EMC Hits Analyst Meeting on a High Note - EnterpriseStorageForum.com

EMC Hits Analyst Meeting on a High Note

NEW YORK — Bolstered by a rebound in IT spending, strong market share gains and new products, EMC CEO Joe Tucci sounded an upbeat note at the company's annual analyst meeting on Thursday.

Tucci predicted that the company will achieve revenues of $8.1 billion and net income of $850 million this year, up 30% and 70%, respectively, from 2003.

Company officials also outlined a fully integrated software division and provided a glimpse of the upcoming Storage Router, a technology breakthrough geared to improve upon and complement intelligent switches made by networking vendors Cisco Systems , Brocade Communications Systems and McData . EMC also embraced tape storage with a partnership with ADIC .

Tucci led off the event with a breakdown of the company's finances over the last few years. He noted that while the company lost $500 million in net income during the dot-com implosion of 2001, then leaked $100 million in 2002, the company rebounded to post $496 million in net income in 2003.

Those numbers were a warm-up for his bold predictions for 2004.

Sky High for ILM

"So, we lost $500 million, we lost $100 million, we made $500 million, so where are we going?" Tucci asked a crowd of about 300 at The Equitable Center. "We believe that we have the opportunity this year to do $8.1 billion in revenue. That would be a 30% growth year over year. ... I believe it's within our reach to do $850 million in net income this year. That's a 70% growth [year-over-year]."

Tucci then made his pitch for information lifecycle management (ILM), which is the company's broad, deep plan for managing an enterprise's information from its creation to its disposal, and represents a potential $46 billion market.

ILM, a concept that vendors like HP , StorageTek , VERITAS and IBM have also embraced, is a process in which data is shuttled throughout a network as its value changes, making it easy &mdash and cheaper &mdash to store and retrieve. EMC has made the biggest investment in its ILM plan, purchasing archiving outfit Legato Systems, content management leader Documentum, and server virtualization vendor VMware.

There are several business drivers for ILM, Tucci said, citing business continuity, compliance, application and server consolidation, and the abundance of unstructured content such as spreadsheets and email.

The opportunity, if EMC delivers as planned, could mean year-over-year revenue growth of 30% in 2004, on the strength of a combination of hardware sales and enhanced software and services offerings, which accounted for 52% of EMC's revenue last quarter.

Integration and Future Products

EMC also officially announced the melding of its Legato and Documentum acquisitions into the EMC Software Group, which is led by executive vice presidents Mark Lewis and Dave DeWalt, formerly president and CEO of Documentum. Lewis, formerly EVP of Open Software at EMC, heads development efforts while DeWalt leads sales.

Both work closely together and have pledged to grow EMC's software and services revenues to $1.5 billion in 2004.

Meanwhile, the company has other plans for VMware, which is led by co-founder and CEO Diane Greene. While officials refused to divulge future VMware developments, Tucci said the division will stand apart from the software division.

Executives noted that VMware's charter is to provide the automation capabilities necessary to make ILM work, via virtualization, which lets multiple instances of an application or operating system function as one machine.

This so-called "virtual infrastructure" approach will allow businesses to mix and manage their storage and computing infrastructure from one shared pool of resources.

Executive Vice President of Storage Platforms Dave Donatelli said EMC will keep its promise of revamping or upgrading its hardware and software on the platform side every 12 to 18 months. Coming in 2005 is software that allows "non-disruptive movement" and migration of data across storage infrastructure.

Lewis described EMC's plans for software that triggers business process management, which will allow organizations to create and automate storage policies based on business processes that will place content in different tiers of storage.

The company is also creating a Storage Router that moves data several times faster than leading data routers and switches. Lewis said the public can expect a beta of this supercharged router in the third quarter of this year. Its architecture is based on SAN controller software running in a network that provides management capability and is based on intelligent switches. Lewis said the Storage Router would move data with no latency or bandwidth.

A Curious Partnership?

Officials saved the most controversial piece of news for the end when Howard Elias, executive vice president of corporate marketing at EMC, said the company has partnered with tape storage provider Advanced Digital Information Corporation (ADIC).

In the deal, for which financial terms were not disclosed, EMC will resell ADIC Scalar tape libraries to pad its ILM portfolio, and ADIC will resell EMC CLARiiON CX machines as part of its Pathlight VX virtual tape product. The reselling will begin in July.

From an industry perspective, the deal is surprising, even though it has been rumored for months. EMC executives had previously pronounced tape storage, where HP, IBM, ADIC and others toil, as "dead," and consistently said disk storage would consume tape market share.

EMC no longer expects the demise of tape, and Tucci said he expects that the tape market, which he admitted being conflicted about, represents a $2.6 billion opportunity. ADIC tape storage will complement and expand EMC's tiered storage offerings, he said.

The news triggered jeers from rivals.

"What's really happening is that EMC has now realized the only way to stay competitive is to broaden its portfolio to meet the depth of companies like HP," HP said in a statement. "As Information Lifecycle Management and compliance issues take hold, that full portfolio is key."

IBM was more critical in its statement:

"Finally after years of saying that tape is dead, EMC is validating the role of tape by attempting to emulate IBM's storage strategy," said Rich Lechner, Vice President, IBM Storage. "Unfortunately their approach is incomplete. This reseller arrangement doesn't address a number of critical customer environments, including large enterprises with mainframes. It also fails to address the growing business requirement for data retention as addressed by technologies such as WORM tape."

StorageTek responded sarcastically:

"Thank you EMC. You have now endorsed our strategy of classifying, managing and moving information across a foundation of tiered storage based upon its purpose and value &mdash which we call enterprise information lifecycle management. With this announcement, EMC recognizes that tape is an essential element to this strategy, and sophisticated customers will consider StorageTek for their tape libraries."

Story courtesy of Internet News


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