Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Bill Fischofer who wrote (28035)	2/20/2000 8:56:00 PM
From: rudedog	Read Replies (1) \| Respond to of 64865

Bill - great post, gets at the heart of what I think SUNW needs to do in the storage space, and also highlights the business conflict which has kept IBM and CPQ from competing effectively with EMC - if you subtract out their captive storage sales.

To: Bill Fischofer who wrote (28035)	2/21/2000 8:50:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 64865

Re: Storage margins It is true that EMC's earning growth 38% was stronger YOY than its 21 %revenue growth. So in that sense, you are correct. If I get your thesis right, it looks like you are saying that the demand for Storage is growing exponentially or at least proportionally to the internet/e-commerce user growth. When the ability of these companies to supply the required storage systems exceeds the growth rate of the user base then the margins are likely to erode. As of January 2000, it does not look like there is any evidence of an exponential growth rate in sales of storage systems. After all, EMC -who is the king of that mountain- showed only a 21% growth in revenue YOY. Should we conclude that the growth rate of users is ~21%? Another constraint is the available capital for investment in storage systems. If this does not grow as rapidly as the demand then the storage systems companies will have to fight over the available dollars. Such a fight will result in all sorts of bundling deals to IT departments. My thesis is that in time these storage systems companies will be selling yet another commodity. Just as servers have become more of a commodity this year. The missing ingredient for some of the companies is the multi-protocol software like EMC possesses. :)