I/O, I/O it's off to war we go.......
INVENTORY
Succeeding
Quarter's
End of Purchased Work-in- Finished Hardware
Quarter Parts Process Goods Total Sales
1Q2000 $ 69M $ 436M $ 174M $ 679M $1,516M
2Q2000 55M 493M 209M 758M 1,647M
3Q2000 50M 620M 199M 869M 1,816M
4Q2000 63M 702M 260M 1,025M 1,564M
1Q2001 61M 708M 299M 1,068M 1,226M
2Q2001 - - - 1,074M -
EMC indicated that it had more than $400M worth of
deals -- 'hundreds of deals' -- deferred at the
last minute. That works out to at least $250M in
hardware, at least $100M in software and at least
$50M in service revenue based on last quarter's
revenue mix.
Half of 810 basis point sequential decline in
gross margin can be attributed to revenue
shortfall created by those deferrals with the
other half presumably tied to pricing actions
and their sweep the floor strategy, which
includes what EMC euphemistically calls
"trade-ins."
The inventory number suggests that EMC is going
to keep on pressing the offensive. Joe Tucci
referred to the 'sweep the floor' strategy that
they're using to exploit the major trend towards
storage consolidation.
Software and Services will continue to grow
faster than Hardware. Here's a comparison
between EMC and Veritas. Veritas' average deal
size is around $130,000 and EMC's average deal
size is probably much higher so the results of
the two companies provide a good look at what's
happening out there.
Note that the much bigger EMC Software has
consistently grown faster than Veritas in the
last 3 quarters -- 42% to 31% in 2Q2001 alone.
Everybody else is losing market share to these
two vendors.
STORAGE SOFTWARE
Veritas Y/Y (%) EMC Y/Y (%)
1Q1999 $ 56M 81% $ 155M 135%
2Q1999 93M* 145% 179M 83%
3Q1999 158M 243% 207M 75%
4Q1999 191M 260% 281M 72%
1Q2000 204M 264% 270M 74%
2Q2000 225M 142% 350M 96%
3Q2000 257M 63% 332M 60%
4Q2000 301M 58% 483M 72%
1Q2001 309M 51% 468M 73%
2Q2001 294M 31% 498M 42%
STORAGE SERVICES
Veritas Y/Y (%) EMC Y/Y (%)
1Q1999 $ 16M 100% $ 72M 227%
2Q1999* 21M 114% 82M 148%
3Q1999 26M 136% 89M 56%
4Q1999 35M 150% 119M 53%
1Q2000 40M 150% 116M 61%
2Q2000 51M 143% 134M 63%
3Q2000 60M 131% 161M 81%
4Q2000 69M 97% 200M 68%
1Q2001 78M 95% 232M 100%
2Q2001 97M 90% 232M 83%
*Seagate Software NMSG acquisition closed.
NIS (SAN+Connectrix+NAS) continued to grow to
58% of Storage Hardware; although, it declined
by 19% sequentially from $883M in 1Q2001 to
$714M in 2Q2001. This sequential decline,
however, was less than the 22% overall decline
in Storage Hardware from $1.564B in 1Q2001 to
$1.226B in 2Q2001.
NIS/Storage Hardware
Storage NIS/Storage
NIS Hardware Hardware
1Q2000 $ 323M $1,267M 25.5%
2Q2000 458M 1,516M 30.2%
3Q2000 567M 1,647M 34.4%
4Q2000 770M 1,816M 42.4%
1Q2001 883M 1,564M 56.5%
2Q2002 714M 1,226M 58.2%
Lastly, 3Q looking worse than 2Q. No 4Q guidance.
EMC appears lock and loaded for bear. |
