nice article in mass high tech just a couple of weeks old.
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The Journal of New England Technology
From Page 1 of the Nov. 9-15, 1998 issue of Mass High Tech
EMC breaks a billion
By Christa Degnan staff writer
CDegnan@MassHighTech.com
The rest of the world is in a tizzy over a slow-down in the technology marketplace, but EMC Corp. just posted its first billion-dollar quarter, with a 50 percent increase in income. Executives followed the news by predicting the company is on track to hit $10 billion in revenues in the year 2001.
EMC also just celebrated the opening of a 682,000-square-foot facility in Franklin, one of the largest structures ever built in central Massachusetts. Taking just 11 months from groundbreaking to shipping product, the plant will produce 60 percent of EMC's worldwide output of computer storage systems.
Already on top of leading the storage hardware market, EMC President Michael Ruettgers said EMC was the fastest-growing software company of its size last year. At a strategy briefing for press and analysts last week, he noted revenue from software products increased 136 percent, to $117,541,000, in the last quarter compared to 1997.
Total revenues for the third quarter were $1,002,541,000, up 37 percent over last year. Diluted earnings per share were 38 cents on net income of $201,290,000, up 52 percent from 25 cents a share last year.
The software claim was a bold one for a company that started out providing add-on memory boards for the minicomputer market in 1979. EMC moved into mainframe storage a decade later, and added software to help manage its boxes as it made the switch to open systems in the middle of this decade.
Now the company is relying on software as the backbone of its Enterprise Storage Network strategy moving forward. The company offers over a dozen software solutions to manage, protect and share information, and debuted two new solutions, Volume Logix configuration management software and Fibre Channel hub connectivity for new platforms, last week.
EMC expects software revenue to double in 1998, to $400 million. To continue this growth, it is investing $1 billion in software research over the next three years, with 800 of its 1,200 engineering staff now in application development.
Focus on software
EMC has added a new "Ruettgers' Law" to the classic Moore's Law (computer processing power doubles every 18 months) and Metcalfe's Law (the value of a network increases as the square of the number of linked devices). Ruettgers' Law states that the value of information increases exponentially with the number of individuals sharing it.
Ruettgers noted that 30 percent of systems' efforts today are spent shuffling information around instead of processing the transactions they were designed for. EMC's Enterprise Storage Network eliminates these efforts, or at least makes them transparent to the user by taking care of the task within the storage boxes' network itself.
EMC is working towards a "universal data tone," like a dial tone from a phone. When any of an organization's systems need information, they will be able to access central EMC storage as easily and quickly as people pick up a phone and make a call today.
Thomas Lahive, senior analyst in server storage and redundant array of independent disks (RAID) storage for Dataquest, said EMC is out in front by a longshot in the external RAID market this year, with 35 percent of the revenue spent. He estimates that the total storage market will be worth $35 billion by 2001, and EMC is on track for a good chunk of that business.
Mark Kelleher, a financial research analyst at Tucker Anthony in Boston, said $10 billion in sales in 2001 is an attainable goal for EMC. He noted the company has very focused management and that they are attacking the market very aggressively.
"They are trying to show that they have the leading edge in storage technology," Kelleher said. "That's a pretty impressive plant out there. That is a barrier to entry for other companies. Those testing facilities are unmatched in the industry."
The new Franklin facility will consolidate EMC's testing operations, which are now located in five buildings in its Hopkinton headquarters area. EMC does not actually manufacture any of the electronics it sells, but assembles components and focuses on rigorously qualifying the final storage systems instead.
Kurt Grazewski, an operations executive who led tours of the plant last week, showcased the plant's heating and cooling facilities, where storage systems are tested under varying temperatures. He noted that storage systems are in and out in three to four weeks, and while the plant has room for expansion, EMC should be set for production space for the foreseeable future, as systems components become more powerful and smaller at the same time.
"We don't need a lot of square feet to make a lot of money," he said.
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