* EMC sets its sights high
Last week EMC held its annual industry analysts’ conference at its Hopkinton, Mass., headquarters. Things are, to say the least, upbeat at EMC, which feels it now touches a market that includes storage; SAN connectivity; storage, content and information management software; and storage services, which the company sees as a market worth $41 billion and growing.
EMC is bending every effort to become a broad-based “solutions” company, and figures its present slice of that very large pie – including hardware, software and services – at about a 17% share.
Perhaps even more significant, however, was the stated goal for the company to grow at twice the rate of the market as a whole.
Statisticians (specifically, game theorists) and economists use the concept of a “zero-sum game” to describe situations where, if one party wins, victory is always at the expense of someone else. In the zero-sum game, the amount of value in a situation is fixed, which means that whenever someone wins a dollar, someone else loses the same amount.
Because the market has continually grown at a rate that supports increased business for many companies, the storage business has historically not been seen as a zero-sum game. Companies may succeed or fail, but it is possible, theoretically, for all companies to keep taking increased revenue as long as no one company increases its market share. The rising tide floats all boats.
The exception to this rule is when one company grows at a rate that is greater than the growth rate of the overall market. And if EMC really is able to grow at twice the rate of the overall market, someone else is going to come up short.
But who? And where?
EMC’s historical sweet spot, large enterprises, is where its Symmetrix series has fought IBM’s Shark (ESS) and Hitachi’s Lightning. As this segment contributes about half the company’s income (EMC claims a 50% share), much of the growth is likely to come from this segment.
The company has far smaller shares of the commercial and small-enterprise segments, and thus has plenty of room to expand there. Scaling large products downwards to meet the needs of smaller customers is at least as great a challenge as scaling up to meet the demands of larger customers, but EMC has been increasingly successful with its Clariion line here. In addition to Hitachi and IBM, in this segment EMC also faces a host of other smaller, often specialized competitors, and some (such as Network Appliance) that are not so small.
Most likely, growth will come from a much more assertive presence overseas, where EMC enjoys a far smaller market share than it does in North America. The company is pushing for international business to account for half its revenue with the next two to three years.
On the other hand, nobody should be naïve enough to think that Hitachi and IBM are going to be sitting on their hands while all this is going on. Hitachi made major announcements (the TagmaStore Universal Storage Platform) in September, and IBM announced its aggressively priced and extremely dense DS8000 and DS6000 last week.
If EMC grows at its intended rate there will surely be pain for its competitors. On the other hand, it may be instructive to remember that when Philip of Macedon (Alexander’s dad) threatened the Spartans with the comment that “If I enter Sparta, I will raze the city to the ground,” the Spartans’ only reply was, “If.”
