In the meantime, EMC has to figure out how to become a software firm, which is by no means easy.
Huh? It seems to me that the rapid growth of EMC Software from virtually nothing in 1995 to an industry leading 30.4% in 2001 shows that EMC has figured out how to sell hardware, software and services as part of an overall solution. In fact, EMC Software has actually grown faster than Veritas during the last 7 years primarily because it provided -- and continues to provide -- both host-based software (ControlCenter and PowerPath) AND array-based software (SRDF and TimeFinder). Veritas, which is often ballyhooed as the storage software powerhouse, sells host-based software only with particular strenghts in Unix/NT backup and Volume Management/File System products for the Solaris environment.
EMC SOFTWARE REVENUES
AS A % OF TOTAL REVENUES
1995 TO 2001
SOFTWARE % of SALES
1995 < $ 50M <1.0%
1996 76M ~3.0%
1997 177M 4.0%
1998 445M 8.2%
1999 822M 12.2%
2000 1.44B 16.2%
2001 1.56B 22.0%
After weathering the high-end price war initiated by IBM in late 1999 with the rush to market of Shark and which I believe came to a practical end with IBM's recent decision to sell its disk drive division to HDS, I think EMC will soon revert back to its former pattern of increasing software as a percentage of sales by about 1% a quarter with possible upside from the larger mid-range systems footprint created by Dell and the other mid-range market resellers. The downside, of course, is that IBM will shift the price war from high-end storage systems to high-end storage software and services, but it appears that this new IBM emperor wants to keep his clothes on, post-Enron.<g>
Still, EMC is convinced that its two-week old Centera product -- the only one of its kind for fixed-content -- has big potential, estimating that the market will reach $3 billion in 2003 and $10 billion in 2005.
Centera is not a new concept for long-time EMC watchers. Centera's lineage can be traced back to EOS which came out in 1996. The pre-Y2K high-end corporate market wasn't ready for this product in 1996 but it may be ready for it now. Note while everybody will have access to the same inexpensive IDE drives that EMC is using, only EMC has the content addressing software from FilePool.
EMC's recent patent actions against StorageApps (now part of HewPaq) and HDS suggest strongly that it is going to use its patent portfolio (600 patents, 500+ patent applications all focused on storage) to keep its competitors off-balance while it develops this new market from its unique vantage point as the leading networked storage vendor and the leading storage software vendor. Note that EMC already controls the two fastest growing segments of the the storage software market: 46% in Storage Infrastructure and 52% in Enterprise Storage Resource Management (ESRM).
From the EMC 1997 10K:
..........In March 1996, EMC entered a new segment of the mainframe market with a unique solution for high capacity applications that require disk-based storage and better application response time than can be provided by traditional off-line storage offerings. Extended-Online Storage ("EOS") has defined a new tier in the storage hierarchy, between traditional online disk storage and offline storage, such as tape or optical disk. EOS is targeted at specific business support applications that previously had no appropriate online storage platform. EOS provides over one TB of maximum capacity. |
