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

To: Uncle Frank who wrote (4425)	9/18/2000 11:21:18 AM
From: Lynn	Read Replies (2) \| Respond to of 10934

Dear Frank: That's exactly what I was think of when I made my posting. >If he adds ntap to his New Telecosm stocks list, it could get even wilder. I totally agree. The price swings could be fantastic, maybe even like QCOM's last year. Back to waxing the car- Regards, Lynn

To: Uncle Frank who wrote (4425)	9/18/2000 12:00:57 PM
From: SecularBull	Respond to of 10934

Speculation about a future addition of NTAP to the Gilder Telecosm List could be what is driving today's action. From what I can tell, today's action does not appear to be institutionally driven, and therefore maybe an unreliable breakout. LoF

To: Uncle Frank who wrote (4425)	9/18/2000 12:04:38 PM
From: D. K. G.	Read Replies (1) \| Respond to of 10934

From the openfund ......NTAP: My Telecosm takeaway community.metamarkets.com For those of you used to reading this column, I apologize for skipping a few days. Covering Gilder's Telecosm conference was much more work than I anticipated, but it was worth it. Of all the companies and cool things I saw, the most investable idea for me was Network Appliance. Here's the thinking. The whole Telecosm thing is all about a world of infinite bandwidth. The discussions were almost universally around "how do you get the maximum pipe size to people at the minimum cost". And it was fascinating. My head is near popping from thinking about optical network management layers and high burst rate wireless. It's essentially a forgone conclusion that this world of near-infinite bandwidth on the cheap is going to happen: it's practically here already. But very few companies (or individuals) at the conference were at all focussed on what to do with all this bandwidth. Beyond the obligatory mention of Napster every five minutes, not many ideas surfaced. Except storage. Sometime this year, it became more efficient to move storage outside the box of a computer than to leave it inside. Why? Because a 1 gigabit ethernet backbone is a more efficient transport mechanism than the backplane of a computer. Thus the "Storewidth" paradigm that has entered the Gilder lexicon. There are a few companies in the storewidth field: certainly companies like EMC are making things happen, and Storage Networks is doing some pretty revolutionary things with the ASP model for storage. But Network Appliance is at the center of all this, and Gilder gave the NTAP CEO an introduction that should have made his ears turn red. They've approached the whole concept of storage from the perspective of the network. EMC and most other boxmakers design what's called "Storage Area Networks" or SANs- private networks that a pool of servers access using a nonstandard technology called Fiber Channel. SAN's are designed to be the externalized storage component of a server. Network Appliance on the other hand builds "Network Attached Storage" or NAS. These are systems designed from the ground up to be part of a network. What does this really mean? It means that it only takes a regular-old network engineer to get an NTAP box running, not a specialist who understands the Fiber-Channel system. But further than that, the network model has built in flexibility: the boxes themselves are addressable on the network, without requiring a server in between. Storage and Servers can be easily reconfigured, again, with exiting-employees. There are some natural disadvantages to this model on the surface -- among other things the network backbone theoretically becomes the bottleneck. But with 1 gigabit ethernet now readily approachable for most businesses, this concern goes away. And NTAP bolsters speed by designing their storage boxes (called "filers") from the ground up, ditching old protocols like SCSI. EMC faces increasingly intense competition from NTAP as this performance argument disappears. And did I mention that NTAP solutions tend to be at least a 1/3 cheaper? The market is becoming quickly convinced. NAS sales in 1999 were just under $1 billion. By 2003 pundits are predicting a market of about $6.5 billion, or a growth rate of 66% a year. And NTAP has a 50% market share. To be fair, there are definite opportunities for NTAP to blow it. Right now they have a significant edge in three areas: technology, cost, and simplicity. They market this well. As they become the entrenched provider, they'll need to expand their focus on enterprise support for the installed base. While their at it, low end competitors (Dell, Compaq) have the opportunity to nip at their heels on cost and marketing. And the industry won't be standing still: NTAP will need to continue its feverish pace of innovation. But I have to say -- so far so good. Looking at the chart, it's clear this isn't exactly a bold new idea -- the market realizes there's something special here. And NTAP's not exactly cheap - with a market cap of $37 billion and sales of under $1 billion, it trades at about twice the price/sales of EMC. The bet here is that NTAP's onto something big here, that EMC will have to play catch-up on.