule for technology companies is EPS Growth. The recent 2nd Greenspan induced recession skews all these numbers and falsely makes many people think that technology companies should be judged on P/E just like stagnant non-growth industrial or commodity companies, which in my opinion the money would better be left ina CD or Bond, since its dead money. Technoloy is about growth, future growth, future stream of earnings, forward looking rather than past or historical earnings. That takes more DD due diligence, but that's what this is all about. Storage simply put is a growth sector, perhaps the largest growth sector among all technology sectors, storage runs out every 60-90 days as the internet grows, so does content, as customer's transact business databases and database warehouss grows, all this data needs upgraded storage, its the most valuable asset companies have, their accountin, transactional, customer, and content and related intellectual property. You bit, hope the bite was worth it. Storage is a vast open earnings growth sector which is still growing marketshares all around.
I am,
Truly your$,
-Crystal Ball |
