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

To: straight life who wrote (5580)	12/6/2000 2:32:25 PM
From: John F.	Read Replies (2) \| Respond to of 10934

Wednesday December 6, 12:32 pm Eastern Time Forbes.com EMC Covers All The Bases By Lisa DiCarlo Arriving at EMC's NewYork press conference yesterday, one could feel the company's energy even before entering the building. Of course, it could have been the 20 or so men dressed as Superman on Park Avenue. The rent-a-superheroes were there to generate excitement for a new product category for EMC (NYSE: EMC - news), one it hopes will diminish the need for products by Network Appliance (Nasdaq: NTAP - news), the leader in network attached storage (NAS). The big news yesterday, which may have been the catalyst for the $11 jump in its shares, is software called HighRoad. The software, which costs about $10,000 per server, gives users greater file-sharing capabilities in bandwidth-intensive environments like medical images or video. It accomplishes this by automatically selecting the fastest route to the data. Company president Joseph Tucci says NAS is inadequate for large-scale data retrieval and sharing because all access occurs through a file server. Storage area networks (SANs) also don't do the trick because they offer no provision for file sharing. ``The market has never seen anything like this,'' says Chief Technology Officer Jim Rothnie. EMC will bring out something else that its customers don't usually see--low prices. Tucci says the new products will be about half that of Network Appliance. He also says the company will bring down the cost of storage--even its high-end Symmetrix line--by about 30% per year. That will bring it more in line with products from Sun Microsystems (Nasdaq: SUNW - news) and Compaq Computer (NYSE: CPQ - news). With more competition and prices coming down, EMC will have to find new ways to maintain its hefty 57% margins. Part of it will come from a shift to selling more software, which has higher profit margins than hardware. EMC will spend 80% of its $1 billion research and development budget next year on software. To further maintain margins, the Hopkinton, Mass.-based company is exiting the server business that it inherited with its purchase of Data General. It's also switching from an indirect to a direct sales channel for the storage products that came along with that acquisition. Analysts will be watching to see that it does maintain those levels. The company, a bona fide Wall Street hero, will nearly double sales to $12 billion next year compared with 1999. Chief Executive Mike Ruettgers turns 58 next week. Perhaps investors should consider a superhero costume as a gift. Go to www.forbes.com to see all of our latest stories.