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

To: Khris Vogel who wrote (3340)	12/7/1998 2:10:00 AM
From: Gus	Respond to of 17183

Ever since EMC became "overvalued" when it's PE exceeded its growth rate of about 35%, the chatter has been non-stop about EMC's vulnerability to "the better and cheaper box" which always seemed to be just around the corner. Against this backdrop, we had that rumor about HWP's displeasure with the terms of its reseller agreement with EMC, which Prudential broached in a research note in June or July, and now this supposed Hitachi deal. I believe the reasonable assumption to make is that the premium prices (100-200%) for EMC boxes -- which is a bit of a misnomer because of the tight integration between EMC hardware and software -- create a certain amount of tension in any reseller relationship because the more EMC charges, the less is left on the table for the reseller. So, I did not mean to convey that HWP is unhappy with EMC, but something more like it is plausible that HWP will always be angling to pry more margins out of EMC. That said, I found the G2News piece a bit weak and implausible too because it assumed that HWP could somehow protect its installed base from EMC. Put simply, EMC has the most advanced and seasoned product line out there that works with the most number of configurations of mainframe, servers and workstations. Additionally, it and its primary disk drive supplier (Seagate) have a huge headstart and influence in designing the separate network that is being developed for storage devices. I don't think even the gang that can't shoot straight at HWP would risk ending up like Sun -- the dot in com that Wintel wants to turn into an asterisk -- which is flatout losing 1 out of every 2 storage sale to EMC. As I mentioned before, it is widely believed that that trend -- the decoupling of the storage sale and the server sale -- will only accelerate as storage gets its own network.