News Stay informed about the latest enterprise technology news and product updates.

EMC's new CEO plans to stay the course

In a tech world that's been roiled by recent executive turnover, EMC Corp.'s transfer of power earlier this month was positively placid. Mike Ruettgers became executive chairman and turned over the CEO reins to Joe Tucci, 53, who joined EMC just over a year ago. Tucci's first task: to announce blowout quarterly earnings just as International Data Corp. reported that EMC's leading market share increased again last year.

With business humming along, Tucci isn't likely to rock the boat, analysts agree. And Tucci agreed in a Jan. 25 interview with Paul Gillin, vice president of editorial at

Now that you're in this position, what's going to change at EMC?
The number one priority is to keep it going. We're doing great. Mike and I have been working together seamlessly for a while and the best thing people will see from the outside is nothing. It's just that I'll be at the head of the table in those meetings, not Mike.

But we also recognize that what got a company to a great place won't keep it there. As we aim for $12 billion in revenue in 2001, we have five new growth drivers:

Networking of storage: This market was $7 billion in 2000 and will be $35 billion in 2003, according to the analysts. It's growing in excess of 92%. We are the clear leader with about 32% share in 2000. We grew 300% in storage network revenue in 2000. We will continue to lead in SAN, NAS and HighRoad software, which fuses the two.

Software: We grew software in Q4 at 72%. We will grow it over 50% this year. We will invest over $1 billion in R&D in 2001 and over $750 million of that will go to software. Last year we also bought five software companies for over a half billion dollars.

International expansion. When I got here we were doing about 36% of our revenues internationally in a computer market where 60% of the spending is outside US. We're hyper-investing internationally. In the fourth quarter we grew Europe over 50% and Asia over 100%.

Information plants. This is a term we think we coined. We believe that as much information will be created over the next three years as was created since the dawn of man. We believe huge information power plants will emerge to hold this data. This wil be a major growth driver.

A vast services network. We have over 600 professional services resources and we will way more than double that this year. We're also certifying partners and we'll have a whole cadre of EMC-proven professionals, at least twice as many in our partner chain as at EMC. But this has become a pretty competitive market. Hasn't that changed your strategy with respect, at least with respect to pricing?
We are using price significantly now. What's keeping our margins as high as they are is the rich software content. In software, we own our own intellectual property and that's almost pure margin. The services business has a little bit of gross margin pressure but does very well on operating margins. We've been weaning off of Aviion [server] line, which is lowest margin thing we do. We've got a great mix and we expect margins to remain in our guidance range of [a percentage of ] mid to high 50s. Who are your most serious competitors right now?
I honestly believe we do not have a direct competitor. We have segments of competitors. In software there's Tivoli, Veritas and CA. On the high end it's IBM and Hitachi. In midrange it's Compaq and Sun. In NAS [network-attached storage] it's Network Appliances. But none of those companies can take us on directly.

[Technology] consolidation is the biggest macro trend in IT today. Customers want to combine servers and storage and we can handle all that. It's our biggest advantage. Your relationship with Storage Networks has been a sore point this year. Are you taking steps to repair that?
No. We have more than 600 people in professional services today. We are going to considerably more than double that number. We have partners signed up, including storage service providers, who are putting their professionals through EMC certification. We are building a huge service network out there, many times the size of SNI. For a lot of reasons, SNI is not one of those partners. They've chosen other approaches and that's fine with us. A lot of dot-com companies, who were spending heavily on storage, have gone under recently. Has that hurt the business?
The dot-com business is down, but we were prepared. Dot-coms never exceeded 10% or 11% of our revenues. We predicted correctly last year that businesses would use the advantages of the Internet to grow fast and reduce costs. So while the dot-come business fell off, the global 2000 business increased dramatically. Do you and Mike Ruettgers differ in any way regarding vision?
I really don't think so. Our relationship has worked out beyond each of our wildest dreams. We like each other on a personal basis, respect each other a business basis. On the vision side we don't disagree. Some analysts have suggested that your appointment signals EMC's plans to become more acquisitive. Can you respond to that?
We did five software acquisitions last year. You should count on us maintaining it. We certainly will not slow it down. IBM has made it clear that it wants to oust EMC from its number one position. Do you think IBM is any stronger now than a couple of years ago?
I don't think so. We have a significant lead on IBM technology. Look at our growth rates. Their share decreased last year and I don't think they're any more competitive than two years ago. What's your position on supporting storage networking over Internet Protocol?
We are transport-agnostic. Go to our interoperability lab and you'll see us connecting to anything over everything. If there's a faster way to connect, we'll be there. What's your plan for competing in the crowded midrange market?
We believe we're investing more in the midrange than anyone else. Our Clariion product have the reputation for being the most available on the market. It was slightly behind in software but we have closed that gap. MirrorView, SnapView, Remote Mirror and a great set of tools will be on the midrange and brought under the EMC ControlCenter umbrella so your central storage and edge storage can be managed together.

Dig Deeper on Storage vendors

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.