Growth in Fundamental Data Demand and the Rise of the Public Cloud: A Wall Street Transcript Interview with Amit Daryanani, Equity Analyst at RBC Capital Markets

Wall Street Transcript

67 WALL STREET, New York - September 18, 2013 - The Wall Street Transcript has just published its Data Hosting Centers and Data Storage Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Data Hosting Centers - Flash Memory - Cloud Computing Secular Trends - Data Center REITs - Colocation, Managed Hosting and Cloud Computing - International Enterprise and Consumer Demand

Companies include: EMC Corporation (EMC), NetApp, Inc. (NTAP), Hewlett-Packard Company (HPQ), Dell Inc. (DELL), International Business Machine (IBM), Western Digital Corp. (WDC), Seagate Technology (STX), Tyco Electronics, Ltd. (TEL), Amphenol Corporation (APH), Flextronics International Ltd. (FLEX), Jabil Circuit Inc. (JBL), Amazon.com Inc. (AMZN), Microsoft Corporation (MSFT), VMware, Inc. (VMW), Oracle Corp. (ORCL), STEC, Inc. (STEC) and many more.

In the following excerpt from the Data Hosting Centers and Data Storage Report, an expert analyst discusses the outlook for the sector for investors:

TWST: In terms of the data storage space and related companies, what are you seeing in demand and pricing trends?

Mr. Daryanani: Fundamental demand the way we look at it, which is the raw amount of data that's getting created, really continues to grow at a very robust pace. The last set of numbers we've seen show raw data creation is growing at about a 50% to 55% clip annually, and that's by things like using Facebook (FB), YouTube, and on the work side with e-mails and databases and so on. So I would say the raw data creation continues to remain fairly strong.

The dynamic that is occurring is where the data is getting stored and how it is getting stored is under change. Traditionally on the enterprise side it used to be EMC and NetApp and the server guys would have the storage array where they store the data. You are starting to see, while it's nascent right now, the growth of the public cloud option, so things like Amazon Web Services (AMZN) or Microsoft Azure (MSFT) are starting to become an alternative way to store data for SMBs and certain larger enterprises as well.

TWST: How are the broader industry trends translating to stock valuations and investor interest today?

Mr. Daryanani: I'd look at it in two different ways: One is the traditional data storage companies that I cover, like EMC and NetApp, and the other would be the hard disk drive companies like Western Digital and Seagate. With the traditional data storage companies, EMC and NetApp, everyone is very cognizant of this secular growth in data being a tailwind.

The investor concern has started to come up to the extent that maybe that data won't be stored in a EMC or NTAP storage array, but end up getting stored in Amazon Web Services or a public cloud that doesn't really use the traditional EMC or NetApp boxes. That's probably the one negative or concern, if you will, on the traditional data storage companies...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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