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

To: jcmoore who wrote (3330)	12/5/1998 10:25:00 AM
From: jad	Read Replies (1) \| Respond to of 17183

As the SAN emerges, EMC's software will probably suck more functionality out of HP's and Compaq's servers and into its proprietary computers. EMC's natural allies, then, are also its natural enemies in the long term. HP is a partner now -- it resells EMC's storage computers along with its servers -- but it could be a competitor in the future if it can get its act together. from SM

To: jcmoore who wrote (3330)	12/5/1998 10:39:00 AM
From: Donaldm	Respond to of 17183

<<Somebody trying to torpedo EMC's recent upgrades>> I remember reading about this rumor awhile back. Seems like every time EMC gaps up, someone comes up with some wild rumor that is usually denied by EMC. Oh well, such is life. Donald

To: jcmoore who wrote (3330)	12/5/1998 11:38:00 AM
From: Khris Vogel	Respond to of 17183

That's probably related to the stunt Prudential pulled last summer, trying to bolster STK (a large Pru client) by starting rumors about there being problems in the EMC-HP relationship. EMC stock went down that day based on Pru's comments, but went back up the next when it was discovered that there was no validity to them. It was a major black-eye for Pru in the minds of many.

To: jcmoore who wrote (3330)	12/6/1998 7:43:00 PM
From: Gus	Read Replies (1) \| Respond to of 17183

EMC and HWP expanded their reseller relationship last May. The persistency of this rumor, however, suggests to me that HWP is clearly chafing under some of the terms of the agreement. The typical reseller (hardware and software) gross margin tops out at roughly 20% and HWP, as the largest reseller of Symmetrix, may just be trying to wrangle a few more gross margin points out of EMC, which has been enjoying the benefits of the brutal double digit quarterly decreases in component pricing (primarily disk drives and DRAMs) while reducing its prices by a leisurely 3% or so a quarter. I really don't see any reason why HWP would even consider dropping EMC. HWP, along with CPQ, DELL and IBM, control about 70% of the global server market. That position allows HWP to grab 50-60% of every storage dollar spent with every server sale. EMC, however, is the independent storage vendor that is grabbing 35% of every storage dollar sold with every server so HWP's reseller agreement with EMC allows it to profit, in varying degrees, from about 85-95% of every storage dollar. Reselling Symmetrix also allows HWP to sell ancillary services like systems integration and support -- a relatively low margin revenue stream that behaves much like an annuity stream -- that allows HWP to spread out the costs of its expensive service organization. The handwriting has been on the wall for the server vendors for the last few years. The storage sale is increasingly being decoupled from the server sale. As storage gets its own network in the enterprise, that trend can only accelerate. The way EMC is relentlessly increasing the software and services components of its business makes me confident that EMC will continue to dominate this part of the storage business with the strongest competition coming from IBM and Compaq.