Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Analog Kid who wrote (3265)	11/20/1998 1:49:00 AM
From: Gus	Read Replies (4) \| Respond to of 17183

I checked the website. Datacore believes that they can replace the most expensive parts of the typical high-end RAID box like Symmetrix with an off the shelf solution using Intel processors and Windows software. The thing is a box like Symmetrix was designed to handle mainframe data, UNIX data and NT data. While you only have a single platform for NT, and a relative handful mainframe platforms, you have something like 25+ variants of UNIX each of which has to be tweaked to work with the hardware. What ultimately earns EMC the premiums it generates for its products is not so much the systems design and the software hardwired into the firmware and the microcontroller (all of which combine to create a topnotch, platform independent AND field proven product line that is widely considered to be at least a year ahead of the competition), but the software that layers on top of the box. Per Merril Lynch, the installed base for Symmetrix is something like 17,000. The current annual revenue run rate for the software biz of a little over $400 million represents a penetration rate of only 25% of that installed base. These apps run best on EMC boxes and a reasonable assumption can be made that as these large MIS shops work through their transitional issues (Y2K, SANs, Euro, etc) they will buy the software that will allow them to manage their rapidly mushrooming (100% annual growth rate at the big shops) storage resources. EMC is heavily owned by institutions and one thing that stands out from the analyses I follow (Morgan Stanley, Merril Lynch and SSB) is that the company is operating on all cylinders on the hardware side with the software side of the biz coming on very strong and a promising services group continuing to develop. Software is ultimately what will allow EMC to be successful as it develops storage subsystems targeted at the booming NT market. About the only quibble I have with EMC's biz model is that they have shown no interest to date of increasing what seems to be a token presence in the lucrative backup market (1997 figures: $5.1 billion market in tape drives, $2 billion market in tape libraries, $2.1 billion market in services). Compaq and Dell are offering end to end NT storage solutions (fixed disk storage + removable tape backup + software + systems integration/support) and that may ultimately force EMC to enter this market. Backup is a biz that levers very easily off EMC's existing marketing and support organization. EMC certainly has the currency(cash, stock) to increase this part of its business substantially on its way to becoming a company with $10 billion in revenues. Gus