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EMC Corp. prepares VNX2 launch

EMC sees the VNX2 unified midrange storage array upgrade and other product launches as a way to jolt stagnant storage sales.

Although this has been a down year for storage sales, EMC Corp. is sticking with its original revenue forecast for the year. CEO Joe Tucci and Chief Operating Officer David Goulden this week said EMC is counting on an uptick in sales in the second half of the year, based largely on a slew of new product rollouts.

EMC executives said the delayed new VNX2 midrange unified storage arrays will be generally available by September. They're also looking toward general availability (GA) of products they've already announced: a refresh of their backup hardware and software, the XtremIO all-flash array and ViPR software-defined storage. Goulden said XtremIO and ViPR products are available through early adopter (beta) programs and are scheduled for GA in 2013.

After failing to meet Wall Street expectations in the first quarter of 2013, EMC hit expectations with its second quarter revenue of $5.61 billion, reported Wednesday. EMC executives said they're on track to finish 2013 with $23.5 billion in revenue, as forecasted before the year began. EMC's revenue at the halfway mark is $11 billion. Goulden said the vendor usually accounts for 53% of its sales in the second half, so it's on pace. Still, second half revenues will have to increase by more than 20% over 2012 to hit the forecast, which is based on a 3% overall increase in worldwide IT spending.

Making its number last quarter was difficult for EMC. Tucci used terms such as "uncertainties in the global economy," and said customers were "very cautious with IT spend," subjecting purchase orders to more scrutiny and "elongating their upgrades" to keep hardware longer. He also said the quarter was back-end loaded -- meaning EMC probably had to offer pricing discounts to hit expectations.

He said he expects the second half of the year to get a boost from the new releases.

"Over the next several months, we will launch a significant number of very exciting and timely new products," Tucci said.

VNX2: Larger capacities, primary dedupe

Wall Street analysts and customers expected the VNX2 release in the second quarter. Goulden said EMC has begun partner training for VNX2 and would have approximately four months of GA in 2013.

EMC hasn't given any public details on the VNX2, but marketing material making the rounds pointed to two new lower-end VNXe2 configurations and five VNX2 systems to replace the four VNX arrays currently on the market.

The 200-drive VNXe3200 and 250-drive VNXe3400 will replace the 96-drive VNXe3150 and VNXe330 arrays. The current VNX5300, 5500, 5700 and 7500 -- ranging in size from 125 to 1,000 drives -- will be replaced by the new VNX5350, 5400, 5600, 5800 and 7600, ranging from 250 to 1,500 drives. The new systems will support 3.5-inch SAS and near-line-SAS drives; 2.5-inch multi-level cell (MLC) flash, SAS and near-line SAS; they will also include two controllers for block storage. The VNX5350 and 5400 will support one or two controllers for file storage; the 5600 will have up to three file controllers; the 5800 will have two to four file controllers; and the 7600 will have two to eight file controllers.

The 2013 launch will be the "Rockies" operating system software release supporting 6 PB per system, primary deduplication for block storage and gateways for EMC VMAX enterprise arrays.

The original production schedule called for a "Cascades" software release to follow in the first quarter of 2014 with support of 256 TB file systems, dedupe for file and block, persistent write cache, controller-based data at rest encryption, and 256 snapshots per file system. It's not known if the Cascades release will be delayed.

"VNX now appears to have directed availability, similar to XtremIO, which should also address concerns of a product refresh hiccup," Sterne Agee storage analyst Alex Kurtz wrote in a note to clients.

Or as EMC's Goulden put it: "We've not been growing [VNX revenue] in the first half. We do expect to grow that in the second half."

Another launch will be the addition of software from recently acquired startup ScaleIO to EMC's XtremSF server-based flash technology. Goulden said most customers are using XtremSF PCI Express (PCIe) cards as cache instead of a primary storage tier, but ScaleIO software will allow them to build shared storage pools across solid-state drives, PCIe flash or hard drives. He did not provide an expected launch date for that software.

EMC also reported strong demand for its Isilon scale-out network-attached storage. Goulden said EMC shipped more than half an exabyte of capacity on Isilon in the first half of the year, including nearly 85 PB to one "webscale" customer.

Tucci said EMC's sales were strong considering overall industry spending this year. According to Framingham, Mass.-based International Data Corp., year-over-year storage disk sales dropped in the first quarter of this year for the first time in four years. IBM -- the only other major storage vendor to report second quarter earnings -- said its overall storage revenue was about the same as last year with hardware down 6% and software up 17%.

"I believe we performed very well, especially when one compares our organic growth to that of our peers," Tucci said. "We absolutely believe we are taking [market] share."

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