Is EMC's dominance endangered?

Over the course of this summer, all of the major high-end disk array vendors introduced new RAID systems, most of which were aimed squarely at EMC. Following EMC's own enhancements to its Symmetrix systems and software, IBM, Sun, Hitachi Data Systems, and Hewlett-Packard (which resells HDS' high-end arrays) in rapid succession fired volleys across EMC's bow.

Then, last month, IBM and Compaq (strange bedfellows, indeed) teamed up in what was almost univer sally viewed as a shot at EMC by announcing a far-reaching storage partnership. The two companies will resell each other's disk arrays and software, while working together on "standards" for the storage area network industry (see story on p. 1). The thinly veiled implication was that these two behemoths will be the industry's standards-bearers, while EMC peddles its "proprietary" approach to SANs.

As I was pondering whether the invincible was in fact vincible, I got EMC's latest quarterly earnings report. Although there may be plenty of loathing in Hopkinton, there appears to be no need for fear.

EMC reported a 43% growth in revenue and a 50% increase in net income for the second quarter of this year, compared to the same quarter last year. For the first time, the company exceeded $2 billion in quarterly revenue, marking its fastest revenue growth rate in five years (a time at which EMC was eating IBM's lunch in the high-margin mainframe array arena).

EMC also reported:

  • 96% year-to-year growth in software revenues
  • 36% growth in enterprise storage systems revenue
  • 30% growth in mid-range storage revenue

And surprisingly, EMC doesn't seem to be having any problems digesting Clariion. Midrange systems revenue (the Clariion products) rose 30% to $141 million, the best quarterly performance in Clariion's history.

And-note this, Network Appliance-revenues from EMC's Celerra network-attached storage (NAS) server increased seven-fold.

To be sure, EMC faces battles that will be fiercer than anything it's faced since locking horns with IBM in the big iron battles. HDS, HP, and IBM/Compaq all have competitive products on both the hardware and software sides. But, as always in this industry, the best products won't necessarily prevail if technology takes a back seat to sales and marketing.

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Dave Simpson, Editor-in-Chief

This article was originally published on August 01, 2000