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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (8575)	8/21/2000 4:05:14 AM
From: Gus	Respond to of 9256

Nothing on DSS, Sam. DSS did indicate at their investor presentation at the NYSE a few months ago that their deal with NTAP is limited to NTAP's flagship filers and that they intend to go aggressively after the other parts of the thin server or the server appliance market, not just the thin storage server segment, where they claim to have 85% of the workgroup NAS market (over 20,000 units shipped with a 5,000+ units a month shipping rate and expected to reach a $100M run rate by the end of DSS' fiscal year). One useful reference point to use in tracking this trend is the way the early general purpose Wintel machines ended up as file servers, print servers and email servers that are now being consolidated by more powerful Unix and Wintel machines because of the complex management issues associated primarily with managing storage over a one-size-fits-all congestable corporate network. This time around the new variables are: Microsoft's embedded NT for server appliances (disk-based or diskless), Linux (Cobalt/Seagate) and Intel's 2-4 way private label reference platforms. Both Intel's $25,000 and under server business and Quantum's Snapserver (workgroup) business exhibited 50+% sequential quarterly growth during the first half of this year reflecting the early stage of this trend. MAXTOR ENTERS HIGH GROWTH & HIGH MARGIN NAS MARKETPLACE In August 1999, Maxtor acquired Creative Design Solutions, A NAS management software and operating firm. In April, Maxtor announced shipment of the new MaxAttach line of NAS server appliances for this high growth and margin market. Dataquest has estimated that the entry-level NAS MARKET WILL GROW FROM 370 MILLION IN 1999 TO OVER $2 BILLION IN 2003 as NAS technology becomes adopted by a greater number of firms. Firms such as Network Appliances and EMC have recorded 12 to 15% net margins for their Internet storage products. These net margins are approximately double those seen in the drive industry during the highly profitable mid-1990's. The anticipated growth and the attractive margins of Internet storage has caused investors to assign a premium to the shares of NAS firms. Cobalt Networks, a 1999 NAS startup with only $23 million in CY99 revenues and a loss projected for this year, currently has a market cap almost double that of Maxtor's. Network Appliances has about 40% of the total NAS market, twice the size of its closest competitor. As of this date, Network Appliances has yet to announce a low-end NAS product. However, the low end NAS marketplace is rapidly drawing competition. Quantum, Western Digital (Connex), HP, and Cobalt Networks have all recently announced low-end NAS products. According to Dataquest, Cobalt Networks currently owns about 14% of the low-end server appliance market for small business. At $20/GB, the MaxAttach product currently provides the best price/performance point in the low-end of the NAS market place. The MaxAttach appliances utilize Maxtor's 40GB drives is a 1U(1 3/4" height) rack enclosure. This gives the MaxAttach product a significant advantage over competing NAS appliances such as the Quantum Snap which require more (2U, 3 1/2") rack space. The MaxAttach product has won awards for both its performance and ease of use in several published reviews including Windows Magazine and INTERNETWEEK. A drawback to the product is that it supports Windows NT and Unix/Linux clients, but not Macintosh users like Quantum's Snap appliance. The MaxAttach offer RAID levels 0 or 1, which may afford a lower level of fault tolerance than some users desire. We anticipate that the superior performance-to-price attributes of the MaxAttach line of products as well as Maxtor's reputation for quality will allow the company to rapidly penetrate the NAS market. WE PROJECT THAT MAXTOR WILL BE ABLE TO CAPTURE 12% OF THE $1 BILLION ENTRY-LEVEL NAS MARKET IN 2001. Due to increased competition, we expect low-end NAS products gross margins to decline from 30% to 20% during 2001 messages.yahoo.com