Hal, dude! Thanks for the compliment. Let me know when you finally make the move to the South Carolina border and get back to the market. I've made money swapping stock and bond ideas with you.
Would you believe I still think NENG is cheap, Hal? NENG currently has a market cap of around $190M vs a current run rate of $108M or a forward PSR of only 1.76, which is kinda' low for a company fully capable of growing at triple digit rates for at least the next two years.
Centera supplies EMC with the storage nodes for Centera. Each node currently consists of 1 Pentium III processor (1Ghz), 4 IDE disk drives (250GB) and 3 NICs (network interface cards) in a form factor that was good enough for IBM to license for $5.5M a few years ago.
Centera v2.0 (introduced 4/2003) is currently selling better than Centera v1.0 (introduced 4/2002) and it already looks like Centera version 3.0 (4/2004?) will sell even better than Centera v2.0. Right now, for example, Maxtor is really the only disk drive vendor supplying the ATA-based drives which are based on the same kind of IDE disk drives used in PCs and laptops. By this time next year, however, all the three US vendors (and possibly Hitachi) will be shipping serial ATA-drives which will be faster, cheaper and better the current ATA drives, further driving down the entry-level cost of Centera.
Legato's technical roadmap for the next 12 months also provides some ideas of where EMC may be going with their recently announced tape library project. The proposed Legato gateway for Centera, for example, allows customers to switch effortlessly back and forth from backup (disk) to passive archiving (tape) to active archiving (disk), further improving the already compelling value proposition of Centera.
For example, the average deal size for a Documentum ECM platform is around $300,000. The current list price for an entry-level Centera is around $148,000 for 4TB (protected).
The combined solution is a big ticket item that would seem to be easily justifiable even with the addition of, say, an $85,000 entry-level tape library from ADIC because of the major business process improvements made possible. I think EMC leaves some Centera disk sales on the table but gains more Centera/Legato software sales in return in addition to further improving the value proposition of ControlCenter.
Of course, if IBM ever decides to license EMC's Centera Software and also uses NENG to supply them with the nodes then.......<g> Documentum, IBM and Filenet are the top 3 players in an early stage content management market that was only $1B in size last year. That's small considering that unstructured data may currently account for more than 85% of all data dispered throughout the typical organization.
August 18, 2003
Legato Upgrades on the Way
By Evan Koblentz
Legato Systems Inc. plans to upgrade several products later this year and next year, separate from its pending acquisition by and integration with EMC Corp., officials said recently.
EMC announced the $1.3 billion buyout last month; it is slated to close by year's end. The flagship Legato Networker backup software will gain new features tailored for EMC's storage and ControlCenter software, with other Legato products remaining hardware-agnostic, officials said.
Legato's own plans focus on tape and library management, middleware for object-based storage, a partnership with IBM, and the use of standards-based code for more interoperability, Chief Technology Officer George Symons said.
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AlphaStor, Legato's software for tape and library management, in the first half of next year will also be able to control tape devices linked to DiskXtender, which conducts HSM (hierarchical storage management). HSM intelligently moves lower-priority data to less costly storage, freeing up primary capacity. By doing so via AlphaStor, users can now have primary and HSM data sharing parts of the same library.
Legato, of Mountain View, Calif., is also building a backup gateway for EMC's Centera product. Centera uses object-based software and inexpensive desktop-class drives to store data that is frequently accessed but rarely changes, doing so much faster than tapes could. The gateway, essentially middleware, is suited for snapshot functions and is based on lessons learned from Legato's own Centera ports, which were troublesome, Symons said earlier this year. Its overlap with EMC's current Centera Application Gateway, from Storigen Systems Inc., in Lowell, Mass., remains unclear.
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Legato's 12-Month Road Map
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Legato also plans to soon enter a resale agreement with IBM, which has a good relationship with EMC, said Joe Tucci, EMC's president and CEO.</font> In that deal, IBM, in Armonk, N.Y., will sell Legato's replication software, called RepliStor, and high-availability software, known as Co-StandbyServer AAdvanced. IBM officials were not available for comment.
Also, Legato's Symons shed light on Networker. Regarding the evolving Storage Management Initiative 1.0, which is a de facto management standard due for completion by the Storage Networking Industry Association late this year, "we're looking more towards the middle of next year to put out a commercial product with it. It's targeted around using SMI for snapshot interfaces," he said.
EMC officials recently announced SMI support for the high-end Symmetrix and midrange Clariion storage families, due by the end of this year. But the SNIA specification has had its share of bugs, and many vendors said they plan to wait for Version 1.1, due in early to mid-2004.
David Herrmann, Novell systems network and backup system administrator at Delta Faucet Co., in Indianapolis, recently switched from IBM storage to an EMC Clariion system. Legato's software works well for Unix but could use more support for Intel Corp. and Windows environments, including tape booting, Herrmann said. Regarding the merger, he said, "We hope things will work to our benefit as we move forward and expand."
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