Article Excerpt:
TWST: Aaron, from a business perspective, how have the storage companies done so far this year?Mr. Rakers: I think that you have a lot of mixed data points out there. Clearly, if you look at the demand perspective last quarter from some of the third party research, on an external basis, storage posted revenue growth of 8.5% year over year. There was some modest deceleration from the growth that we saw throughout 2005, and a little bit of a deceleration from the Q1 results of 10% year-over- year growth. I think that that is still relatively healthy growth in a mature market and is still a little bit ahead of my expectation of 6%-7% type growth throughout 2006. So, overall, we have seen demand relatively stable. From a vendor specific perspective, you continue to see relative momentum at Hitachi (HIT), some strength ongoing at Hewlett-Packard (HPQ), and clearly some execution hiccups at EMC (EMC) as of late, which I think will start to work themselves through in the second half of the year.
TWST: Rick, what is your take on what has gone on so far this year?
Mr. Summer: We would echo some of Aaron's comments, but we try to look at things
a bit more longer term than quarter to quarter. We believe that these
executional hiccups or missteps that we have seen at EMC aren't really
indicative of any significant changes in long-term demand. I think that most of
the great, big, iron storage vendors expect long-term demand to be in the 7%-8%
range year over year. That is something that we envision to be happening over
the next three to five years with some degree of stability. The challenge as an
analyst will be to filter out the short-term noise. For example, one of the
things that we see on the HP front is that they have been able to tighten up
their channel relationships. HP has also capitalized on a product refresh and
has seen better attach rates on server sales. Our question for a company like HP
is how they would really continue to leverage storage. Are they the next game in
town, or are we still seeing short-term market share gains from a product
refresh and operational improvements?
Tickers included in this excerpt: BRCD, CSCO, ELX, EMC, HIT, HPQ, MCDTA, NTAP, SUNW, WDC
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