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

To: JDN who wrote (10717)	7/23/2000 9:04:56 PM
From: Gus	Read Replies (2) \| Respond to of 17183

That is incorrect, JDN. I started posting on this particular EMC board in mid-97. And yes while you may have been the first to call Shark a minnow, there were many other people here who were quick to gather *the* substantive data that showed the numerous technical deficiences - including the lack of FC connectivity that will be only added later this year -- that led many, including me, to conclude that IBM was pricing it aggressively to compensate. As you recall, I posted several reports from the technical trades that showed several accounts in which IBM was pricing the Shark as much as 50% below the Symmetrix (matched by EMC) and extending the warranty period (not matched by EMC) to boot. What I don't understand is why you don't seem to be willing to recognize the lucrative trendlines that people have been following on this board for several years now. 1996 - 25%/75% Storage/Server IT budget 1999 - 50%/50% Storage/Server IT budget 2003 - 75%/25% Storage/Server IT budget (IDC) 2004 - 80%/20% Storage/Server IT budget (Dataquest) 2005 - 1 billion interconnected PCs (Intel) 2004 - Network bandwidth will increase by 250x (Lucent) If you don't want to generate a discussion about Sun on the EMC board then close your damn eyes everytime people here want to talk about the intensifying competition for the storage dollars between the server-centric IT model and the storage-centric IT model. Lastly, spin it as you wish, but you heard the same EMC CC as I did. This is what MR said about Sun as posted by me before Sun's blockbuster earnings came out: 4) SUNW -- "One of the 4 Horseman of the Internet, accelerating server sales, probably the only server company to gain storage share but Purple contains features that Clariion already introduced in 1992 and 1997, and Purple still doesn't have all the features already in use in Clariion's newest mid-range SAN (42% of $148m) product." Now how does that make Purple EMC's only competition? MR didn't even compare it to its flagship Symmetrix, but instead he compared Purple to EMC's Clariion line, which is aimed squarely at the middle market. If you listen between the lines, Connectrix provides a bridge between Clariion and Symmetrix so the more Clariions they sell the greater the addressable market for the premium-priced Symmetrix in the future. Since Sun is pricing the Purple at a loss-leading $0.01/MB (escalating price structure once the server/storage lock-in is complete and total), the middle-market is clearly where EMC is going to be more aggressive in price. Since EMC continues to drive more Clariion sales through its direct sales structure and since direct sales carry higher margins, that clearly gives more room for the technology leader to undercut all comers including Sun. Clariion direct sales went from 40% ($98m) in 1Q2000 to 60% ($141m) in 1Q2000, or 44% quarter to quarter in terms of revenues. EMC's earlier guidance was that Clariion would be at an annual run rate of $600m by year's end. Clariion already came close to hitting that bogey last quarter with the peak sales season still to come. And 42% of Clariion sales in the last quarter came from the new Clariions that were only introduced on 4/25. Put another way, EMC sold $500m worth of new Symmetrix and $62m worth of new Clariions in 9 weeks.

To: JDN who wrote (10717)	7/23/2000 10:58:25 PM
From: Tony Viola	Read Replies (1) \| Respond to of 17183

JDN, pretty good article on storage from Business Week. Not sure if it's been in here. This paragraph agrees with what we said about Dell catching up. Maybe the author knows enough to look in here, where the latest info is available. ;-) Not only Sun but IBM, Compaq, Hewlett-Packard, and Hitachi have all announced major storage initiatives in just the past few weeks. "They have to be on that boat," says Merrill Lynch analyst John Roy. "It's sailing, guys." He thinks it will take several years for the server vendors to catch up to where leaders like EMC and Network Appliance are now. "In the meantime, EMC and NetApp are grabbing burgeoning share of the burgeoning market." businessweek.com