Enterprise storage will become more commoditized (EMC, NTAP, VMEM)

History has a pattern of mass-market products eventually decimating low-volume high-end products.  The cost savings from economies of scale overpower the benefits of specialized solutions.  This has happened to word processing (e.g. Wang Labs), mainframes, high-end CPUs (SGI versus Intel), post production systems (ADSK, ADBE, AVID, etc.), film/video cameras, and many other industries.

Back in Dec 2012, I wrote a post on enterprise storage.  Now, I’m starting to be more confident that enterprise storage will indeed become increasingly commoditized.

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Enterprise storage stocks (EMC, NTAP, FIO, STEC, etc.)

I’ve been researching this industry.  On my first pass at it, I’m not very excited about these stocks at the moment.  I think it would be prudent to patiently wait for Mr. Market to have one of his mood swings.  Valuations are not compelling at the moment.

There is a lot of hype surrounding flash technology.  Many companies making flash-based products have very high short interest (e.g. FIO, STEC).  While these stocks will likely go down, they may not be compelling shorts due to expensive put options and high short interest affecting the borrow on the common stock.  Basically… nothing in this sector is really compelling to me at the moment.