Guys
I thought this was interesting and worth sharing from the immediate discussion point, related market developments as well as potential investment considerations.
We have all heard that data generation is going to go up 100x between now and 2020 and storage and bandwidth will go bananas and we have all scratched our heads about what the best way is to play this.
This short interview clip made me sit up and take notice in terms of the potential bottlenecks, the consequences and the beneficiaries. Essentially - whilst data goes up 100x, this will mean creating 20x the data that the internet can cope with storing let alone the bandwidth to traffic all this data requiring data to be processed and stored at the edge where it is generated.
https://www.cnbc.com/video/2017/10/12/pure-storage-chairman-…
or here if that doesn’t work…
https://finance.yahoo.com/video/pure-storage-chairman-explai…
Effectively whilst this is an interview about Pure Storage, it’s applicability relates to the entire sector of cloud storage as well as distributed storage at the device as opposed to simply monolithic cloud data storage. This has a really interesting implication for those that produce chips and data storage at the device/sensor end of the IoT etc - namely Micron and Nvidia etc. It also supports the investment thesis in those players that enable efficient storage, hyperconvergence and computing at the edge - namely Pure Storage, Micron and Nutanix.
It seems others are starting to put 2 and 2 together also!
https://www.benzinga.com/analyst-ratings/analyst-color/17/10…
Ant
14 Likes
Effectively whilst this is an interview about Pure Storage, it’s applicability relates to the entire sector of cloud storage as well as distributed storage at the device as opposed to simply monolithic cloud data storage. This has a really interesting implication for those that produce chips and data storage at the device/sensor end of the IoT etc - namely Micron and Nvidia etc. It also supports the investment thesis in those players that enable efficient storage, hyperconvergence and computing at the edge - namely Pure Storage, Micron and Nutanix.
Ant,
First of all, thanks. I really am interested in taking a closer look here, and I’ve sometimes tried to understand these offerings through Bert’s articles, watching videos on Youtube, combing the respective company websites. I think the fault is with me more than anything, but I usually just glaze over after a minute.
Can you say a little more about the differentiation between these products, and even more so, the services they provide after the products are purchased? I owned Pure briefly but never got comfortable. With Arista (ANET), for example, I can see that they’re totally disrupting/displacing a product with a huge TAM. It’s a little less clear to me where a leader like that may exist in this space. What happened to Micron a few years ago seems possible for any of these companies. Is there more to the story, or did Micron’s products just get temporarily passed/out-competed? Nice that they’re back…I just don’t feel like I can know when that sort of thing might happen again.
Enough rambling…I’ll let someone else talk now.
Thanks again,
Bear
Hi Bear
Yeh - I remember your dalliance with PURE Storage earlier in the year. They did ok for you but then have done even better since. I still hold.
From a high level - effectively, my take on the macro opportunity following that video clip is that the tailwind opportunities in certain spaces are going to be enormous and possibly a once in a generation opportunity to take advantage of…
Effectively what we are looking at is kind of similar to the internet 1.0 opportunity where we went from no internet to the birth of the WWW and the roll out of all of the original internet infrastructure. This gave birth to Cisco, Amazon, Google etc. Let’s remember that was an SMS text only era when web content and consumption was text based with limited functionality etc.
Since then we have had mobile advance, a shift from text to video consumption and the birth of the IoT. We will face a one time move from web connected computers and mobile internet devices (smart phones) to everything produced on planet earth being sensor/digital enabled and internet connected with Artificial Intelligence loaded on top. Once everything is hooked up to the web as smart devices that then enables everything as a service - the ongoing opportunity is just the YoY growth in output as opposed the initial smartification of everything - like going from analog to digital. So basically like Cisco’s one time opportunity to build the internet infrastructure ~Y2K with their routers etc.
Who are the certain winners in this?
Well there will be winners that are hard to guess - e.g. the internet of things device companies (Sierra Wireless vs CalAmp vs Cyprus) etc…
Then there will be certain winners where there is a total shortage of supply (during the smartification stage). By the sound of it there will be a shortage of:
- Data storage
Flash data providers e.g. Pure Storage or NetApp
Virtualisation and Hyperconvergence e.g. Nutanix or VMWare
- Internet / cloud hosting
Hosting infrastructure & Services e.g. AWS, Azure, AliBaba cloud, BOX and any Data Center REIT you care to choose (I’m in Keppel DC REIT in Singapore)
- Bandwidth & traffic management
Let’s see who wins the 5G ownership - perhaps CISCO or Qualcomm plus Verizon etc?
- At the edge processors and memory
Core building block providers where data is generated e.g. Nvidia and Micron (or ARM via Softbank)
I am in: Pure Storage, Box, Nvidia, Nutanix, Micron, Ali Baba and Keppel DC REIT (in Singapore).
I still don’t know how to play the bandwidth angle except go for the Nvidia and Micron and Nutanix that allow for at the edge computing and data storage.
Got to rush off now but let’s bat this around for a start.
Ant
8 Likes
Bear et al
This is exactly what I was referring to in terms of 'at the edge" computing requiring memory and processing at the smart device end of the IOT rather than in the cloud given that neither bandwidth or internet cloud storage will be able to cope.
It seems this is how Micron sees the world too.
https://sg.finance.yahoo.com/news/micron-accelerates-edge-st…
Cheers
Ant
2 Likes
and in case you were wondering about the rise yesterday…
http://www.barrons.com/articles/micron-zooms-as-samsung-sign…
Strong DRAM, NAND pricing seen through to end of next year and into 2019 now plus Samsung is not about to invest everything in new capacity as they are going to blow half on a dividend.
oh plus Micron is lining up deals in China to control what is going on there…
oh and private equity is taking a position in Micron
https://seekingalpha.com/news/3303377-einhorn-buyer-tpx-hpe-…
Plus plus…
https://seekingalpha.com/symbol/MU
Ant
3 Likes
Here’s another long standing holding I have (CEVA) that is pursuing the computing at the edge positioning…
https://sg.finance.yahoo.com/news/ceva-brodmann17-partner-de…
They’ve just announced market beating results…
https://seekingalpha.com/pr/16986463-ceva-inc-announces-thir…
Q3 EPS of $0.36 beats by $0.08.
Revenue of $24.04M (+34.7% Y/Y) beats by $2.49M.
SP dropped making the PE more palatable due to uncertainty around iPhone X content. If Apple really does kick Qualcomm out of the iPhone with Intel now possessing CDMA tech for its modem then CEVA should do really well out of it. Irrespective they are positioned better than ever in base stations, non-handset and the 5G revolution.
I actually sold out just before results close to the high fortuitously and may buy back in if it continues to drop more.
Ant
1 Like