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Technology Stocks : Son of SAN - Storage Networking Technologies -- Ignore unavailable to you. Want to Upgrade?

To: Joe Wagner who wrote (1902)	3/23/2000 3:19:00 PM
From: Smart_Asset	Read Replies (2) \| Respond to of 4808

Exerpts from 3/7/00 ML report, This is from the Network Appliance thread (Lynn). I believe the author is Steve Milunovich(sp?). Are his comments re fibre channel being a niche technology just Gilder wannabe rhetoric? <<We believe EMC is working on a product that will run both block level and file level commands over IP. The pirate group working on it plans IP to ride on top of Dense-Wavelength Division Multiplexing (D-WDM) networks. This offering could be available in the next twelve months>> <<We visited EMC management to get an update on where the storage leader is headed. The answer? Towards IP, or Internet Protocol. The implication is that EMC is staying ahead of industry changes and that NAS and SANs may merge. We view this evolution as positive for both EMC and Network Appliance. Today SAN and NAS are often thought of as alternatives. Although all four storage vendors on our recent conference call thought SAN (storage area networks) and NAS (network attached storage) are complementary, we have viewed NAS as a potential disruptive technology. Even IDC breaks out NAS and SAN in its projections. NAS and SAN are each projected to grow at a 66% compound rate through 2003. Although the combined NAS/SAN market is only 8% of the market today, IDC projects it will grow to 34% by 2003. We believe that this estimate is too conservative. NAS customers use their existing network. Generally, NAS users run HTTP-based and email applications over their existing IP/Ethernet network to hit their NAS box (see NAS World diagram). NAS users do this because they have the network and know how to operate it, achieve good performance from file level commands, and get to share files between servers and across operating systems. Network Appliance (NTAP; C-1-1-9; $199 15/16) is the leader in this $850 million market. SAN customers build a separate network. They are typically running database, OLTP, or streaming video applications over Fibre Channel (see SAN World diagram). SAN buyers want high performance on both large and small block sizes, shared support across huge amounts of data, mirroring of data for disaster recovery, and LAN-less backup for better performance. EMC is the leader in this $1.4 billion market. We see SAN and NAS converging into a combined world running IP. In order to capture both of these growth markets, vendors are looking to run file and block level commands over IP (see Combined World diagram). Although Ethernet may not be as efficient as Fibre Channel for certain applications, the massive growth in Ethernet performance in the next couple of years will likely make this a non-issue for a large majority of applications. EMC is working on Symmetrix support for IP and should enjoy a lead. EMC is agnostic about which network transport a customer wants to use (Fibre Channel or Ethernet). We believe EMC is working on a product that will run both block level and file level commands over IP. The pirate group working on it plans IP to ride on top of Dense-Wavelength Division Multiplexing (D-WDM) networks. This offering could be available in the next twelve months. Consequently, EMC will support both NAS-type and SAN-type customers over IP, thus delivering on the combined world vision and eliminating the SAN versus NAS question. However, having an IP network handle both file and block level information over cheap Ethernet could turn Fiber Channel into a niche market. EMC does not see SAN standards providing vendor interoperability. EMC sees FC and Ethernet coexisting for some time but believes the new SAN standards will not deliver interoperability. EMC thinks the standards are too high-level and do not specify the implementation detail needed. One vendor's products will most likely not work with others (unless you are using only vendors from EMC's Fibre Alliance). We find this a rather remarkable admission on EMC's part. It's also in sync with the views of Adaptec-founder Larry Boucher as well as George Gilder that the consensus optimism on Fibre Channel is misplaced. In contrast, Ethernet standards over the years have provided greater detail and therefore interoperability. EMC and NetApp should both be winners as SAN and NAS merge into a combined IP world. A world moving to IP plays to NetApp's strengths. The Internet space in particular likes IP and is driving filer demand for the company. Network Appliance sees a similar merger and based on our analysis might be pursuing products based on Intel's Virtual Interface Architecture (VIA). This would produce very high performance data transfer as the host computer could simply "write" directly into the main memory of the filer's computer. We've been concerned that EMC would be threatened by this trend but they seem to get it. If IP takes over, just having the Celerra NAS offering isn't enough of a defense. Disruptive technologies guru Clay Christensen just spent two days with CEO Mike Ruettgers. In our view, investors should not underestimate EMC's ability to innnovate, to climb the next mountain while the competition is busy scaling the last peak. [end of quoted text] Tam