The questioning followed a change in EMC's reporting of revenue numbers in its data storage product lines. What previously had been broken out as separate Clariion and Celerra revenues was combined into a single revenue number for the quarter ($800 million) that spanned all "midtier products," including Clariion, Celerra and Data Domain.
On chief financial officer and executive vice president David Goulden's portion of the earnings call, midtier revenue gains of 32% were reported, along with some pointed references to wins over NetApp Inc. in this product category, including significant deals at a large medical services company and an online content service provider.
"It's not surprising news," wrote EMC user David Grant, a data center manager with a large communications company he requested not be identified, in an email to SearchStorage.com. "What I'll be looking at is how they develop the midtier products they keep … we're seriously looking at NetApp right now as a storage vendor who [can address] our need to get off the storage expansion treadmill and start getting better value out of what we already own."
Rumors have been swirling that EMC plans to consolidate its consolidate its Clariion and Celerra lines in exactly the way Tucci described, as Clariion disk arrays already underlie the Celerra product. However, a second part of those rumors stipulated Clariion will be end-of-lifed, which Tucci did not specifically confirm, except to say, "we are absolutely collapsing platforms. You'll see a second wave of emphasis in the midtier market where smaller systems are growing faster – you'll see work on that early next year."
The consolidation between midrange products makes sense, wrote Enterprise Strategy Group founder and senior analyst Steve Duplessie in an email to SearchStorage.com Wednesday morning. "Instead of talking about 87 individual products, the lines are becoming so fuzzy that it's safe to assume they will start talking in 'classes' of products," Duplessie wrote. "When you break them down they are boxes of disks and processors -- the only thing that differentiates a lot of them is the function they were designed for (dedupe, NAS, block array, object store, etc)."
Further product rumors addressed; IT spending seen stabilizing
Rumors have also been circulating about EMC's plans to announce a new midtier system that has been known as VCX. "That's not the name, the blogosphere has named it that," Tucci said, adding that it won't be out in the second quarter as has been suspected.
Meanwhile, Goulden dropped a hint of his own that a new virtualized storage technology is on its way "in the near future", one that "allows customers to use distance as an asset rather than a constraint." Presumably, the near future refers to the upcoming EMC World 2010 conference to be held in Boston starting May 10.
In the meantime, EMC said customers have completed the transition from Symmetrix DMX systems to the newer V-Max high-end disk array, which saw a 28% revenue increase year over year. Analysts also questioned whether EMC anticipated consolidation between its midtier and high-end products similar to Clariion/Celerra consolidation.
"We see customers that would've bought a midtier product [go to Symm] … if you add a low tier of SATA, it competes very, very effectively in the midtier. That's one of the reasons for the high growth in Symmetrix," Tucci said. "There will be some blurring, but we'll see two distinct [midrange and high-end] tiers."
Overall, EMC reported all-time record earnings of $3.9 billion for the quarter, up 23% year over year, with Information Infrastructure revenues up 22% to $3.3 billion. "We think IT spending looks to be on track with what we've been expecting: up 3% to 5% this year," Goulden said. "This is the continuation of pent-up demand we saw last year." Product revenues within Information Infrastructure of $2.2 billion outstripped $1.1 billion in services, "an encouraging sign customers are moving forward with infrastructure investments," Goulden added.