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Technology Stocks : EMC How high can it go?

EMC 29.05

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Sep 15 5:00 PM EST

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To: stockman_scott who wrote (12950)	8/8/2001 1:23:57 PM
From: Gus	Read Replies (1) of 17183

RE: Sun and Hitachi The well known statistic is that less than 20% of the total cost of storage is the actual cost of storage hardware because storage management accounts for more than 80% of the total cost. Software and services are the ways to address the larger part of that total cost equation. Stripped of pomp and circumstance, this is a primarily a hardware deal because Sun and Hitachi each had less than 1.7% of the 2000 Storage Management software market so combining the best of two of the worst storage software programs ain't gonna create a contender. Moreover, this alliance represents the 3rd or 4th major change in Sun's storage-is-a-feature strategy since 1995 when EMC started the year with 0% of the open systems market. I'm skeptical that Hitachi hardware can make Sun more competitive. Remember that Sun has long resisted EMC's vision of intelligent storage because array-based and switch-based intelligence undercut its efforts to sell more high-end Unix MIPS and the software and services that go along with the hardware sale. Not coincidentally, Hitachi's arrays started to sell better soon after it decided to get out of the mainframe business completely. What this deal does is line up the ducks for EMC in an orderly fashion. When it decides to leapfrog Hitachi's flavor-of-the-year box -- *when NOT if* -- EMC will have a chance at hitting 3 noisy ducks (Sun-HDS-HWP) and 2 relatively quiet ones (IBM-Compaq) with each new product introduction. Note that HWP started reselling Hitachi's box for about a year before HWP terminated its reseller agreement with EMC in May 1999. Yet it still took HWP another year or so to get its bearings despite the highest priority and urgency attached to that transition by HWP's former management. Time ain't on their side. STORAGE MANAGEMENT SOFTWARE Gartner Dataquest 1999-2000 2000 rank 1999 Share 2000 Share 1. EMC $ 803M 19.6% $1,341M 25.5% 2. Veritas 505M 12.3% 855M 16.3% 3. IBM/Tivoli 724M 17.7% 844M 16.1% 4. CA 799M 19.5% 613M 11.7% 5. BMC Software 229M 5.6% 224M 4.3% 6. NTAP 53M 1.3% 156M 3.0% 7. StorageTek 113M 2.8% 144M 2.7% 8. Compaq 45M 1.1% 143M 2.7% 9. Legato 172M 4.2% 142M 2.7% 10. HWP 68M 1.7% 87M 1.7% 11. Others 578M 14.1% 703M 13.4% dmreview.com THE CHANGING BATTLEFIELD Gartner Dataquest 2000 vs 2005 2000 % 2005 % Storage Infrastructure $ 2.0B 37% $ 7.2B 43% Data Management 2.3B 44% 5.7B 34% E-Storage Resource Mgt. 1.0B 19% 3.8B 23% Total $ 5.3B 100% $16.7B 100% is.pennnet.com EMC has gained market share in storage software every year since it introduced SRDF in 1995. Assuming different market share rates, EMC Software will grow as follows: 2000 market share - 25.5%- $1.3B 20% market share by 2005 - $3.3B 25% market share by 2005 - $4.2B 30% market share by 2005 - $5.0B 35% market share by 2005 - $5.8B

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