Analysis: Where EMC is and where it's going

My recent meeting with several EMC managers resulted in some intriguing information. Here's some of what I heard and where I think it is going.

First came the obligatory chest pounding: Revenue is up in every geographical segment, and overall corporate growth in the second quarter was 19%. In 2006 the company, now with almost 25,000 employees, intends to grow at twice the market rate, which if most estimates are correct would give EMC a year-over-year growth rate of 14%.

EMC is on track to spend $1 billion in R&D this year, which of course puts it in a rather exclusive club, companies that spend more on R&D than their competitors receive in annual revenue. Last year, EMC spent about 10% of its revenue on R&D.

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My recent meeting with several EMC managers resulted in some intriguing information. Here's some of what I heard and where I think it is going.

First came the obligatory chest pounding: Revenue is up in every geographical segment, and overall corporate growth in the second quarter was 19%. In 2006 the company, now with almost 25,000 employees, intends to grow at twice the market rate, which if most estimates are correct would give EMC a year-over-year growth rate of 14%.

EMC is on track to spend $1 billion in R&D this year, which of course puts it in a rather exclusive club, companies that spend more on R&D than their competitors receive in annual revenue. Last year, EMC spent about 10% of its revenue on R&D.

By way of comparison, other storage members of this club include HP, IBM and Sun. According to those companies' latest published annual reports, HP spent $3.7 billion (roughly 5% of its revenue), IBM spent $5.7 billion (roughly 5.9%) and Sun spent about $1.8 billion (roughly 16%) on R&D.

As for the future, EMC looks to be following a two-track strategy. First, expect information life-cycle management (ILM) to play a continuing role in most aspects of EMC's storage planning. Secondly, as we have predicted for a year, EMC clearly is beginning to realize that there may be life beyond storage. The overall goal, according to one of EMC's spokesmen, is to move the company "from being a storage company to being an information management company."

Let's look first at ILM. It of course is all about efficiently moving data between the various tiers of storage to save money while making sure that data is retrievable according to established service levels. ILM is also about clichés.

For instance, a standard set of clichés applies to ILM products and services from all the leading vendors, including EMC. All vendors admit, for example, that ILM is not a product, but is an assemblage of hardware, software and services. Alas, you and I can't go out and "buy an ILM."

That circumstance notwithstanding, however, EMC - like its chief competitors - is prepared to make it easy for you to buy all your ILM-related hardware, software and services from a single source should you want to do so. (Guess who?)

EMC will make storage tiering easier through several new technology initiatives.

First, during the coming months look for EMC to roll out arrays that use low-cost Fibre Channel drives, which can be put in the same arrays as higher-performance Fibre Channel devices. This will be a cross-industry trend, similar in most ways to what is happening to serial-attached SCSI (SAS) and serial-ATA (SATA). Look for lots of silicon providers (Agilent for one) to offer several low-cost Fibre Channel options, including 4G-bit/sec systems.

Next, expect EMC to make two key moves in network-attached storage: EMC will move the file virtualization technology it got through the Rainfinity acquisition to the front and center of its network-attached storage marketing efforts, and the company will withdraw its largely unsuccessful NetWin line of NAS products.