EMC and Dell storage
I am a long term holder of both EMC and Dell stocks as well as a technical person who is intimately involved with the IT and the storage markets and a part of the EMC customer council. As such I have had a number of discussions with EMC, Dell, and many other companies regarding multiple areas (including storage) over the past few months. Obviously, the only information that I will discuss is already public information.
Why am I taking the time to provide this information? Because I believe that there is too much misinformation and confusion regarding Dell and EMC and that people should make informed decisions regarding whether to buy, sell or hold.
There are two ends to the storage spectrum. The high end and the low end.
At the low end, one can consider a small number (say up to 4) NT servers. At the high end, one can consider many servers with multiple OS (example, NT, Unix, MVS)
At the high-end of the market, one can find products from EMC, IBM, SUN, and to a lesser extent the high-end Compaq line. At the low end one can find Dell, Network Appliance, Compaq, etc.
The EMC solution (hardware, software, and consulting) is a complete solution, providing capability to have redundant computer room synchronized in real time (in EMC terminology SRDF). That implies that when one computer room is unavailable, the other one (which can be far away from the first one) picks up the load. In addition, the EMC solution has an extremely high reliability, tremendous diagnostic capability, large capacity, etc. Yes, the EMC solution is not the cheapest per MB, but you get what you pay for. So for enterprises with a large number of servers, multiple OSs, mission critical systems, need for disaster recovery and or continued operations site, EMC is an excellent choice. That is why EMC is doing so well. And since enterprises always need additional storage, they continue to purchase it from EMC. In addition, EMC has a full SAN (Storage Area Network) solution. They can sell highly reliable equipment that establishes a high performance, highly reliable SAN. This is a great benefit for large enterprises with high information demand.
However, in many enterprises, there are a large number of NT servers. Each server was purchased as a stand-alone server and has its own storage built into the server. This solution has limitations. It is impossible to share storage, it is difficult to deploy a highly available solution. So companies such as Dell and Compaq have introduced a storage solution that enable multiple servers to share the same storage. Since the number of these servers is large and growing on a daily basis, Dell has the ability to grab a large percentage of that market share. In general, EMC is not playing in that space.
So can both companies grow? It appears that the answer is yes as both markets are growing very rapidly. Can Dell move up in the food chain? Possibly. But it will take some time and a lot of energy. Will Dell try to move up the storage food chain? Maybe but again it is not that simple.
Regarding the Y2K effect…there are a number of studies (Gartner group, etc.) that show that customers are definitely not going to deploy a new system just before the Y2K. However, adding hardware (storage, servers, PCs) to the infrastructure poses very little risk and therefore, companies are going to do that on as needed basis. It is somewhat hard to believe that a company that requires additional storage in order to provide more competitive solutions, or more servers in order to improve web site response time, will choose to wait 4-6 months. They may loose the battle during that time and therefore will continue doing that. Implications? Dell and EMC should do well.
So why are people so nervous? There is tremendous amount of misinformation out there. All the way from “I am selling due to the fact that insiders at EMC are selling”, to “Y2K will reduce IT purchases between now and January 1st.” In my opinion, people need to think a bit harder and come to their own conclusions.
Thanks
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