EMC Predicts Web's Future Is Storage-centric
By Barbara Darrow, TechWeb News
Aug 2, 2000 (2:42 PM)
URL: techweb.com
EMC on Wednesday pulled out all the stops to convince Wall Street that it can continue its winning streak into next year and beyond. In the EMC (stock: EMC) worldview trotted out for the press and analysts at Harvard University's Sanders Theater, the price of bandwidth and storage will sink like a stone in the next five years, leading to an explosion of personal Internet storage. Users will use the Web to store not only traditional data, but
also greater numbers of digital photographs; works of art; and complex images, such as CAT scans, in their personal Net-based storage space,
EMC executives said.
A "huge buildout" of the optical network will make it seem as though bandwidth is free, and a simultaneous explosion of data-storage capacity will
give users the perception of "free and infinite storage -- which luckily for us will not actually be free," said Jim Rothnie, senior vice president of
product management at EMC, Hopkinton, Mass.
Simply put, the Web infrastructure will bulk up tremendously. The miles of fiber-optic cable will jump from 20 million to 20 billion worldwide in five
years. And the capacity of each fiber will be boosted a thousandfold by dense WDM (DWDM), Rothnie said.
During the same period, the cost of disk storage will fall, from 30 to 40 cents per megabyte now to 1 cent per megabyte.
Of course, this view puts EMC -- and perhaps bandwidth purveyors -- in the catbird seat.
It also conveniently relegates other industry leaders -- such as top makers of PCs and handheld devices -- to the periphery of the market. Rothnie
said while handheld phones and computers are easily lost and replaced, the data that makes them valuable will remain permanently on the Web.
"Even Bill Gates would say this is true," Rothnie said. "This is what [Microsoft's] .Net initiative is about, and if you needed a nail in that coffin, it is the
wireless revolution."
Rothnie said the measurement of personal data stored remotely from the user will skyrocket, from 100 gigabytes in the near future to 10,000
petabytes in five years.
Of course, a scenario in which everyone will store even their most intimate data on the Web presupposes that privacy issues will be addressed in
advance, observers said. Consumer groups are already worried about the safety and security of data residing online.
Rothnie and other EMC executives spoke at the company's annual analyst meeting. For its second quarter, the company's revenue exceeded $2
billion for the first time. Net income reached $429 million, up 50 percent from the year-ago quarter.
To bolster its profitability, EMC is seeking key technologies for the management of rich media, including audio; video; and holographic, molecular,
and optical recording technologies, said Don Swatik, EMC's vice president of strategic planning.
Analysts said the company must look forward, especially as competitors -- including IBM (stock: IBM), Compaq (stock: CPQ), Sun (stock:
SUNW), and others -- refocus their own storage efforts. EMC's strength prompted longtime hardware rivals IBM and Compaq to launch an
interoperability campaign so their offerings will work together. The two vendors even plan to offer each other's storage products when it makes
sense.
EMC, which has heretofore concentrated largely on enterprise storage, said it is serious about being a bigger player in mid-range and
network-attached storage arenas, where it is not dominant.
The company expects the midrange market to hit the $12 billion mark this year and show a 15 percent compound annualized growth rate over the
next three years. In that space, it expects to reap $600 million in revenue with Clariion storage products this year, up 50 percent from last year.
"We're the fastest-growing here, but we are not the largest company," said EMC president Joe Tucci.
That growth spurt comes courtesy of EMC's purchase of Data General and its Clariion storage business last year.
"We're taking on Compaq and Sun and will attack them head on this year," Tucci said.
EMC CEO Mike Ruettgers told analysts the company will not rest on its laurels.
"Technological leadership is not an entitlement," Ruettgers said. "We see this because we're on Route 495, and if you start in the north heading south,
we see Wang, Digital, Prime, Data General."
Those companies failed to recognize a competitive threat until it was too late.
EMC's presence seems to have mobilized competitors, including IBM, which had been seen as something of a sleeping giant in storage. These
players repeatedly characterize EMC offerings as proprietary and pricey. EMC executives bristle at that notion.
"There is major openness campaign by all of our competitors, but who provides more connectivity to other vendors? No one has more
interoperability support matrix that comes close to ours," Swatik said.
He said EMC is leading the effort to devise Fibre Channel standards and switch interoperability.
Analysts said the terms proprietary and open are relative -- and loaded.
"Some people talk of 'open' in terms of ability to access third-party hardware and servers, hubs, and switches and in that respect, EMC is the most
open," said John McCarthur, vice president of storage research at IDC, Framingham, Mass.
McCarthur said EMC has worked well with application vendors, such as SAP (stock: SAP), Baan (stock: BAANF), and Oracle (stock: ORCL).
But in terms of working with third-party software tools and management, other companies have a better story, he said.
One observer said EMC might face a disadvantage in gaining the latest and greatest IBM component technology for its own storage systems. But
Swatik said EMC was able to incorporate new IBM drive technology before IBM's own storage group was able to do so.
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