COVER STORY_
EMC Under Attack
By Joseph F. Kovar, CRN
4:59 PM EST Fri., Jan. 19, 2001
The competition is ganging up on EMC, but the storage
vendor already has a battle plan.
Executive Chairman Mike Ruettgers says EMC is courting
a new crop of solution providers to help the company
reach a revenue target of $12 billion this year, up 41
percent from $8.5 billion last year. The bottom line: EMC
needs the channel to grow, he says. "We have more
opportunity than we can address right now," Ruettgers
says. "So we're anxious to find more people to help us
cover the marketplace."
The strategy comes as
other hardware vendors
maneuver to cash in on
the exploding storage
market. This week,
Compaq Computer,
Hitachi Data Systems
and Dell Computer plan
to introduce storage
products aimed at
midrange and enterprise
storage clients,EMC's
core customer base.
Hewlett-Packard, IBM
and Sun Microsystems
also are zeroing in on
that market segment with
new storage products
and upgrades.
And more competition
looms for EMC. For its
part, Hitachi Data Systems claims to have wrested the lead
from EMC in the storage service provider (SSP) space, a
niche also coveted by Compaq. At last week's ENSA@work storage event, Compaq touted
partnerships with seven SSPs, which in part are aimed at working with solution providers.
Compaq already has teamed with IBM to ensure interoperability between their storage
products and resell each other's high-end storage systems directly and via channel partners.
The alliance directly targets EMC, says John Koury, vice president of marketing for
Compaq's Enterprise Storage Group.
EMC is under attack, says Larry Holzenthaler, executive vice president of sales and
marketing at Total Tec Systems, an Edison, N.J., systems integrator whose Compaq SAN
sales were up 25 percent last year. "We have come up against EMC in competitive
situations five or six times over the last year, and we have been successful with every one
of them," he says.
Total Tec has been particularly successful in winning with Compaq solutions in new
accounts. "We have not lost against EMC in a new installation," Holzenthaler says. "If you
look at their architecture, it works well in the mainframe environment, but it is not well-suited
for and has a number of inherent bottlenecks if you are selling into the SAN open systems
market."
That said, Holzenthaler says it is not easy battling the EMC juggernaut. "They are a
formidable competitor," he says. "Most of the time they are there first, and they do a good
job of selling high and pointing to their success in the marketplace. But if a customer takes a
look at the technology in most applications, Compaq is going to have both a price and
performance advantage and a future growth path that EMC can't offer."
Amid the escalating competition, EMC is
focusing on how it can best reach its
growth targets. After years of quietly
developing a solution provider channel, the
Hopkinton, Mass.-based vendor now is
stepping forward to keep its aggressive
direct-sales force at bay,and even turn it
into the channel's best friend.
"If we're going to hit the growth that we
need to, we have to rely on partners," says
Tom Heiser, EMC's vice president of global
channels and service providers.
"We have a lot of growth planned, and obviously you can't do it all yourself," says
Ruettgers, named executive chairman last week. Joe Tucci, president and COO, assumed
Ruettgers' CEO title.
EMC recently began briefing current and potential channel partners on initiatives designed
to make it easier for them to work with the vendor, Heiser says. Due to be unveiled soon, the
plans include a certification and training program for solution providers plus programs that
allow solution providers to supply more training and services to customers.
A special emphasis is being placed on what EMC calls the small and medium enterprise
space, Heiser says. To that end, the company is assembling two sales teams. A channel
sales team will identify, recruit, train and work with channel partners. Another team will
serve small and medium enterprises, with business fulfilled through channel partners.
Key to the success of the channel programs is reducing potential conflicts with EMC's
direct-sales force and making it a partner of solution providers, according to Heiser. "One of
the new things we have is executive sponsorship on all the accounts. So all of our key
partners are now being assigned EMC senior sales management sponsorship," he says.
"They can go to this individual and have a direct link with what makes the sales force tick."
Though the channel programs await introduction, EMC's recruitment activities already have
begun. The vendor is holding its first global user and partner event, the EMC Enterprise
Wizards Conference, Feb. 12 to 15 in New Orleans. Part of the conference is aimed at
"technologists who build and run complex technology environments within EMC's
customers' organizations," according to an e-mail invitation recently sent to solution
providers.
One EMC executive, who asked to remain anonymous, says he's actively looking for
solution providers willing to work with EMC. Although the company seeks to identify some
channel partners at the high end, it's particularly interested in teaming up with integrators in
the small- and midsize-business space.
"Our account managers are following named accounts, so smaller customers may fall
through the cracks," the EMC executive says. "We have plans internally to have our
salespeople filter leads through the channel."
Solution providers confirm EMC's attitude toward the channel has changed. Mike Cavender,
vice president of indirect markets at EDS, says talent shortages and increased end-user
outsourcing are pushing EMC to pair up with solution providers. "[EMC is] putting a big
emphasis on an independent channel from Heiser's organization," he says. "There's an EMC
team that doesn't get paid unless EDS wins."
Another solution provider, who asked not to be named, says EMC has definitely thought
out its compensation-neutral strategy. "Their 'hunter' reps,their guys knocking on
doors,only get paid if they go through the channel," he says. "EMC has so many accounts
to cover. They can't do it all."
The solution provider, who recently met with EMC about its channel efforts, says EMC
plans to offer channel partners discounts depending on status, similar to a bronze, silver or
gold partner program offered by other vendors. The integrator discount on the hardware
means EMC will get slightly less than it would have collected if it had made the sale direct,
he says.
"So EMC will 'uplift' that price by 110 percent to 120 percent and pay its reps on that,
making the price equivalent to what the end user would have paid," the solution provider
says.
John Murphy, executive vice president of Advanced Systems Group, a Denver-based
Symmetrix integrator, agrees that EMC has become more channel-friendly of late, especially
in offering assistance in areas such as setting up SAN labs and client training.
"They are finally seeing that people like us,with a great deal of expertise in databases and
storage, but outside EMC,are more valuable than they thought in the past," Murphy says.
EMC is offering a good co-op program, but not much in terms of leads, he says. Still, related
services are a solid business, even though hardware margins are thin, he adds.
Dave Richardson, director of strategic alliances at Articulent, a Hopkinton-based storage
integrator, says EMC has dabbled in building a channel in the past but now is going full
speed ahead. Articulent now has an EMC representative who offers support, information
and connections with the vendor's local sales teams.
"It's sometimes beneficial to have the manufacturer on hand for more details or for NDA
information we can't present [to customers]," Richardson says. What's more, EMC exhibits
more interest in revenue than in account control, which has even led to joint sales calls with
Articulent, he says.
However, solution providers are far from unanimous in believing that EMC suddenly got
channel religion. Several cite past brushes with EMC direct-sales reps who initially appeared
to work with the channel but then annexed the account at the last minute. One integrator,
who requested anonymity, says EMC needs the channel, but he will keep the vendor at
arm's length for now. "From their standpoint, they have to [align with solution providers]. If
they don't do it, they will find themselves in too much of a niche market," he says. "But I
wouldn't trust them as far as I can throw them."
Nevertheless, EMC is backing up its channel efforts on the product front. Last month, it
introduced the IP4700, an NAS system aimed at the midrange storage market,and
particularly at Network Appliances, a bitter rival in the SSP space. Code-named Chameleon,
the IP4700 represents a big part of EMC's efforts to get closer to the channel, Ruettgers
says.
EMC also is expanding its product offerings,particularly its Clariion line,into distributed
environments, especially for customers looking to deploy storage in departments or small
remote offices, says John McArthur, global storage analyst at IDC. At the same time, the
vendor is enlarging its traditional market of highly centralized, redundant data centers.
But EMC has had to address a refrain continually sounded by competitors: EMC makes
customers stay with its proprietary technology while other vendors are working toward
open standards in storage. Compaq's Koury echoed that theme at the ENSA@work storage
event. The IBM-Compaq alliance, he said, "essentially doubles our sales force. It shows
customers they don't have to be locked into a technology."
Bob Samson, vice president of worldwide sales and strategy for IBM's Storage Systems
Group, says EMC's proprietary technology gives end users and channel partners less
flexibility in choosing and building solutions. "If a customer can't leave, it gives partners
who work with EMC less opportunity. It's a wonderful model if you are a vendor, but not if
you are the customer or partner," Samson says.
EMC executives say their storage arrays attach to nearly every server environment. In
addition, EMC has an API program to facilitate interoperability with other storage systems,
Ruettgers says. "We're making it easier for [other] vendors to, in fact, integrate with our
systems," he says.
For its channel strategy to succeed, EMC must hope its partners and end users think the
same. |
