Data General Plans to Significantly Increase Sales and Marketing Investments In CLARiiON Storage Business
WESTBORO, Mass.--(BUSINESS WIRE)--May 17, 1999--Data General Corporation (NYSE:DGN) today announced that it plans to significantly increase its sales and marketing investments in its CLARiiON storage business to ensure long-term growth. Over the next 18 months, Data General plans to hire in excess of 450 people in its CLARiiON organization, the majority of which will be direct sales people. The additional expense of these people, and related marketing efforts, is expected to be more than $100 million over the 18-month period.
"The market for Fibre Channel-based disk storage is projected to grow at 65 percent annually for the next few years," said Data General President and CEO Ronald L. Skates. "Data General is a leader in Fibre Channel technology, and we need to aggressively bring our CLARiiON products to this market. This is a great opportunity for Data General in a market which has enormous potential."
"In the seven years since CLARiiON was introduced, we have built a solid base in the storage market through OEM relationships with server vendors. CLARiiON revenues for Data General's fiscal year ended September 1998 were approximately $400 million, the majority of which were derived through OEMs. We focused on the OEM market because the majority of storage historically has been sold with servers as part of a complete system sale. In the future, we plan to strengthen our OEM relationships and to introduce a continuing family of products to meet our OEM customers' needs.
"In late 1998, we began building an end-user sales force and service capability. Today we are announcing a dramatic increase in our investment in end-user selling capabilities. CLARiiON storage already attaches to UNIX and NT servers from each of the four largest server vendors: IBM, Compaq, Sun and Hewlett Packard. Storage on these vendors' servers accounts for more than half of the storage market. By significantly accelerating the expansion of our end-user sales force, and by establishing a stronger brand name for our CLARiiON products, we have the opportunity to reach this large market."
Mr. Skates stated, "while short-term results will suffer because of the heavy investments we are now making, the long-term market opportunities dictate these actions. We have the products to be a major player in the independent storage business and these investments are necessary to take advantage of the market. We anticipate it will take a year to generate the revenues necessary to produce a return on these investments, but we expect they will provide the base for rapid future growth in this burgeoning market."
Mr. Skates commented, "the advent of Storage Area Networks, or SANs, is changing the computing model and helping to establish storage as a market apart from servers. SANs, which are based on Fibre Channel technology, address key issues for data access and backup and move the center of computing from the server to the storage system. CLARiiON is the only full, end-to-end Fibre Channel technology available. Since CLARiiON is 'SAN-ready' and designed to operate with virtually any brand of server, we believe that Data General can quickly become the leading independent supplier of storage systems in the SAN market."
According to IDC, the market for Storage Area Networks based on fiber channel is projected to double annually for several years and reach more than $9 billion by 2002.
Data General's CLARiiON division has shipped more than 100,000 disk arrays and over 7 petabytes of open RAID-protected storage. It is the leading supplier of advanced storage solutions to major computer system manufacturers, value-added storage resellers, and system integrators worldwide. Data General's CLARiiON FC5000 Fibre Channel disk array family is based on the Fibre Channel interface and is the industry's most comprehensive and scalable online storage solution. The high end of the FC5000 Series, the FC5500, is the industry's most powerful all-Fibre Channel RAID solution.
"We are recognized in the industry for delivering the most advanced Fibre Channel storage technology," said Mr. Skates. "Now it is time to complement our existing channel strategy with an accelerated end-user sales and marketing approach to grow our storage business to a new level."
Data General's investments include:
-- Rapidly expanding the CLARiiON direct sales force from its current level of 50 to over 300.
-- Increasing Data General's systems engineering and professional services staff to expand implementation of CLARiiON SANs in complex storage environments.
-- Enhancing the company's Data General NOW e-commerce site to pursue CLARiiON sales.
-- Increasing marketing and advertising to position CLARiiON as THE Storage Alternative.
-- Accelerating the CLARiiON SAN development program to expand the company's software and systems portfolio.
"At the same time," added Mr. Skates, "we will continue to invest in our AViiON server business which drives more than $1 billion in annual product and services revenues. We have an established customer base that is leveraging the benefits of our high-end NUMA servers for UNIX applications. We also are one of the largest suppliers of information technology to the healthcare industry, and the overall mid-range market leader in systems that use Microsoft Windows NT server technology."
"Our goal is to make Data General a leader in storage and high end computing," said Mr. Skates. "CLARiiON revenue progress in the near term will be limited until our sales and marketing investments begin to produce results. While these investments will have a negative effect on our results over the next year, they are necessary to achieve our long-term objectives of increased revenues and profitability."
About Data General
Data General Corporation, headquartered in Westboro, Massachusetts, specializes in servers, storage systems, and related software and services for customers worldwide. The company reported revenues of $1.5 billion for fiscal 1998. Additional information on Data General Corp., its products, and its services is available on the Internet at dg.com.
Statements made during the course of this conference call that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward looking statements within the meaning of the Private Securities Reform Act of 1995. The forward-looking statements involve risks and uncertainties. It is important to note that the company's actual results could differ materially from those projected in any such forward looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company's SEC filings, including but not limited to the company's annual report on form 10- K for the year ended September 26, 1998 and our second fiscal quarter Form 10-Q for the period ended March 27, 1999. Copies of our 10-K and 10-Q may be obtained by contacting investor relations at 508 898-6550.
NOTE - Information on Data General, its products and services, can be accessed on the Internet at dg.com. Additional information on the CLARiiON Advanced Storage Division can be accessed at clariion.com.
AViiON and CLARiiON are registered trademarks of Data General Corporation
CONTACT:
Data General Corp.
Jim Dunlap, 508/898-6546
jim_dunlap@dg.com
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