Summary
PMC-Sierra's new 6Gb/s SAS chipset is only part of the reason that PMC-Sierra is on the upswing. The real reasons start with the 'blink' factor and Cisco, HP, IBM, Oracle, Sun, Brocade, ATT and many others. Who would blink first and shift between the competitor vs vendor categories.
Analysis
The astounding rise in PMC-Sierra's stock price is driven by much more than the release of a faster RAID chipset.
In the past, it was easy to place a major company in a particular category or market like telecom, data center, system integrators, etc.:
- Network Vendors - Cisco, Alcatel-Lucent, Nortel...
- Server Vendors - HP, IBM, Dell...
- Storage Vendors - EMC, NetApp...
- Telecom Providers - ATT, Verizon...
- System Integrators - IBM, Accenture, CapGemini...
The world has changed in the last six months. I have been waiting for the last five years for someone to 'blink' and start competing against their vendors and customers. Oracle blinked and bought Sun. Cisco blinked and entered the enterprise server market. And now the shifts are occuring at lighting speed as companies realign with new partners, make new acquisitions and enter new markets.
The key market of the hour is the data center. This includes outsourcing, cloud computing, consolidation, virtualization, deduplication and many other buzz words du jour.
And now there is a perfect storm in the storage arena. In-line deduplication combined with raid-on-a-chip combined with solid state drives allow data to move almost as fast outside the processor as inside. Virtualization allows maximum usage and sharing of processor and storage resources. Cloud computing allows sales to new customers that could afford the old data center models. Software as a Service allows utilization of best of breed (or good enough) platforms by customers who previously couldn't afford to utilize packages like ERP.
The changes that are coming:
1) Acquisitions by major system integrators of companies in the deduplication, virtualization, storage management arenas.
2) Rise of software companies that are not best of breed in the large enterprise space, but are 'good enough' in the SMB space.
3) Attacks on markets that were traditionally hard to attack. SMB's, remote globals.
4) More major shifts by companies like HP, IBM, Cisco, Dell.
5) Explosion of Software as a Service.
