MSDW view on SUN and Hitachi Alliance:
Sun Microsystems (SUNW-$17-N) Storage Agreement With Hitachi Announced
In a much-anticipated move, SUNW and Hitachi announced a major 3-year storage agreement, which includes SUNW's ability to distribute Hitachi's high-end storage platform - branded as StorEdge 9900 series. Additionally, SUNW and Hitachi will cross-license and distribute each other's storage software and will collaborate on storage software, services and support.
Overall, we view this deal as a positive move for SUNW as it provides a strong high-end, open standards-based storage product that is easily integrated with SUNW's leading UNIX server product capability. Challenges include: execution; effective differentiation of the product; training and efficient leverage of each others' sales and service capabilities; integration of the hardware and software offerings; and the management of potential channel conflict. While a positive step, SUNW still needs additional hardware and software capability to truly differentiate its product line-up in the storage market, and we look forward to additional announcements.
Hitachi and SUNW should prove a powerful combination that will likely exert additional competitive pressure into the market. In our opinion, the deal appears likely to pressure Hewlett-Packard, EMC and IBM. Selling price pressures in storage are on the rise, and this deal will likely add more fuel to that fire.
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My two cents:
For how long can EMC take this heat before E from P/E starts to disappear. In that case it would be difficult for EMC to maintain its growth story for at least 1 year even when using 1998 (need to take that tech bubble out of the equation) as baseline.
The last time I checked EMC, CISCO and GLW has tangible book value anywhere from 3 to 7 dollars. |
