EMC's CEO Dismisses Concerns About New Competition in Storage (EMC)

Jul.18.06 | About: EMC Corporation (EMC)

On the Q&A session of EMC's fiscal 2Q conference call, CEO John Tucci insists that EMC is "holding its own" in the storage business amidst increased competition:

Rebecca Runkle - Morgan Stanley

...In your commentary you don't really seem to highlight increased competition per se as being a factor. Just on that point, some would obviously look at the extended sales cycle, the more formal sales review process and interpret that as being increased competition.

So just to give us some confidence in the fact that you are not seeing increased competition, can you talk about how win rates have changed both on the Symmetrix platform and CLARiiON platform over the last 12 months, and then in this latest quarter?

Joe Tucci, CEO

Sure, Rebecca. I did acknowledge -- maybe I didn't do it well; I will do it again. What I tried to say was that I don't see new competitors. You see a lot of kind of flashy advertising for a lot of -- I'm talking primarily with our storage business now -- for new companies getting in the storage business. I think if you added them all up, it is two bits of nothing. That is definitely not a factor.

So the competitors that we see out there are the ones that have been out there for a long time. It is IBM, it is HP, it is NetApps, right? For sure, I said that these competitors have refreshed their product families, and to that extent as they refresh, they are get stronger.

I think what they have done in the enterprise, as we look at our end win rates in the enterprise, they just have not changed much. Now you can slash that any way you want, but that is the facts, and I am not making it up. We have got good win rates.

Of course with win rates, we look at bookings, right? So some of the bookings didn't turn; so obviously when the share count, when share goes on revenues, like in mid-tier and in high-end -- I don't know what will happen in high-end, but mid-tier for sure -- as sure as I'm sitting here we will lose some share this quarter because we didn't turn it. But the bookings are there, and that is just timing.

So in the enterprise we are holding our own. One of the factors I said that is forcing these competitive bids, there are new product lines and there are more emphasis on this. But as we get into the bids our win rates are excellent.

I think when you get into the lower end of the market, where I think some of our competitors are having great success, we really have a single product now on the low end of the market, which is the AX150. That is not sufficient.

So while the AX150 is doing fantastic to really get the potential of what this SMB market can do, and I do think that is the fastest-growing part of the market, we need a product family. That is coming. That is a lower-end product than the AX150 and that is a higher-end product to AX150.

You have seen so many announcements we have done with Intel, so many announcements we have done with NEC, that kind of hints at what we are doing on the lower end. I guarantee there is a bigger brother coming to the AX150 too. I think that is one of the things we need, and we're not executing there on all cylinders because of that.

So that is how I would break up competition. They are stronger, they are forcing more competitive bids, they're forcing a lateness. Our win rates are great. In the CX 3 and the DMX 3 we are holding our own. When you go into the SMB and lower end of the market, we're not sufficient from a product point of view.

Hang in here; six months or so and I think we're going to rock the world there too. It is our goal to be the leader in the low-end storage also, not only high-end and mid-tier.