EMC: Eating Shark Fin Soup
More wins than losses
Interview The last twelve months have seen a range of accusations laid at EMC's door. The competition says that EMC has lost its edge, that it's slipping and that it needs to change if it is going to fend off their products. EMC says that this couldn't be further from the truth. Mark Fredrickson, EMC VP of communications and Ken Steinhardt, the director of technology analysis, explained to IT-Analysis.com the real picture – minus the competition's spin.
So tell us what's being going on at EMC, there seems to have been a few problems.
The global economy is the best place to start I think when it comes to explaining our position right now. If you look back over the past few years we benefited enormously. It seemed that everything that happened, Y2K, Dot Com, all ended up paying enormous dividends to EMC and as a result we and our stock price soared.
Now though we are dealing with a tech slump, a slowing economy, terrorism, war and unfavorable comparisons by financial analysts. That's the problem. There are no fundamental issues at play with our technologies our strategies or anything like that. EMC is exactly the same as every other tech company that benefited in the same way as us over the past few years.
We have to take some seriously deserved credit for creating this storage industry as a standalone entity. We continue to win a lot more deals than we lose. We continue to see a lot more deals going through on head-to-heads with IBM and HDS than they make out. And in that respect we are very happy indeed. The problem is that there simply isn't the volume of deals out there that there used to be.
So how bad is it exactly?
Most of what we have encountered is that people are holding projects; they aren't canceling projects and we aren't losing contracts. It's just slowed down. We are, however, continuing to trounce the competition on an awful lot of contracts.
So how come HDS is suddenly creeping into the frame – and how come IBM is experiencing storage revenues beyond its expectations?
One of the natural tendencies with this market is that people will try new technologies. They get caught up in marketing and sales hype and they will dip their toe in the water. But the effect of these two competitors is nominal. We are replacing them all over the world. We've just replaced 60Tb of HDS equipment with 200TB of EMC solutions at Qwest, for instance.
They had tried HDS after a successful sales pitch but it had to come back to EMC; we were the only ones capable of managing their requirements. Same with Edward James in the US. It set corporate records for due diligence after a note from its CEO and as a result it thoroughly evaluated IBM, HDS and EMC. We won the deal though. Same with Orange - we've just put in 250TB of EMC kit, that's an enormous amount, an enormous deal and an incredibly important decision for Orange. But, once again, we were the only ones that could serve their needs.
So what went wrong at Wal Mart?
That's a very interesting question. If you throw this supposed win under scrutiny you will see that it is not quite what IBM might like you to believe. Sure, IBM put some storage solutions in there but it was a bundle. IBM wrapped the storage up as part of a mainframe deal and the fact is that we still have an enormous presence at Wal Mart. Far greater than IBM even with this deal. All new capacity at Wal Mart is EMC - we have 170 TB at Wal Mart and there's probably more to come, we work very closely.
So it was just IBM's spin machine going into over-drive?
Quite possibly. IBM has a wonderful marketing machine and I have to admit they did an excellent job of spinning that story. However, it could be a bad move. Now the world knows the truth behind that story and IBM is left wishing it had chosen another 'massive deal'. The problem is it doesn't have any. IBM should have known it would get found out eventually.
I imagine you read the recent interview with Dietmar Wendt from IBM?
I did indeed and once again they were highlighting deals and contracts that weren't theirs. Daimler Chrysler has 98 per cent of its US data on EMC machines. Not the other way round as IBM suggested. After we read that interview we sat down with them and laughed about it, neither EMC nor Daimler Chrysler could find any IBM storage solutions anywhere in its operations. It's funny, but if you look at the contracts IBM has been shouting about they're both ours and worse than that, we've won awards from both of these customers this year.
But surely the competition is making a mark on EMC?
We do have what you might call reasonable competition nowadays certainly but that's only because previously there wasn't any. The phenomenon that you're seeing though isn't anything to do with the competition as such, it's about competitive balance in the data centre more than anything else. Organisations can for the first time buy competitors kit and evaluate it and that's all they are doing –they are evaluating with small scale implementations and leaving the real work to EMC. They certainly aren't replacing EMC solutions.
Next time you're in Boston you could come to my office. I have a collection that would interest you. I don't know if you are aware that when IBM sells its Shark solution it sends out a plastic Shark Fin with it as a marketing gimmick. Over the past few months our customers have been handing these over to us as we go and replace the Shark with our solutions. Like I said, it's quite a collection.
What about the claims of mistreating your resellers?
It's inevitable that you get claims like that. A reseller strategy is a very complex thing and it continuously evolves, which means some resellers won't make the grade. But I think you've just got to look at the Dell deal that we did to see how well our reseller relationships are going. I have a feeling that Dell has probably done its homework.
Doesn't that deal throw a cloud over the whole reseller strategy though? I know some resellers are very concerned that you will offer Dell cheap price kit whilst they pay the full amount. Is that likely?
One of the big things that we have been trying to establish is finding people that can shift our Clariion range and that will be a big factor. However, as for the pricing, we will make sure that there is a level playing field.
And what about pricing for your customers. EMC has been accused of being very expensive in the past - is that going to change?
There's no question that previously there was no other product around that could possibly match what we offered and we were simply supplying the demand for those kind of solutions. We don't just sell boxes though. We set about improving businesses.
People that buy EMC buy a wealth of experience and talent – they buy real business value from us. That's why we have perhaps been perceived as expensive. Now though we are responding to IT budgets and our customers are very happy indeed. The competition has claimed that our customers are unhappy with us but that simply isn't true. We don't take examples in isolation, especially when they are being made by competitors; we run quarterly customer satisfaction surveys and last quarter they were up. Our customer satisfaction ratings are superb and that's what we rely on to find out how happy our customers are and how we can serve them better.
So are the fractions in the storage industry just another marketing war?
I think it's probably something like that, but we don't want to play that game. EMC is a serious company with serious solutions and we, unlike the competition, can substantiate our claims. The customers that use EMC solutions know that they get serious quality from us, and that's quality technology, quality support and quality solutions.
There do seem to a be a lot of reports coming from financial analysts that suggest you are losing your competitive edge.
That's a fair point but I would be inclined to say what do financial analysts know about technology? Some people have also speculated that the financial analysts are just looking for the potential in HDS's IPO. That might have something to do with the bad reports.
I seem to recall questions being asked about your architecture too. Is it as good as the competitions?
If there is one thing that I am sure about it's our architecture. It is a fantastic architecture that will survive for years. We have a great architecture with great technologies that are being improved everyday. We pour millions into our R&D and that ensures that our architecture will be around for decades. There are very few companies that can claim to have an enduring architecture but that is something we most definitely have. If you look at IBM for instance, it has had to stop and start new architectures regularly over the years – you should draw your own conclusions from that.
So if everything is so rosy, what happened?
If it appears that we were caught out in some way it's down to two factors. Firstly we thought that storage would do better this year than it has but that was down to the signals we were receiving and we, like much of the industry, followed those signals. The other reason for perhaps appearing as if we were caught out is that we don't listen to the competition, we listen to our customers. That is genuinely what we focus on, everything else is just noise. And we saw that our customers were happy.
Does this mean that the strategies you've employed recently, cost cutting and such like, will see you well prepared for a bounce back when the economic recovery starts?
Our strategy has always been to prepare for the fog to lift so that we can get running again. That's why we didn't cut costs quite as dramatically as some of the financial analysts would have liked. But, and I know this sounds corny, we did have to right-size the company for the climate. And that did have some effect on morale as you would expect. But since the recent announcements, Dell and our new storage management tools, everyone is pretty happy again. They see where we are going and EMC is firing on all cylinders. I had a phone call from Dick Egan recently, one of the founders of EMC, and he said he was so impressed with what we were doing, he said we were gonna fly when the economy bounces back. And he's right.
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