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Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: John F. who wrote (3252)	5/15/2000 7:30:00 AM
From: DownSouth	Read Replies (2) \| Respond to of 10934

John, your comparison to DEC's attempt to counter IBM's aggressive move into PCs to EMC's attempt to counter disruptive NAS technology rings true. Wang did the same thing, and, in fact, was the #2 PC maker behind IBM for almost a year. The PC ruined both of these companies. If you have not read "The Innovators Dilemma", I recommend it. I believe it describes the EMC/NTAP situation. Keep in mind that NTAP's competitive advantage is based not only on the NAS concept but their patented file layout (WAFL), their proprietary, specialized OS (ONTAP), and the innovations built upon these "open proprietary" innovations, such as SNAPSHOT/RESTORE, soft failover clustered configurations, etc. NTAP's architecture is basically a very efficient software package which runs on commodity hardware. Unless EMC can match the performance/reliability/cost of NTAP's architecture, their NAS offering will, similarly to DEC and WANG's PC product life cylce, take the following course: 1. The first year or two EMC will sell great quantities of their NAS product to their installed base. 2. The demand from their installed base will diminish rapidly as their customers meet their short term needs. 3. In competitive situations outside their installed base, EMC will have to cut margins to the bone to approach the price/performance of NTAP. EMC will not collapse because of NAS. They will, instead, focus on their storage management software where margins are tremendous, and NTAP will become a file system that can be included in an EMC-managed storage network. What will suffer is EMC's growth rate as NAS continues to grow at a rate 3-4x EMC's rate. All my own opinion, of course, and its worth what you paid for it <g>.