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Stellar EMC fails to impress investors . . . again

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EMC did its usual double-digit thing during the fourth quarter.

The storage maker knocked revenue higher by 19 per cent to $3.83bn. It also kicked net income 35 per cent higher to $525.7m. Oh, and, EMC generated $712m in cash during the quarter - a 78 per cent year-over-year hike. What else can you ask for?

Well, apparently quite a bit more because EMC's already rather deflated share price has tumbled more than seven per cent on the fourth quarter showing.

EMC's Joe Tucci may have been responsible for the investor spooking. During a conference call, he warned about 2008, saying that "the economic environment will for sure be more challenging and uncertain than the year before".

The company's virtualization entity, VMware, added to EMC's woes yesterday by disclosing, for the first time, that it won't double revenues every year ad infinitum. Apparently, many investors were shocked that VMware's revenue miracle appears set to come to an end next year on just - blech - 50 per cent growth and ripped off more than 30 per cent of VMware's share price during today's trading.

Turning back to big pappa EMC, investors found the vendor reporting a 19 per cent rise in fiscal 2007 revenue to $13.23bn and a 47 per net income jump to $1.67bn.

But full-year figures are for cowards and sick toddlers.

In the fourth quarter, EMC's systems revenue rose 15 per cent, while software and maintenance revenue rose 20 per cent. Services revenue also grew 27 per cent year-over-year.

Later this year, EMC will try to fatten all of these pies via new high-end hardware and software. Tucci, for example, hinted once again at EMC's "Maui" software, which is expected to be a super-duper clustered file system and then some capable of doing battle against Isilon, Panasas and others. In addition, it will ship "Hulk" - a set of clustered storage boxes capable of running the Maui software. And then you'll find the usual services behind this high-end gear.

"2008 will mark EMC's entry into the Web 2.0 market," Tucci said, meaning this as a good thing. Some customers are already testing the Hulk, and all customers should "ook for us to announce an OS later this year." Hello, Maui.

Maui and Hulk appear to be EMC's response to the push around what are technically known as huge ass data centers by service providers, national labs and the like.

One of the best executive bloggers out there, EMC's Chuck Hollis, has hinted quite a bit about EMC's intentions with this high-end gear.

We're routinely encountering new requirements where terms like "gigabyte" and "terabyte" are not useful, the discussion starts at "many petabytes" and goes up from there.

We tend to think of all this stuff sitting in a data center somewhere, but for this model, it just doesn't work. Nobody can afford a single data center that's large enough to put all this stuff into (no, not even Google). More importantly, no one can afford the network pipes that'll be needed in a single place to feed everything into, or out of.

No, what you'll need is the ability to place these devices in locations around the world, and have them operate as a single entity: a single global name space, and -- more importantly -- the ability to ingest content from anywhere, and move content to popular places depending on traffic and interest.

Presenting storage as blocks (e.g. LUNs) won't scale. Presenting storage as files won't scale. You'll need an object-oriented approach with rich sematics -- nothing else will work at this uber-massive scale.

Know something more about Maui and Hulk? Do write. We're intrigued.

Looking ahead, EMC sees revenue growth of 13 per cent for 2008, putting it at $15bn. ®

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