EMC chief sees HP/Compaq storage falling behind

EMC chief sees HP/Compaq storage falling behind

The fate of storage technology from a combined Hewlett-Packard/Compaq Computer, the evolution of EMC as a storage software company, and outsourcing were on the mind of EMC Executive Chairman Mike Ruettgers during a group question and answer session here Wednesday at the Storage Management 2002 conference.

As the merger of Hewlett-Packard (HP) and Compaq begins to look more and more like a reality, Ruettgers said that HP "hasn't been as much of a factor as Compaq" in the storage market. But he said both HP and Compaq stand to lose ground against their storage competitors in the wake of the merger. Ruettgers said that for HP/Compaq, the distraction of having huge, impending layoffs as a result of the merger will apply drag to HP/Compaq's innovation, ultimately leaving them behind the storage technology curve.

"After [the merger], much of the technology will be obsolete in both HP and Compaq," said Ruettgers.

The merger was just one topic touched on by Ruettgers. At last year's Storage Management conference here, EMC CEO Joe Tucci came under fire for what attendees then claimed was arrogance on the part of EMC's historically aggressive sales force. Addressing that, Ruettgers said EMC has tightened its customer focus and has worked with its sales staff to temper any behavior that could be perceived as arrogant.

"We've tried to point out that there is a thin line between confidence and arrogance," said Ruettgers. "And we've spent a lot of time trying to reinforce that."

During the last few years, EMC has been morphing itself from a provider of enterprise storage hardware to a storage software and service company. This trend will continue, said Ruettgers, to the point that within the next year or so storage hardware will be only half of EMC's business. Of the remaining 50 percent of EMC, 30 percent will be storage software, while 20 percent will concentrate on storage services, said Ruettgers.

EMC's record of company acquisitions reflects this shift to storage software, said Ruettgers.

"With the exception of our Data General acquisition, which we did [to obtain hardware for] the Clariion product line, all of our acquisitions have been software," he said.

Pondering the recognized demise and current ambiguity of the SSP (storage service provider) model, Ruettgers said SSPs were more appropriate during the dot-com days and that SSPs are currently in the process of redefining their place in the storage industry.

Ruettgers did, however, point to the combination of storage and application outsourcing as a way to capitalize on storage outsourcing today.

"You know who the biggest ASP in the world is?" asked Ruettgers to an audience unwilling to take a stab at the answer.

"ADP [Automatic Data Processing]," Ruettgers answered himself, naming the Roseland, N.J.-based payroll and transaction processing giant.

"ADP outsources storage with the outsourcing of payroll. And storage being outsourced as part of application outsourcing makes sense," he said.

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