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Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (10181)	5/20/2002 9:03:07 AM
From: riposte	Read Replies (1) \| Respond to of 10934

re: EMC v. NTAP posting Jake - That was an interesting post over there. He's got some very valid points; IMHO, the Microsoft issue will be quite major in the future. One minor point he misses, as he talks about market share, is that the entire pie is also simultaneously increasing, which allows the potential for many players to grow, even if their overall percentage is declining. He also ignores NetApp's efforts to connect NAS with SANs. Clearly, they understand how the two areas are consolidating. Finally there's also the issue of what you're measuring when determining percentage. It is total $ spent, unit shipped, or perhaps bytes shipped? Which number you cite depends upon which way you want to spin the story. The following article, from SearchStorage.com, punches one or two holes in his arguments regarding EMC's "dominance". EMC ousts NetApp from top NAS spot -- sort of By Kevin Komiega, Assistant News Editor 15 May 2002, SearchStorage Move over Dan Aykroyd and Eddie Murphy. EMC Corp., and Network Appliance Inc., are trading places. According to a report from Gartner Inc., EMC and NetApp swapped spots in the network-attached storage market from 2000 to 2001. In 2000, NetApp held the lion's share of the market with 49.8% to EMC's 36.3%. But in 2001, EMC grabbed 48.6% of the NAS market while NetApp fell to 35%, according to Gartner. EMC recorded NAS revenues of $786 million in 2001, $262 million more than in 2000. NetApp saw sales slow in 2001, reporting $566 million, versus its $720 million tally in 2000. A market shift is partly to blame for NetApp's slowing sales. Much of the company's target customer base was made up of high-tech startups, many of which suffered budget-tightening or total collapse. Pushan Rinnen, senior analyst for Gartner Dataquest said that 2001 was the first full year that EMC really pushed its NAS sales, but an argument can be made that EMC's numbers are somewhat subjective. Since EMC's Symmetrix can house NAS, direct-attached and storage area network configurations, it is hard to determine what portion of Symmetrix revenues can be attributed to NAS. "EMC couldn't provide that kind of information because it's based on each user's configuration," said Rinnen. When EMC received an order for the Celerra File Server as part of a Symmetrix configuration, it considered Symmetrix as part of the NAS revenue, she said. Upshot: The total revenue from the sale of the Symmetrix would be counted as NAS revenue, and vice versa. "That could be questionable," she said. Rinnen said Gartner worked closely with EMC to clear the confusion and avoid duplicating SAN and NAS results. Gartner maintains that there is no clear cut way to separate EMC's numbers, unlike filers from NetApp which are pure NAS. As one would imagine, NetApp disputed the report, stating that the numbers are not verifiable. Kris Newton, analyst relations manager for NetApp said Gartner only reports on hardware revenue and NetApp believes the real benefit of NAS lies in software. "We use commodity, off-the-shelf hardware and add our software," said Newton. NetApp said its strength is in the other numbers. For example, NetApp shipped more petabytes of NAS storage in 2001 -- 9.7Petabytes compared to EMC's 3.5 Petabytes. Newton also said NetApp shipped 5400 units versus 1900 from EMC. Newton added that EMC charges approximately four-times as much per M Byte for its NAS hardware. NetApp is charged 6 cents per M Byte in 2001. On a related note, NetApp reported its results for the fourth quarter and fiscal year 2002 on Tuesday. Revenues for the fourth fiscal quarter were $204.9 million, compared to revenues of $225.8 million for the same period a year ago. Overall revenues for the fiscal year 2002 totaled $798.4 million, compared to revenue of $1 billion for fiscal year 2001. EMC and NetApp were followed by Quantum Corp., Dell Computer Corp., and Maxtor Corp., as the top five NAS-sellers in 2001. URL: searchstorage.techtarget.com

To: JakeStraw who wrote (10181)	5/20/2002 1:02:20 PM
From: Jacob Snyder	Respond to of 10934

Gus is a very smart guy, and he can talk the tech talk a lot better than I can, but he is not objective. I don't think I've ever heard him say anything negative about EMC, or anything positive about NTAP. In their last earnings reports, EMC had falling QOQ sales, while NTAP's sales went up a bit. NTAP continues to maintain gross margins far higher than EMC. Comparing their peak quarterly sales numbers to the latest reports: EMC: 2.62B to 1.30 = 50% decline NTAP: 288M to 205M = 29% decline If EMC were gaining market share, as NAS and SAN converge, then why are they posting those numbers, numbers that clearly show NTAP's business is holding up much better than EMC's? If EMC was successfully making the transition to being a software company, then why are their margins so low? Software is a higher-margin item than anything else EMC or NTAP does. It's clear to me, looking at the numbers, that EMC has sacrificed profitability, in an unsuccessfull attempt to hold onto market share. Their business model, till recently, did not include competing on price, and they seem to be floundering in the current market environment. Gus can claim this isn't true, but their results show otherwise. Disclosure: I'm very long both these stocks.

To: JakeStraw who wrote (10181)	5/20/2002 3:55:22 PM
From: BirdDog	Read Replies (1) \| Respond to of 10934

Gus is definitely an EMC perma-psycho-bull. He always has a twisted view of reality when it comes to emc. I wouldn't be surprised if it were found out that he is an emc employee paid to post here. The worst thing he ignores is the fact that ntap now can and does deliver blocks of data if the customer wants it. BTW: Delivering blocks of data versus files is the basic difference between SAN and NAS. The funniest thing he said was about ntap pushing this NAS SAN convergence themselves. When in fact the entire industry, including EMC has been talking about it. EMC's only problem is they can't come up with anything decent for this convergence. I won't bother to go point to point through the holes in his post. BirdDog@Prairie.com