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

To: Jerome who wrote (13755)	1/17/2002 8:28:20 AM
From: John Carragher	Respond to of 17183

interesting article on folks getting guns who should be on the check list as criminal etc. Seems most states have not updated the data bases. Here in Pa. it was noted 40/50% of data is updated. It comes to mind all the things they want to do for security checks etc but states etc do not have the money or manpower to update the data bases or maintain them... Perhaps it will be much longer than we think before we get into central access data bases.

To: Jerome who wrote (13755)	1/17/2002 7:03:24 PM
From: Gus	Respond to of 17183

Until 2001, customers usually bought their storage annually since density was doubling every year and prices were coming down 25%-35% every year. In 2001, the high-end pricing environment deteriorated led primarily by IBM which was defending its mainframe upgrade cycle and which, like everybody else, was also wrestling with increasingly uncertain customer IT budgets which ultimately ended up being reduced to much lower levels than expected. In effect, the combination of the IBM-led price war and deferred IT spending led to the decline of the overall storage market by 19% according to IDC. Any recovery therefore would depend on a) IBM reverting back to its historical pattern of being a rational price competitor; and, b) pent-up demand for storage as a result of deferred IT spending. Pent-up demand is easier to track since applications drive infrastructure sales and upgrades. What is more difficult to ascertain is IBM's pricing decisions. Shark only grew by 6% YoY in its seasonally strong quarter. This may indicate that IBM's pricing strategy is already producing diminishing returns. Coupled with the 35% YoY decline in IBM's disk drive business and IBM's decision to buy premium-priced disk drives from Seagate (read: higher costs, less pricing flexibility), it's not surprising that both EMC and HDS now expect pricing to gradually revert from the current 40%-45% annual decline rate to the historical norm of around 25%-35%. I also think that there is something to CPQ's observation about high-end demand. The last time EMC released data about its Symmetrix unit shipments, it indicated that 15% of its quarterly unit shipments came from SMALL Symms. 50% of quarterly unit shipments came from MEDIUM Symms and 35% came from LARGE Symms. In terms of the 8000 series, the 8230 (32GB, ~50 disk drives) would be the SMALL Symm, the 8530 (64GB, ~100 disk drives) would be the sweet spot MEDIUM Symm, and the 8830 (64GB, 384 disk drives) would be the LARGE Symm. I think EMC's Sales plummeted in 3Q01 primarily because they couldn't sell enough SMALL Symms (and Clariions) in time to make up for the deferred MEDIUM and LARGE Symm revenues which also happen to be more support and software-intensive. Averaging the shortened 3Q01 and the seasonally strong 4Q01 should give us a better idea of the kind of bottom in its business that EMC is dealing with and whether the demand for MEDIUM and LARGE Symms is starting to come back since the system sales that were deferred in 3Q01 will start to show up in 4Q01. It is clear from the way they managed the migration of their customers to ESN Manager - 8,000 licenses in less than 10 months -- that they intend to keep on using Software to lead the way now. That's good. IBM also reported that amidst Tivoli's YoY decline, Tivoli's Security products increased by more than 100% from 3Q01 to 4Q01. Tivoli's Storage Management products increased by 60% sequentially. That's very bullish for EMC Software.