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To: Bill Fischofer who wrote (9599)	5/8/2001 9:21:28 PM
From: Allen Benn	Read Replies (2) \| Respond to of 10309

Thanks for the explanation. I understand exactly what you mean about EMC’s true value-add – and it agrees with my view of EMC, even though I still associate refrigerators with EMC. That’s why I talk about TINA providing the means for EMC or Cisco to be “disrupted” not annihilated. If computer device industry at large can combine important pieces of the puzzle in commodity form (iRAID, iNIC, iNP, and BSD Unix all within the framework of I2O), Dell-like OEMs will grab the low end of server appliance devices, including storage. The management software won’t be nearly as capable as EMC’s, but adequate given huge reductions in product costs. In time, management software available throughout the Linux/BSD Unix free source community, combined with proprietary developments, will be adequate for a growing number of companies. EMC will be forced to stay ahead of the curve in all areas like in-the-box data caching, RAID processing and maintaining their in-house OS, the all-important management software, as well as features they would rather ignore, like IP switching/routing, firewalls, security of all sorts, etc. The ultimate box I described is built from open components, all undergoing advances in underlying hardware platforms and software by serious players, at least one (Intel) with demonstrated success commoditizing a bigger industry than the storage sector. If you think through just the implications of peer-to-peer data handling between iRAID, iNIC, iSCSI, iNP and probably downstream, iTAPE, the synergy becomes increasingly overwhelming. Or, what about intrusion detection and a myriad other security features that will grow up around iNICs? EMC will be forced to add capabilities they are poorly equipped to handle or concede whole segments of the storage sector. Having great management software is insufficient insulation from all these forces stemming from so many directions. EMC cannot itself incorporate iNICs, at least without a lot of fuss, because TINA doesn't support EMC’s OS. If EMC encouraged WIND to support EMC’s OS, so they too can benefit from all the synergy, then what would be EMC’s value-add? The exact same thing is true for Cisco. It simply cannot be good for Cisco’s core business to have more and more of it amenable, dirt cheap, to attachment on an iNIC connected to a server or server appliance. Intel is the undeniable king of commoditizing major sectors of the computing industry, as illustrated by the PC and increasingly servers. Now Intel is attacking the storage sector, with iRAID, iSCSI and iNIC, and the network equipment sector with iNP and iNIC. Further, synergy is being applied throughout all these sectors: PCs, servers, storage and network equipment. In my mind, the synergy across these sectors makes combating Intel’s moves vastly more difficult than anything faced by the computer industry over the last 20 years – and we know what happened there. Meanwhile, Intel has never been more needful of sizeable sectors to commoditize. None of this will play out instantly, nor is any of it necessary for TINA to be successful. Nevertheless, if history is any guide, the path going forward in the storage and network equipment spaces is pretty clear: Entrenched giants suffer a slow debilitating decay while the commoditizers reap huge rewards. And I can still agree with you that most of EMC’s value-add is management software, enabling them to enjoy extremely high gross profits and maintain market share at the high end. (However, I did hear from a good source that EMC beat out Sun at AOL on the basis of speed tests – a direct result of the outsized cache they use compared to the competition. Management software wasn’t mentioned. EMC also has a highly refined in-house OS optimized for reliable data storage, an in-the-box characteristic.) Allen PS – When I talk about Intel and WIND commoditizing storage and network equipment, I mean it from the point of view of entrenched suppliers. From Intel’s and WIND’s point of view, the business is hugely profitable with nearly insurmountable barriers to entry – the exact opposite of a commodity.