EMC, Oracle broaden their storage deal

Under the relationship, the two companies will make sure their products work well together, said EMC chief executive Michael Ruettgers at an EMC conference here today. In addition, Oracle will preferentially promote EMC storage hardware, added Mike Rocha, senior vice present for platform technologies.

The collaborative work between the two companies is already under way. Under the alliance, Oracle has formed a "strategic business unit" and a development center to help tie the two products together. Financial and personnel terms of the deal were not disclosed

EMC, riding high from sales to Internet customers, wants to solidify its lead in high-end storage systems that can connect to mainframe computers as well as Unix and Windows NT-based server computers. The company has grand aspirations of doubling its 1999 revenue--an estimated $5 billion, Ruettgers said today--to $10 billion for 2001. Currently, it is the leading maker of data storage systems for large corporations.

To reach its goal, EMC must keep IBM's "Shark" storage system at bay and stay a step ahead of former ally Hewlett-Packard, which dumped EMC and instead joined up with Hitachi Data Systems for storage. Two efforts under way at EMC will help that push, the company has said: selling lower-end data storage products from newly acquired Data General and selling more software along with hardware.

EMC bolstered its software today with the addition of a new data management software product called Control Center. The software lets an administrator monitor and control different elements across a network, but more significantly, takes automatic actions to adjust to bottlenecks and other problems.

"It reacts to the unexpected," said James Rothnie, EMC's chief marketing technical officer.

Control Center won't come cheap. Pricing for the software will vary depending on what modules are sold, but the average price tag will likely be $100,000 to $200,000 per customer.

"I think Control Center is going to be one of the heavy-hitters," Rothnie said in an interview. The software soon will bring in hundreds of millions of dollars in revenues, he predicted.

Every penny counts. Ruettgers predicted today that software sales will account for nearly one fifth of EMC's 2001 revenue goal of $10 billion, not including the effects of the Data General acquisition. In 1999, EMC will sell an estimated $750 million in software, Rothnie said.

Software revenue in the most recent quarter was 14 percent of the overall sales, Ruettgers said. "By 2001, it should be up in the high teens," he said.

Data General acquisition key
Through its acquisition of Data General, EMC is expanding from its mainframe storage stronghold into less powerful storage systems, but analysts say the company has a ways to go before conquering the more crowded Windows NT and low-end Unix server market.

"They've got to get on the horn" regarding the new low-end products, said Gartner Group analyst Roger Cox. "They still are talked about today as just too expensive for the NT market."

The new software will help EMC with its traditional high-end customer base, Cox said. "Their software for the high-end marketplace is quite compelling," he said.

The Clariion storage products from Data General aren't a big departure from EMC's storage expertise. But the Aviion servers from Data General are a different matter.

EMC is setting up the Aviion server group as a separate division with a new leader. But the Aviion servers will account only for a small fraction of EMC's business, Ruettgers said today in an interview.

"We will focus on an attractive subsection of the NT marketplace," such as helping companies replace large numbers of lower-powered Windows NT servers with a single Aviion machine, Ruettgers said.