Software-Defined Storage Vendors Create Hardware Commoditization and Bearish Sentiment in Computer IT Sector: A Wall Street Transcript Interview with Andrew Nowinski, Vice President and Senior Research Analyst with Piper Jaffray & Co.

Wall Street Transcript

67 WALL STREET, New York - February 17, 2014 - 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, Equity Analysts and Money Managers. 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 - Mobile Computing - Infrastructure Upgrades and Consolidation Activity

Companies include: CommVault Systems, Inc. (CVLT), Seagate Technology (STX), Western Digital Corp. (WDC), Mellanox Technologies, Ltd. (MLNX), Brocade Communications Systems (BRCD), EMC Corporation (EMC), NetApp, Inc. (NTAP), Rackspace Hosting, Inc (RAX), Equinix Inc. (EQIX), Amazon.com Inc. (AMZN), Gartner Inc. (IT), Intel Corporation (INTC), Emulex Corp. (ELX), QLogic Corp. (QLGC), Xyratex Ltd. (XRTX), STEC, Inc. (STEC), International Business Machine (IBM) and many others.

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: Let's start with a refresher on your coverage universe.

Mr. Nowinski: My coverage universe has not changed much since the last time we spoke, about six months ago. To recap, my coverage universe spans across the entire value chain in the storage market, ranging from software vendors like CommVault (CVLT); to component vendors like Seagate (STX), Western Digital (WDC) and Fusion-io (FIO); to networking vendors like Mellanox (MLNX) and Brocade (BRCD); the system vendors such as EMC (EMC) and NetApp (NTAP); and then I also cover the data center hosting providers, which includes coverage of Rackspace (RAX), Equinix (EQIX) and others.

TWST: That is a range of companies, but how would you describe overall investor sentiment right now in the space?

Mr. Nowinski: Investor sentiment on the storage sector is actually pretty bearish. Investors are concerned that the public cloud providers are creating headwinds for the storage hardware vendors. Additionally, investors are concerned with an emerging threat from software-defined storage vendors essentially commoditizing these storage hardware vendors.

Sentiment regarding the data center hosting providers is also not much better. There is certainly significant concern regarding an oversupply of capacity in the colocation and the managed hosting markets, and additionally many investors believe the public cloud market is entirely Amazon's (AMZN) for the taking, leaving little opportunity for the other cloud providers.

TWST: Did any particular highlights or themes from the most recent earnings report stand out for you, and what will you be paying attention to in the next round?

Mr. Nowinski: EMC guided modestly below consensus, implying roughly 3% growth in the storage market. Gartner (IT) had just forecasted that market to grow about 4% in 2014, with most of the incremental growth coming from APAC and EMEA. EMC seems to think that the demand environment will be slightly more muted this year.

Additionally...

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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