EMC How high can it go? Message Board

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Technology Stocks : EMC How high can it go?

EMC 29.05

0.0%

Sep 15 5:00 PM EST

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To: charlief who wrote (14093)	4/18/2002 1:15:37 PM
From: Gus	Read Replies (1) of 17183

The current IBM-Hitachi alliance has two parts. The first part is a joint-R&D effort at the storage system level. Hitachi is just the latest to spend some time in this high-end IBM petting zoo. Remember IBM-Charlie Chaplin in 1993? IBM-StorageTek in 1997? IBM-LSI Logic in 1999? IBM-Compaq in 2000? IBM-LSI Logic in 2001? Exactly. The second part is the sale of the IBM disk drive division ($3.0B to $3.8B a year) to Hitachi ($800M a year). Everybody in the industry is quaking in their boots at the prospect of a money-losing IBM disk drive division (current loss rate: $600M-$700M a year) being merged with a money-losing Hitachi disk drive division (current loss rate: a gazillion yen a year) to create a very profitable disk drive juggernaut. Huh? The counter-suit is almost routine in patent suits. The outcome that Hitachi is aiming for is similar to the outcome of Motorola vs Hitachi over semiconductors where Motorola succeeded in proving that Hitachi infringed on its patents only to have Hitachi proved that Motorola also infringed on its patents. I think that the most likely outcome in the replication patents will be closer to a total shutout like IBM vs Hitachi in 1982 over the mainframe operating system and other software where IBM forced Hitachi to settle by paying $300M in damages as well as an agreement to allow IBM to inspect all of Hitachi's mainframe-related products till the end of time. As many here know, despite creating this major handicap for its rivals, it wasn't until IBM was able to completely shake off its anti-trust issues in 1999 that it was able to finally drive Hitachi (and Fujitsu) out of the mainframe market. This effort, by the way, was lead by the current head of IBM's storage operations who was the head of IBM's mainframe operation during the time that both Hitachi and Fujitsu felt their nuts being crushed by a combination of extremely stiff licensing terms and exclusionary patent enforcement. Fortunately, EMC doesn't suffer from that handicap and can just go for the jugular.

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