>> .. network attached storage ... <<
From todays Investors Business Daily:
NETWORK APPLIANCE INC. Santa Rosa,
California Helping Computer Users Avoid
Busy Signals
Date: 10/8/98
Author: Alan R. Elliott
''We're temporarily unable to access the information you've requested.
Please try again later.''
That on-screen message is the Internet's busy signal. It usually means
computers called network servers are overloaded with information
requests. And as more users crowd the Internet, the message is becoming more familiar.
Network Appliance Inc. may be selling some relief. The company makes
information storage devices designed to free up network servers. These
disk-drive devices handle information requests made over the Internet and company networks. Called network-attached storage, they boost server performance and user access to data.
''The basic concept of network- attached storage is, instead of having a hard disk directly attached to your local system, you move the disks out onto the network,'' said David Hitz, Network Appliance's co-founder and director of systems architecture.
The technology has made the company's client list a who's who of the
high-tech industry. Apple Computer Inc., Netscape Communications
Corp., America Online Inc. and Hewlett-Packard Co. are just a few
customers.
Originally, Hitz had geared the devices toward less ambitious clients.
''Our first products were low-end to midrange products,'' he said. ''We thought we would be selling them more to small offices. We certainly weren't targeting the Fortune 500.''
But engineering firms started using the products as high-performance
network add-ons. Then high-tech companies adopted them to speed
complex processes, such as chip design. That's when sales began to take off.
''We discovered that the torage) boxes, using this appliance approach,
were extremely fast,'' Hitz said. ''That really pushed us upscale very
quickly.''
Network Appliance's products cost $30,000 to $500,000. An average
sale is $100,000. What that buys is an appliance, about the size of a
breadbox, that stores vast amounts of information.
''When we first shipped our product in '93, we supported seven gigabytes (of storage),'' Hitz said. ''By '96 that had gone to 200 gigabytes, and in the past two years, it's gone to 1.5 terabytes.'' A terabyte is a thousand gigabytes, or about 26 million pages of print.
While increasing capacity, Network Appliance has also boosted the speed of its products. Its original systems could perform 400 operations per second. ''Our systems today can do about 7,500 operations per second,'' Hitz said.
The systems manage information without the help of the network server. To do this, they employ a slimmed-down computer called a file server. The file server handles all the hunting, sorting and sending of files while the main server busies itself with more complex processes.
Besides saving time, the file servers let companies expand their storage without buying more server capacity, says analyst Mark Kelleher of Tucker Anthony Inc. in Boston.
''You can put as many storage devices on the network as you want without adding an additional server,'' he said. Servers can cost hundreds of thousands of dollars and are often difficult to install.
These advantages - and exploding demand for increased storage capacity - have helped the company attract more than high-tech companies. Its
customer base includes names as diverse as NASA, Glaxo Wellcome
PLC, Bear Stearns Cos. and Mack Trucks Inc., a unit of Renault S.A.
Analysts expect Network Appliance's earnings to rise 48% to 86 cents a
share in fiscal '99 ending April 30, First Call says.
In the July 31 first quarter, earnings rose 58% to 19 cents a share. Revenue climbed 72% to $57.3 million. The company trades as NTAP.
The market for network storage devices is growing upwards of 40% a
year, says Los Altos, Calif.-based Collaborative Research. U.S. sales are expected to exceed $9.7 billion this year and $28 billion by '01.
The fastest- growing niche is network caching. Caches store frequently
requested information at various points in the network. Subsequent
requests for cached files don't travel as far and place no demand on file servers. That means less wait time and more room on the network.
Network Appliance's NetCache products, launched last December,
account for less than 5% of sales. But the market for caching products
should mushroom to $4 billion by '01, up from $50 million in '97,
Collaborative Research says. And the company is expanding its sales force to meet increasing demand.
For now Network Appliance faces limited competition, Kelleher says:
''There is nobody else who has spent the time to develop a file manager system.''
The company's closest rival is Auspex Systems Inc. Auspex traditionally targeted higher-end storage markets, but is losing share to Network Appliance's higher-capacity systems.
Larger companies will likely enter the network storage device arena. But it will take two years for anyone to develop a competitive product, Kelleher says.
(C) Copyright 1998 Investors Business Daily, Inc.
see:
investors.com
As usual, much gratitude and salutations for IBD's web access to their newspaper. I am impressed by the projections of market growth rates and the two year barrier to entry. Since this is NET driven, it is somewhat immunized from a recession.I have in mind the DataDock 7000 line from MicroNet on the middle end.
Thar acquisition warchest has increased about 3? fold in it's value. We are looking at a severe credit crunch, for small businesses, and should expect to hear some real loud groans in about 3 months. Waiting a little longer will produce even better values. In the meanwhile, the funds can provide working capital, which depending, can be very valuable also.
Incidentally, given the immediate market circumstance, an opportunistic strategy is better than a planned one.
Ed Perry |
