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

To: TraderEd who wrote (10590)	7/7/2000 7:38:45 AM
From: John Carragher	Respond to of 17183

recent post on fools thread. Cold Storage at IBM and Compaq By working together on open standards and interoperability, IBM and Compaq are hoping to make a dent in EMC's data storage market share lead. However, EMC continues to be laps ahead of the two firms in the race for Rule Maker status in the storage market. By Brian Graney (TMF Panic) July 6, 2000 In an effort to stay competitive in the wildfire enterprise data storage race, computing products vendors IBM (NYSE: IBM) and Compaq (NYSE: CPQ) announced they will work together to ensure interoperability of each other's storage hardware and software products, and promote open standards for the emerging area of storage area networks (SANs). Under the deal, Compaq will resell IBM's Shark enterprise storage servers and its Tivoli systems management software, while Big Blue will resell Compaq's StorageWorks systems and software. The two companies spun the announcement as a "game-changing play" in the advancement toward interoperable storage products and open standards for the storage industry. Yeah, sure. The cute PR phraseology aside, today's announcement really doesn't change much of anything in the world of enterprise storage, as far as investors are concerned. If anything, it is IBM's enterprise data storage strategy that is changing, which is not exactly novel considering this tends to happen every few months or so. In fact, the announcement is more of a milestone of sorts for high-end enterprise storage powerhouse EMC (NYSE: EMC) than for either IBM or Compaq. Today's collaboration has a more defensive than offensive flavor to it and appears to provide additional proof that EMC is running away with the high-end storage lead. To make up ground against market share leader EMC, IBM and Compaq are planning investments possibly exceeding $1 billion in the data storage market, which is set to expand to around $50 billion in just a few years, according to most estimates. However, simply throwing money at a fast-growing market doesn't guarantee super-industry returns, just as IBM has found out that naming your flagship product after a scary marine predator doesn't ensure market share gains. A major part of the EMC value proposition has always been that its products are heterogeneous, working on a variety of server platforms and operating systems. Further, the company has invested $1 billion over the past six years on its own interoperability testing program. EMC is also a major backer of the Fibre Alliance, which aims to ensure interoperability among different SAN hardware and software vendors. Despite their bluster, Compaq and IBM are not exactly first movers in this area. At the end of the day, execution and customer satisfaction will play the greatest role in determining excess returns in the enterprise storage market. In these areas, EMC has proven that it is the uncontested leader. This is largely because of its single-minded focus on storage versus the scattershot approach embraced by the likes of IBM, Compaq, and even Sun Microsystems (Nasdaq: SUNW) , which continue to be viewed as server vendors first and storage vendors second. When looking for tomorrow's Rule Makers in the burgeoning enterprise data storage area, Foolish investors should keep that market-focused strategy in mind. Your Turn: Do you think EMC is the emerging Rule Maker in enterprise storage? Post your opinions on the Rule Maker Companies discussion board. Related Links: EMC discussion board EMC website Motley Fool Research: EMC

To: TraderEd who wrote (10590)	7/7/2000 9:24:09 AM
From: Bill Fischofer	Read Replies (1) \| Respond to of 17183

I agree However, while the also-rans in storage are huddling together to try to match what EMC has on current offer, EMC is in the meantime working with the likes of NT, LU, and CSCO to define the future of storage as a service within the optical network of the near future. Not only does EMC get the emerging paradigm, they will largely be responsible for defining it from a storage perspective. This is what happens when you're 2-3 years ahead of your competition as EMC has maintained it is. EMC will not partner with SUNW because SUNW has no interest in the new paradigm, however the fact that CPQ has thrown in with IBM makes it more likely that DELL will partner with EMC. DELL more than anyone else seems to be positioning itself to lead the commodity diskless server market of the near future.