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

To: Gus who wrote (13720)	1/7/2002 7:18:25 PM
From: Gus	Respond to of 17183

Clarification: Note that currently, 1 Mainframe SANs still sell for every 2 Open System SANs. Actually, unit-wise and revenue-wise, ESCON-based mainframe SANs peaked sometime in 1997 and continue to decline. ESCON SANs started to migrate to FICON SANs in September 28, 2001 -- the General Availability date set by IBM which controls the ESCON and FICON standards and which astutely gained a headstart over EMC and HDS by shipping FICON products before the official GA date. Such are the prerogatives of a monopoly.<g> As an aside, FICON is ESCON mapped over Fibre Channel while what is popularly known as Fibre Channel is actually SCSI mapped over Fibre Channel so Fibre Channel is the interconnect being used to converge first generation and second generation SANs. The cautious way a risk-averse market transitions from a first generation SAN architecture (ESCON) to a second-generation SAN architecture (FICON/FC) is a useful thing to watch now and during the transition from second generation SANs (FC) to third generation SANs in a few years. The migration from ESCON SANs to FICON SANs can be tracked by watching the results of IBM, MCDTA, INRG and EMLX. IBM's mainframe MIPs shipments have gone from 100% YoY in the December 2000 quarter to more than 40% Yoy in each of the last three reported quarters so the pipeline for FICON appears to be strong. My hunch is that the pent-up demand for alternative FICON storage systems from EMC and HDS is particularly strong now that IBM is again the mainframe monopoly. Of the $6.25B in total SAN revenues that IDC project for 2001, about $2B will come from ESCON/FICON SANs and about $4.25B will come from Fibre Channel SANs, or a little over 2:1. YoY growth for ESCON/FICON SANs, however, is expected to be a negative 16% while YoY growth for FC SANs is a healthy 12%. Note that the transition from first generation SANs to second generation SANs is taking place in an overall storage market that is expected to decline by 19% in 2001.