EMC looks to software and services to power turnaround

EMC looks to software and services to power turnaround

EMC wantsto "take a little bit of a page from IBM's book" and position itself as an end-to-end provider of hardware, software and services to meet all of its customers' storage needs, according to chief executive officer, Joe Tucci.

He was speaking at EMC's annual strategy briefing.

Through internal development and acquisitions such as its $US1.3 billion in-progress buyout of software maker Legato Systems, EMC is expanding its product portfolio, services capabilities and partnerships. It was also cutting operational costs and speeding its product cycles, Tucci said, as the company prepared for what he saw as a transition in the storage industry toward providing "information lifecycle management " (ILM).

EMC's ILM strategy is about expanding the storage market by offering customers new technologies for optimising their data back-up, recovery and manipulation operations, executives said.

In line with that vision, EMC is adding low-end products and rebuilding its software strategy to offer customers access to a complete portfolio.

The company is looking to enter the Veritas Software and IBM-dominated tape back-up market, possibly through a partnership, according to Dave Donatelli, EMC's executive vice-president of storage platform operations.

While EMC focussed on faster, more expensive disk-based storage systems, it recognised that tape wasn't going away, he said.

A full line of storage software was key to EMC's end-to-end vision, and it had in the past year filled in significant functionality gaps, EMC's executive vice-president of software, Mark Lewis, said.

By the end of 2004, EMC would have its software set completed, adding pieces such as automatic provisioning and replication technology throughout its entire product lineup, he said.

With more than 200 storage software tools available in the market from a variety of vendors, most of the technical challenges facing customers had been solved, Lewis said.

The obstacle that remained was integrating those pieces to ease management burdens - and EMC was confident that its software portfolio would fill that market void, he said.

"The problem is really more about complexity," Lewis said. "What we need to do take the pieces and try for simplicity."

As EMC expands its product set, it also aims to extend its customer base, revamping sales tactics to reach new markets.

The EMC of several years ago was a direct-sales-oriented company that essentially offered just one product, its high-end Symmetrix systems, and targeted one customer segment, large global enterprises, marketing and business development head, David Goulden, said.

Now, it has added a direct sales force to target midsize businesses and is building a network of channel partners to overlap in the midsize market and exclusively target smaller businesses.

Those non-enterprise market segments represent up to 50 per cent of the storage market, Goulden estimated. So far this year, EMC had signed 1000 new small and mid-size customers, he said.

After posting losses in every quarter last year, EMC pledged to be profitable throughout 2003.

It met that goal in the first two quarters of the year and expected to do so in the next two, chief financial officer, Bill Teuber, said.

Over the past two years, the company had cut several thousand jobs and shaved $US500 million off its quarterly break-even cost, bringing that figure down to $US1.26 billion in its most-recent quarter, he said.

A consolidation of EMC's design groups intended to lower costs was also helping quicken its development process, executives said. By overhauling its product testing process and conducting in parallel trials that used to be run serially, EMC has cut days and in some case weeks off product cycles: the high-end DMX2000 storage array EMC introduced earlier this year took 14 days to test, down from the 30 days of testing needed for its previous top Symmetrix product.

That shortened product cycle would help EMC as it continued with the most ambitious product rollout plans in the company's history, Tucci said.

"I honestly believe the storage market will change more in the next three years than it has in the previous 10 or 12," he said.

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