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

To: Joseph Ziebarth who wrote (13774)	1/24/2002 7:53:24 PM
From: Gus	Respond to of 17183

1) Why didn't EMC bump up after the Sept. 11th demonstration of how important good data storage at another site has become. EMC warned soon after 9/11. Remember that at the end of 2Q01, they had declined to provide guidance except that the 3Q01 got off to a rockier start than 2Q01. During the CC they estimated that a surprisingly low $75M in 3Q01 revenue was deferred to 4Q01 indicating that 3Q01 was already tracking to be a $1.3B quarter, at best, even before 9/11. The numbers from Emulex (52% Q2Q increase in IBM business) and McDATA (IBM went from 14% of sales in 3Q01 to 22% of sales in 4Q01) suggest that a large part of this 3Q01 under-performance was due to IBM's ability to freeze the high-end market with its FICON introduction late in September during the first full year of its mainframe upgrade cycle which also saw a gradual compression of IT budgets throughout the year. The significance of that is that those FICON SANs also drag along larger FC SANs during a later phase of the typical SAN expansion strategy. A good example is the annual Wal-Mart drop-your-pants competition between IBM and EMC. In 2000, EMC won the Open Systems SAN (~160TB) contract while in 2001, IBM won the Mainframe SAN (~50TB) contract. While IBM did have the mainframe FICON market all to itself late last year, EMC gets to tap the larger market for a non-IBM alternative to FICON starting this quarter. 2) Why are we not seeing in the Ad's how well EMC did for their 25 or more customers they had in the Towers? I thought EMC's role was reasonably covered and understated considering the situation. SRDF is already the de facto standard for disaster recovery and it is the most popular cornerstone for the Business Continuance strategies of its partners. SRDF has 58% market share which is more than the combined market share of its next 3 competitors (19%). As you know, EMC Global Services employs a 1:4 partnership strategy, i.e., EMC tries to match $1 in in-house consulting revenue with $4 in consulting revenues for its partners so that it allows them to cast a wider and deeper net. During the CC, they indicated that gross margins on its Services revenue spiked to 58% from the normal 35% to 40% range indicating that there was a corresponding increase in activity in core infrastructure planning as a result of 9/11. This is also confirmed by Inrange's pre-annoucement and McData's 15% sequential increase in core director sales as well as a dramatic increase in the use of directors at the edge (read: infrastructure hardening). Previously also, MR indicated that prior to 9/11 European companies bought twice as many SRDF licenses as American companies and that was starting to change so while the coverage may not have been to everybody's liking, 9/11 has, in fact, opened more doors and continues to do so. For example, EMC reported that MR and JT made formal presentations to 6 or 7 Board of Directors of presumably Global 2000 companies about Disaster Recovery and Business Continuance during the last quarter. They're following that up with a webcast mid-quarter so there's a very good chance that the total number of licenses sold for SRDF will go up from the current 8,300+ number especially with next-gen SRDF (a key part of AutoIS Phase One) poised to enter the marketplace. On another note, here is EMC's last disclosure of the installed base for its top software products. My hunch is that AutoIS becomes the de facto industry standard at 10,000 to 15,000 licenses, which is well within reach as a result of its large installed base. More than 90 ISVs with more than 50 shipping products are already writing code to Symmetrix before anybody else. Even Microsoft engineers have grudgingly complimented EMC on the quality of its APIs.<g> EMC's Greatest Software Hits (1995-2001) As of Late 2001 ControlCenter* 40,000+ licenses PowerPath 38,000+ licenses Timefinder 12,000+ licenses SRDF 8,300+ licenses ESN Manager** 8,000+ licenses Symmetrix Manager installed base was migrated to CC frame. *Volume Logix installed base was migrated to ESN Manager, which is a module in the ControlCenter frame. One angle that doesn't get much coverage is that while WideSky is free, the Oracle database contemplated as being the central repository available to all storage applications from all vendors is not. EMC and Oracle already have more than 9,000 joint customers so with DBAs being as perenially scarce as they are, that's a major selling point for both EMC and Oracle. The database is the workhorse of most enterprise applications and the relationship of the database customer and the database vendor is one of the stickiest in IT.

To: Joseph Ziebarth who wrote (13774)	1/24/2002 8:10:08 PM
From: Gus	Read Replies (1) \| Respond to of 17183

REPOST1) Why didn't EMC bump up after the Sept. 11th demonstration of how important good data storage at another site has become. EMC warned soon after 9/11. Remember that at the end of 2Q01, they had declined to provide guidance except that the 3Q01 got off to a rockier start than 2Q01. During the CC they estimated that a surprisingly low $75M in 3Q01 revenue was deferred to 4Q01 indicating that 3Q01 was already tracking to be a $1.3B quarter, at best, even before 9/11. The numbers from Emulex (52% Q2Q increase in IBM business) and McDATA (IBM went from 14% of sales in 3Q01 to 22% of sales in 4Q01) suggest that a large part of this 3Q01 under-performance was due to IBM's ability to freeze the high-end market with its FICON introduction late in September during the first full year of its mainframe upgrade cycle which also saw a gradual compression of IT budgets throughout the year. The significance of that is that those FICON SANs also drag along larger FC SANs during a later phase of the typical SAN expansion strategy. A good example is the annual Wal-Mart drop-your-pants competition between IBM and EMC. In 2000, EMC won the Open Systems SAN (~160TB) contract while in 2001, IBM won the Mainframe SAN (~50TB) contract. While IBM did have the mainframe FICON market all to itself late last year, EMC gets to tap the larger market for a non-IBM alternative to FICON starting this quarter. 2) Why are we not seeing in the Ad's how well EMC did for their 25 or more customers they had in the Towers? I thought EMC's role was reasonably covered and understated considering the situation. SRDF is already the de facto standard for disaster recovery and it is the most popular cornerstone for the Business Continuance strategies of its partners. SRDF has 58% market share which is more than the combined market share of its next 3 competitors (19%). As you know, EMC Global Services employs a 1:4 partnership strategy, i.e., EMC tries to match $1 in in-house consulting revenue with $4 in consulting revenues for its partners so that it allows them to cast a wider and deeper net. During the CC, they indicated that gross margins on its Services revenue spiked to 58% from the normal 35% to 40% range indicating that there was a corresponding increase in activity in core infrastructure planning as a result of 9/11. This is also confirmed by Inrange's pre-annoucement and McData's 15% sequential increase in core director sales as well as a dramatic increase in the use of directors at the edge (read: infrastructure hardening). Previously also, MR indicated that prior to 9/11 European companies bought twice as many SRDF licenses as American companies and that was starting to change so while the coverage may not have been to everybody's liking, 9/11 has, in fact, opened more doors and continues to do so. For example, EMC reported that MR and JT made formal presentations to 6 or 7 Board of Directors of presumably Global 2000 companies about Disaster Recovery and Business Continuance during the last quarter. They're following that up with a webcast mid-quarter so there's a very good chance that the total number of licenses sold for SRDF will go up from the current 8,300+ number especially with next-gen SRDF (a key part of AutoIS Phase One) poised to enter the marketplace. On another note, here is EMC's last disclosure of the installed base for its top software products. My hunch is that AutoIS becomes the de facto industry standard at 10,000 to 15,000 licenses, which is well within reach as a result of its large installed base. More than 90 ISVs with more than 50 shipping products are already writing code to Symmetrix before anybody else. Even Microsoft engineers have grudgingly complimented EMC on the quality of its APIs.<g> EMC's Greatest Software Hits (1995-2001) As of Late 2001 ControlCenter* 40,000+ licenses PowerPath 38,000+ licenses Timefinder 12,000+ licenses SRDF 8,300+ licenses ESN Manager** 8,000+ licenses Symmetrix Manager installed base was migrated to CC frame. *Volume Logix installed base was migrated to ESN Manager, which is a module in the ControlCenter frame. One angle that doesn't get much coverage is that while WideSky is free, the Oracle database contemplated as being the central repository available to all storage applications from all vendors is not. EMC and Oracle already have more than 9,000 joint customers so with DBAs being as perenially scarce as they are, that's a major selling point for both EMC and Oracle. The database is the workhorse of most enterprise applications and the relationship of the database customer and the database vendor is one of the stickiest in IT.