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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: JDN who wrote (9629)	3/22/2000 7:12:00 AM
From: John Carragher	Read Replies (1) \| Respond to of 17183

JDN A friend of mine asked when we are going to split so I told him I would check with you!<g>

To: JDN who wrote (9629)	3/23/2000 8:21:00 AM
From: Allegoria	Read Replies (2) \| Respond to of 17183

JDN, in my DD I do not place a great deal of emphasis on one person in a large organization, Mike R. maybe superhuman or he may not. This thread has its fair share of chatter and I am hoping to focus our attention on our competition and interested in stirring a debate. NTAP vs. EMC Here is what your competitors are saying about our EMC: Disruptive Technology Watch! New ML Research EMC & NAS In the Server Hardware Update Report dated March 20, 2000, Steve Milunovich says that a disruptive technology, like NAS, is a risk to EMC. He also says, "We think EMC may be looking to partner for a low-end NAS product in the second half [of this year]." ML has good research. This is important new information about EMC's NAS strategy if correct. The thinking has been that they would be using Data General's technology for a NAS product sometime this year. If this is correct, it could mean that the threat from EMC would be a repackaged product from an existing competitor with an EMC logo on it. We KNOW how we stand up against existing competitors! The fear has been "What would EMC offer against NTAP?" I am issuing a "Disruptive Technology watch" to EMC shareholders. As you know, a "watch" merely says that conditions are favorable for a weather-related event. This is NOT a "warning", which indicates that a weather-related event is occurring and threatens those in its path. IF (big IF) EMC does decide to outsource (aka "OEM") its NAS technology then I believe they will have unknowingly) capitulated the NAS market to its competitor, NTAP. Here's why: 1. OEMing NAS technology indicates that EMC either a) doesn't recognize the potential impact of NAS as a discontinuous innovation relevant to the current EMC market place; or, b) EMC is not willing to commit the resources required to create its own discontinuous or continuous innovation to answer the NTAP technology; or c) EMC has identified a heretofore unknown NAS technology with the price/performance and scalability required to fend off NTAP. 2. NTAP's WAFL, SNAPSHOT, multi-protocol, and clustering technologies are unequaled by any of its NAS competitors. WAFL and SNAPSHOT are protected by patents and provide the basis for multiprotocol and clustering products. The value chains linked to these technologies are very long and strong and the price/performance afforded by these technologies cannot be equalled using UNIX, NT or LINUX -based software. 3. IF (big IF, again) EMC OEMs NAS technologies, its margins on NAS will be under constant pressure because OEMing adds another cost layer. This will exacerbate NTAP's price/performance advantage against EMC's offering(s) and will erode EMCs stock price as these smaller margins become larger portions of the EMC revenue stream, unless the NAS technology that EMC OEMs is discontinuous, relative to NTAP's offerings. It has been discussed many times and many places that NAS represents a serious threat to EMC's architecture. The integration of NAS and SAN is occuring very rapidly and NTAP is participating in this integration aggressively. NTAP's products are scaling into the multi-terbyte capacity and overlap EMC's products at the low to mid range. Conclusion: We have often concluded that EMC is the King of its domain. That throne is under threat from NTAP with its discontinuous innovation. (Some will argue that NTAP is the Gorilla of NAS, with the BTEs, value chains, intellectual property, and tornado to prove its gorilla-ness. The jury is out on this, however.) EMC may be stuck in "The Innovators' Dilemma" with its customers insisting on improvements in the current EMC product line, its board of directors insisting on sustained profit margins, and its sales force pressing for the products that the current customer base is demanding. Thus EMC may the will to make the hard choices required to answer the NAS threat. Good luck, Eric