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To: D. Swiss who wrote (33303)	9/23/1998 11:52:00 AM
From: rudedog	Read Replies (2) \| Respond to of 97611

Drew - Dell is just starting to get into the storage business now and only began in the server business 1 - 1/2 years ago. That is exactly why the growth numbers look good. Dell showed the typical rapid growth from entry into a new market. If they sold 1 unit in 4Q96 and 3 units in 1Q97, that would be 300% growth but not much of a competitive threat. Their server and workstation sales are now maturing, and I believe they will stabilize at around 50% per year this quarter or next quarter. The year over year numbers will still look good because they are compared against a low base (Dell's entry level numbers). Dell's high end storage business represents about 20% of DG Clariion's business, based on statements from both Dell and DG executives. DG's total Clariion business is less than $600M, so Dell could be doing maybe $120M. That's good for an entry position, but compare that to CPQ, which does nearly $8B in high end storage. This is actually good for Dell from a PR perspective (and a real business case) since they have such a small presence that they can gain rapidly, given their marketing clout. But they could grow this business at 200% per year for several years and still not be on the radar screen with the big boys. Once these segments mature, Dell will be playing against very securely entrenched competitors (IBM. CPQ and EMC) with the huge engineering clout that it takes to win in this space. They will need more than good marketing to maintain 50% growth.