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EMC sees mid-range dip, but SANs still strong

EMC said the slowing storage market is affecting sales to its mid-sized customers, but its large-scale business is holding strong.

London - EMC said the market for storage is slowing at an unprecedented rate worldwide, and is especially affecting sales to mid-sized customers. However, the storage giant says its sales to large enterprise customers have remained largely unaffected.

"I've never seen as quick a slowdown," said Nigel Ghent, EMC's marketing director for the UK and Ireland. Ghent also says it is often difficult to ascertain the reasons why customers defer or cancel purchases. "They might say a project has been deferred, but this sometimes means it's been cancelled," he said. That said, EMC believes storage is still one of the strongest areas of IT in terms of growth, and as a market leader the company is well positioned to ride out the economic storm. EMC expects to grow its business by 20% this year.

The slowdown, which EMC says first started in the US at the end of last year and is now creeping into Europe, is especially evident in the embattled telco sector, which Ghent described as 'horrid.' He added that other areas such as finance and retail were standing up well.

Also slowing are sales of Clariion, EMC's mid-range storage systems for workgroup and departmental applications, said Ghent, though he added this accounts for a small amount of EMC's overall business. In addition, Ghent said EMC's top-end enterprise business had seen no marked change. "SANs are complex products with long lead times. Customers are still buying them because they are strategic," he said.

Ghent denied EMC was feeling the effects of increased competition from the likes of IBM and Hitachi Data Systems, both of whom have heavily targeted EMC in recent months with claims of better price/performance. "There's certainly a lot more noise, but we can hold our own against it by staying focused on thought leadership" he said. Ghent says customers are not pressuring EMC to change its pricing strategy. Gigabyte for gigabyte, there are cheaper vendors than EMC, but the company says it's providing customers with something different; it's not just about the hardware. "We're big enough to change our pricing, but customers aren't asking for it," says Ghent.

Meanwhile, EMC's focus for the future will concentrate on lowering the cost of storage management, which by far outweighs the cost of the storage system itself. Though EMC won't reveal details of new products until they are actually available, Ghent said the company is working on ways to automate management functions such as virtualization and load balancing.

EMC is already well down this path with products such as its long-standing Symmetrix Remote Data Facility mirroring software and its HighRoad operating system. Future acquisitions will be geared around small software companies that add to these functions, said Ghent. "True point-in-time is the holy grail as far as storage is concerned, and this can only come about through software functionality," he said.

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