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Careful, don't move. What's that? Yes, it's a glint of growth at EMC

Let down by legacy array revenues fall

Sunset over the Texan desert. Photo by ArchBob, licensed under cc0 public domain

EMC just managed to scratch out a one per cent annual revenue rise in its third calendar 2015 quarter's results, beating its own estimates.

The quarter ended on 30 September and revenues of $6.08bn were a tiny amount up on the year-ago's $6.03bn and the second quarter's $6bn. Net income of $528m was down 16 per cent in the year-ago's $627m but higher than the second quarter's $487m.

CFO Zane Row stated: "EMC Emerging Storage, Pivotal and VMware generated positive momentum in the third quarter."

He talked about cutting cost: "The $850 million cost reduction and business transformation plans are on track, and the team is working on many initiatives in areas such as SKU simplification, facilities and manufacturing optimization, and direct material procurement that span EMC's global operations.”

EMC_Q3_cy2015_revs

Click chart to embiggen it.

The damage was done by EMC II, whose business unit numbers show a legacy array revenue decline pattern:

EMC_II_Q3_2015

Its third-quarter revenue was down three per cent year over year and up two per cent year over year on a constant currency basis.

CEO David Goulden found lots of roses amongst the revenue thorns in his prepared quote: "As the broader market shifts toward cloud, mobile, social and Big Data, we continue to expect newer storage technologies revenue to grow at high teens while traditional stand-alone storage systems revenue to decline at low teens. ... For the first time in Q3, our newer storage products* now make up more than half of our strategic storage business**. This is a good indicator of the progress we've made in transitioning the portfolio, setting EMC up nicely for the future.”

Within Emerging Storage, XtremIO had another quarter of strong triple-digit revenue growth and is on track for more than $1bn in bookings in 2015.

Geographically EMC's consolidated third-quarter revenue from North America and Latin America was up four per cent and one per cent year over year, respectively (four and 14 per cent on constant currency basis). But EMEA and Asia Pacific and Japan revenue in the third quarter was down three per cent and four per cent respectively (up seven and three per cent on a constant currency basis).

When large installed base revenues turn south they outstrip newer product revenues for some time, witness HP with its 3PAR and old EVA lines. Next quarter's EMC's results will have added interest because they will be the first potentially affected by the Dell-EMC deal. ®

* Newer storage products include all-flash arrays, scale-out file, software-defined storage, converged infrastructure and purpose-built backup appliances.

** Strategic storage business includes product-related revenue in the storage categories identified as High-End, Unified/Backup and Emerging.

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