I am inclined to believe a similar scenario as EMC will happen with IC's over the coming decade. Old forecasting techniques are seriously flawed, for they consistently fail to take into account new digital products which become necessary to the masses. This is the first year digital camera sales will surpass 35mm. Five years from now, what will the memory requirement be for say a 10MB camera? As memory prices drop, they become available to a wider audience, helping to turn the wave into a tsunami.
BK
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EMC Looks Around the Corner to 50-Fold Explosion in Information Growth, $100 Billion Market Opportunity; Executive Team Describes Factors Driving Acceleration of EMC's Growth At Analyst Day
Cambridge, Mass
The exploding growth of digitized information - and the market opportunity it presents to the world leader in creating and building information infrastructures - will continue to render all traditional industry growth forecasts obsolete, executives of EMC Corporation told a packed gathering of analysts yesterday at Harvard University. EMC (NYSE:EMC - news), the leader in information storage, completed two days of meetings with nearly 400 of the world's top equity and industry analysts and fund managers on the campus of Harvard. The theme of the annual event was ``TNT (The Next Thing): Preparing for it, shaping it, making it happen sooner.'' EMC executives provided in-depth detail on why the company is positioned even more strongly to be the storage leader for the next decade than at any time during its past decade of achievement and growth. EMC's senior management team outlined how the company manages its business for the next thing, how it continuously and concurrently innovates the next thing in storage solutions, and how it helps its customers attain the next thing in their business objectives. Wednesday's session concluded with the unveiling of ``The Next Next Thing'' - a vision of how the world will be forever changed in 2005 due to nearly infinite and virtually free bandwidth and storage. ``Welcome to the content big bang,'' said Jim Rothnie, EMC's Senior Vice President of Product Management. ``The explosion in both individual and organizational data taking place over the next five years will dwarf all previous market forecasts for information storage. The world will need to store and manage more than 10,000 petabytes of digitized information by 2005 - 50 times the amount being managed today. Enabled by dramatic advances in storage software and hardware technology, the plunging cost of storing digitized information, and a tremendous bandwidth expansion, the market for information storage products and services will likely exceed $100 billion in 2005. We believe the storage market may be twice as large as the server market by then.'' Mike Ruettgers, EMC Chief Executive Officer, described EMC's evolution and role in leading the information explosion. ``EMC is uniquely positioned to take advantage of the content big bang,'' he said. ``For the past decade, we have seen the next wave in storage before our competitors, and we have executed at least two years before any of them to achieve the technology and market leadership we now hold. Yet we know that what got us here won't keep us here. Technology leadership is not an entitlement. Capitalizing on the content big bang - a wave of information growth that will be far more powerful than any previous stage of the IT revolution - means continuous reinvention and investment, seamless product transitions and superior execution on a global scale. EMC has never been better positioned to capitalize on the tremendous opportunities ahead of us. The content big bang favors the EMC E-Infostructure, which enables data permanence, automated management, and universal connectivity.'' Joe Tucci, EMC's President and Chief Operating Officer, reflected on his first seven months with EMC, working alongside Ruettgers to execute today's business plan and shape tomorrow's. ``I've spent 31 years in the IT industry, and I have never seen a company so intensely focused on its customers,'' said Tucci. Tucci identified three market segments for increased EMC focus and investment going forward, including specialized investments in technology solutions as well as dedicated overlay sales teams. These market segments are the mid-tier storage market, the NAS (network-attached storage) market, and the service provider market. In each case EMC's objective is to achieve the same levels of market leadership already attained by EMC in enterprise storage systems and software and SANs (storage area networks). ``Each of these segments requires a focused attack,'' said Tucci. ``We are deploying specialized sales teams to complement our enterprise-dedicated sales organization, which is the largest in the world focused on storage.'' Mike Ruffolo, Executive Vice President of Global Sales, Services and Marketing, detailed the elements of The EMC Offering. ``EMC strives to earn customers for life. We do this with what I call aggressive listening - customer interaction that goes beyond satisfaction and makes EMC strategically relevant to their businesses. We have hosted visits at EMC facilities from more than 13,000 individual customers this year, facilitating discussions with the world's leading businesses on information strategies for growth and profitability. We have earned more than 300 new customers in each of the last five quarters. They all want the same things: new ways to grow revenue and market share, differentiate themselves, control costs, and make IT easier. The EMC Offering uniquely encompasses technology, expertise, open interoperability, alliances with industry leaders, and comprehensive services, helping customers as they acquire, deploy, and grow their EMC E-Infostructures.'' Joseph Walton, Senior Vice President of Global Customer Service and the leader of the world's largest and most capable storage-dedicated service army, explained why more and more customers cite EMC's service advantage as one of the primary reasons for choosing an EMC E-Infostructure. ``We will have 4,600 service professionals by the end of this year, yet only about 10% of the job we perform in the field is fixing problems,'' said Walton. ``Ninety percent is predicting, pre-empting and preventing problems - enabling customers to move confidently to their next big thing. We believe our people and our continuing investments in customer service are major reasons for EMC's 99% customer retention rate.'' Frank Hauck, Executive Vice President, Products and Offerings, described EMC's engineering and manufacturing advantages as stretching beyond the fact that EMC invests far more in storage systems and software R&D than any other company. ``The ability to reinvent ourselves every two years is a core element of EMC's engineering culture,'' said Hauck. ``R&D and interoperability make up EMC's one-two punch. We will invest $2.5 billion in storage-focused R&D and interoperability from 2000 to 2002. We are a Mecca for the world's best storage talent. Our storage software is in its fourth generation, just as others in the industry are beginning to talk about storage software as a future. Our product generation engine is tuned up, and it's about to shift into overdrive. The technology gap between us and the competition is widening, because our product generation and development model is so good that the bigger we get, the faster we become.'' Bill Teuber, Senior Vice President and Chief Financial Officer, told the audience that EMC's management processes have evolved to stay ahead of the growth curve. ``As we accelerate our velocity on the road to $12 billion in revenue next year and beyond, we have increased the pace from fast to faster, shifted the infrastructure from large to infinitely scalable, and expanded our planning process from an annual budget cycle to a rolling six-quarter budget cycle,'' Teuber explained. ``This allows us to illuminate the bumps in the road and see around the corner.'' Teuber also summarized EMC's approach to financial management succinctly: ``No excuses. No whining. No surprises.'' Ruettgers closed the meeting this way: ``Expect acceleration of the acceleration you saw in Q2.'' In its recently completed second fiscal quarter, EMC achieved its highest year-to-year growth rate in storage revenue in five years (43%), along with a 50% increase in net income and its first $2 billion revenue quarter. EMC Corporation (NYSE:EMC - news) is the world leader in information storage systems, software, networks and services, providing the information infrastructure for a connected world. Information about EMC's products and services can be found at emc.com. EMC is a registered trademark and EMC E-Infostructure is a trademark of EMC Corporation. This release contains ``forward-looking statements'' as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) component quality and availability; (ii) delays in the development of new technology and the transition to new products; (iii) competitive factors, including but not limited to pricing pressures, in the computer storage and server markets; (iv) the relative and varying rates of product price and component cost declines; (v) economic trends in various geographic markets and fluctuating currency exchange rates; (vi) deterioration or termination of the agreements with certain of the Company's resellers or OEMs; (vii) the uneven pattern of quarterly sales; (viii) risks associated with strategic investments and acquisitions; (ix) the ability to attract and retain highly qualified employees; and (x) other one-time events and other important factors disclosed previously and from time to time in EMC's filings with the U.S. Securities and Exchange Commission. |
