Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Epic Growth /
Big Numbers - Really, Really Big Numbers
IceWEB Inc. (OTCPK:IWEB) OTCBB
Remember Carl Sagan, astrophysicist and cosmologist, who years ago spoke to us of unfathomable numbers in his big, smiling and engaging way, referencing the "billions upon billions" of stars? I recall the appealing way his mouth moved when he articulated the mention. Dr. Sagan said, "The total number of stars in the universe is greater than all the grains of sand on all the beaches of the planet Earth". He thought there might be 100 billion galaxies out there; that was 15 or 20 years ago. Now the new data from the Hubble Space Telescope suggests 'that' was a lowball call. In any event preposterously big numbers are now in today's current lexicon.
Now wrap our head around the data explosion with numbers of intergalactic proportions that resonate in the data storage space. Let's open up our minds to the mushrooming necessities of managing today's data explosion. Consider that with a 61.4% CAGR (per IDC) no corporate sector as large has ever grown as fast (with no end in sight) as data storage even in this economic downturn.
Data is ubiquitous, increasing by astronomic, nearly incomprehensible measures and it's coming in at the hyper velocity (about 2,000 photos are uploaded to Facebook every second), and it's stored somewhere, needing to be tracked, backed up, retrievable, always on call. Now referred to in the trade as "Big Data" the volume of that digital content is thought by IDC to expand by 50X by 2020. Consider the challenges in dealing with 'its' capture, storage, and analysis in a way that's manageable and affordable.
Now a water shed event has stunned the data storage industry. On May 24th "tiny" IceWEB Inc. (IWEB) announced that it has won the Storage Hardware Product of the Year Award. * That's over the data storage monsters IBM, EMC, HP, DELL, NTAP etc.!
The win isn't the first defeat that (OTCPK:IWEB) has meted-out to the big players; (OTCPK:IWEB) won the #1 ranking in the DCIG 2012 Midrange Array Buyer's Guide. (Again, another win over EMC, NTAP, IBM, HP, et al.).
IDC estimates the sharpest growth in storage capacity will come from organizations described as "content depots." Examples of content depots include: Google, Amazon, Facebook, Twitter and YouTube.
Storage consumption from these organizations will grow at a compound annual growth rate of 91.8% through 2012. In the Investor Business Daily tracking of 197 industry groups the Data Storage sector has consistently remained near the top over the last year.
Surprisingly the biggest growth now and going forward is thought to be in the Small and Medium Business [SMB] arena where (OTCPK:IWEB) is now "the" player with the best product at the lowest price. Here is some fresh analyst** data focused specifically on the SMB space and its astonishing growth trend.
· 49% of SMB companies plan to purchase or upgrade Storage/SAN/NAS in the next 6 months.
· Virtualization adoption grew 18% over the past year among SMBs and will grow another 13% in the next 6 months.
· 48% of SMBs are using cloud services today, estimated to reach 62% over the next six months.
· 12% of SMBs plan to implement cloud storage in the next six months
NBT Equities Research said recently re (IWEB):
"Bottom-line...with the new distribution deals IceWeb has recently put in place...with the new deal they have with one of the hottest cloud technology companies on the planet - Fusion-io (NYSE:FIO), with new deals coming with ALL the major petabyte-a-day storage creators and private datacenters (the Amazons, Facebooks, AOLs, Verizons of the world) Ice Web is almost magically in the right place with the exactly right product at the right time."
Also from NBT Equities:
"The fact that there is feeding frenzy of buy-outs in this space makes IceWeb and its lowest cost / highest performance open source storage software/hardware solution a prime take out play-in our mind the only question is, WHEN not IF."
If I am right in my analysis just the name of one of the major "content depots" mentioned above and are testing (OTCPK:IWEB)'s products (and I believe there are more than one) would ignite a fury of buying in the shares. Thus, IceWEB looks to be a new player offering their best and least expensive wares to the premier "content depot" organizations. This is obviously going to get mighty interesting.
Just some of the recent $6billion 'plus' in deals:
· EMC buys Data Domain for $2.1 billion
· EMC buys XtremIO for $450 million
· Oracle buys Pillar for $500 million+
· NetApp buys Engenio for $480 million
· Dell buys AppAsure for undisclosed $
· Dell buys Compellent for $960 million
· Dell buys Equillogix for $1.4 billion
· HP buys LeftHand for $360 million
These acquisitions have been priced at exceptionally high multiples of revenue, some as high as 6 to 8 X revenue; this makes the IceWeb shares even more compelling.
There have been over $6 billion in merger and acquisition deals inked in the data storage hardware and software space in the last few years. The trend has been when the big companies validate the advancement in technology and software of the smaller companies the big guys follow with original equipment manufacturing licensing agreements and buyouts. When revenues ramp quickly in these small co's the larger companies look to acquire them.
I agree with NBT Equities: (IWEB) is a sure shot acquisition target!
Ponder this: (OTCPK:IWEB)'s market-cap is an infinitesimal $21 million. (NYSE:IBM)'s is $222 billion, (EMC)'s $51 billion, Hewlett-Packard (NYSE:HP)'s $42 billion, (NYSE:DELL)'s $20billion, and NetApp (NASDAQ:NTAP)'s is $10 billion. Hard to believe but (OTCPK:IWEB) - nearly 7,800 times smaller than IBM decisively defeats the huge established legacy players.
The (OTCPK:IWEB) product mix sells at a fraction of the cost of the competition, at a price point that is consistently 30% lower than the high cost vendors such as EMC and NetApp. (OTCPK:IWEB) also includes an "all inclusive feature set" - you buy [it] you get all their cool features... unlike any vendors that I know of in this space...
Here's the short but impactful (OTCPK:IWEB) story. The company has built an award-winning family of high performance data storage array products with enterprise-class features and performance capabilities that are sold at a fraction of the price of traditional providers. Exceptional new management and marketing hires have brought added quality and dynamism to the storyline. Revenue is surging. And now the market is discovering it and new orders are pouring in, as the recent press releases demonstrate. And micro-cap (OTCPK:IWEB) has the best and least expensive product. Truly astonishing!
(OTCPK:IWEB) has an unbeatable sales offering that a growing list of premier customers have selected, which speaks to the quality of its product line and all-inclusive service: the U.S. Army, The Department of Defense, the US Geological Survey, as well as multiple local and county governments, plus Google and Cisco… A steady stream of sizeable orders from mid-to-large commercial and public sector customers have selected (OTCPK:IWEB)'s products. Last month, (OTCPK:IWEB) announced that one of the world's largest electronics manufacturers, a Global 50' Enterprise Corporation, (rumored on the web to be Samsung) has purchased a high performance IceWEB 7000 data storage system to upgrade its supercomputing environment.
Also noteworthy: Yesterday (OTCPK:IWEB) announced IceKAST On-Demand, an e-learning portal demonstrating the rich, powerful, yet intuitive and easy-to-use IceSTORM Operating System which IceWEB ships at no additional cost with its hardware (which is yet another competitive differentiator in and of itself).
Item of note: I heard a while back that the manual for a Boeing 767 (if it were in a paper format) would weigh more than the 767.
In IDC's TOP 10 PREDICTIONS for 2012 they opined that, "Worldwide IT Spending on public and private cloud services, and the building of those services (the "cloud arms dealer" opportunity), will reach $60 billion growing at 6.9%, over 2011, surprisingly solid growth in a fragile, recovering economy." For the IDC report go here.
* The finalists in the DataCentre Storage Product of the Year competition won by (OTCPK:IWEB) were voted on by the IT community in a strict voting process limited to businesses with knowledge and familiarity of the data storage industry. To see the press release go here.
** The survey was conducted by Spiceworks, an online community of more than 1.9 million IT users in SMB organizations. The report is called "The State of SMB IT Report". To download go here.
I call (OTCPK:IWEB) my "Turnaround Stock of the Year" and I see fat multi-bag potential for the shares of this little company.