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

To: Jerome who wrote (13753)	1/17/2002 3:24:36 AM
From: Gus	Read Replies (2) \| Respond to of 17183

In the case of IDC's forecasts, Compaq likes to lump Non-RAID Storage, Internal RAID Storage and External RAID Storage to justify its claims about leadership because it's easier to razzle dazzle the units and terabytes into a perception of leadership, but the most important market segment is really external RAID storage. External RAID storage, for instance, is expected to account for nearly $15B of the $25B total storage market in 2001. To understand why, consider that 100% of mainframe storage is external. More than 70% of Unix storage is external. Less than 50% of NT/W2K storage is external. The trend is clearly towards external storage. In fact, all the research houses project that 70%-80% of all storage (read: external) will be networked in 3-4 years. Mainframe storage routinely achieves 70%-80% capacity utilization rate because it is networked using the half-duplex ESCON interconnect (first generation SANs). Unix and NT/W2K are heavily underutilized at around 30%-35% primarily because the server vendors -- who continue to account for 70% of every storage dollar -- have no interest in making the data in the storage systems attached to their servers easily available to other servers and applications either on a congested LAN or on a dedicated SAN. Compaq, for example, sells 70% of its SANs to resellers incentivized to sell SANs consisting mostly of Compaq servers and storage. The arguable point is that the server vendors are being dragged into networked storage by the combined pressure of NAS, which displaces general purpose file servers, and SAN, which creates an increasingly dynamic storage pool. This is why EMC easily went from less than 1% of the Open Systems market in 1994 to around 17% in mid-1996. Symmetrix could support servers from any vendors saving the customers the cost and expense of extracting data from one application running on one server platform and transfering it to another application running on another server platform. Capacity utilization is not everything, but Open System capacity utilization on the Symmetrix was around 50%-60% while its rivals were stuck around 20%-30%. The same thing is starting to happen in Open System SANs where capacity utilization is starting to exceed 90%. That's why EMC easily went from less than 10% of the Networked Storage market in 1998 to an expected 39% in 2001 because of its ability to network servers from any vendor on any network. Networking multi-vendor servers and multi-vendor storage and multi-vendor networks (SAN, LAN, WAN, MAN) is a natural progression. The top server vendors really have no interest in supporting the servers and storage systems of other vendors because those servers are very profitable cornerstones of their business models. That's why practically every server vendor has this born-again spiel about being open while all its account control programs are designed to keep the customers buying their own servers and storage. Talk OPEN. Act DE FACTO. And quack like a DUCK. What can be screwed can always be unscrewed.<g> That kind of approach, however, only works best with the 80% of the market that only accounts for 20% of industry revenues. It doesn't work too well with the 20% of the market that accounts for 80% of industry revenues. For example, the server vendors tend to do well in selling external RAID storage to their own installed base, but none of them do very well in selling external RAID storage to the installed base of other server vendors. EMC, on the other hand, routinely captures the top and second spot in all the major server platforms -- Solaris, HP-UX, IBM-AIX, IBM-S390, Compaq, NT/W2K, etc -- demonstrating clearly that more customers prefer its approach thus the saying, Vendor X wins some, EMC wins more. The syllogism or specious argument that the server vendors try to employ is this: They have demonstrated no interest in supporting the servers of other vendors because it destroys their business model, BUT because they are sincere, born-again OPEN advocates and mindshare is equal to market share, they can be counted on to support the storage systems and software of other vendors. Huh? Put another way, EMC is proprietary because it supports any server which the server vendors can't realistically be expected to match because that would commoditize their servers, BUT since they are sincere born-again OPEN advocates and mindshare is equal to market share, they can be counted on to support the storage systems and software of their rivals. Again, Huh? Exactly. But gullibility is the minor scourge of the early 21st century so that noise level can only be expected to increase as storage becomes more strategic.<g>