EMC revamps to fend off competition

The Hopkinton, Mass., company introduced its Symmetrix 8000 yesterday, its first major redesign of its top-end system in years. The refrigerator-sized systems, packed with dozens or hundreds of hard disks, typically cost $500,000 to $600,000 and sometimes 10 times that price, said Mark Vargo, vice president of product marketing for EMC.

The new systems are built with a totally different chip, Motorola's PowerPC, instead of with Motorola's 68000 series processors. Although the new chip and other internal improvements lead to a faster product, changing such a fundamental component requires that software be rewritten and typically makes corporate buyers cautious.

The popularity of the storage systems for use at big businesses or e-commerce sites has lifted EMC's stock from $58.75 a year ago to $137 today. But EMC's plump revenues--$1.82 billion in the first quarter of this year--have attracted competition from IBM, Sun Microsystems, Hitachi Data Systems and former EMC ally Hewlett-Packard.

Storage systems once were drab products that received far less attention than the servers that run heavy-duty corporate computing tasks. Storage systems are increasingly found at the core of corporate networks, however, and often cost more than servers because they control information retrieval and storage--two crucial Internet functions.

"It's getting extremely competitive out there," Vargo said.

For example, IBM already has launched a counteroffensive with "Shark," a high-end storage system that the company says provides faster performance and a more flexible design.

EMC's current architecture is "aged," and its new design still won't outperform IBM's, according to Bob Samson, IBM vice president of worldwide marketing and strategy.

Compaq Computer, Sun Microsystems and HP also took pains to put their own spin on the news from EMC. Every three months, Sun executives reassure financial analysts in conference calls that their storage products are on track and that the company is aggressively targeting EMC's business.

HP dumped EMC last year so it could sell products under its own name and keep a higher fraction of the profits. The HP products, however, are designed by Hitachi Data Systems.

IBM has mounted perhaps the most aggressive campaign. Big Blue has sold Sharks to 37 percent of EMC's top 200 customers, Samson said. He acknowledged, though, that many of these systems are more a foot in the door than an outright replacement of EMC products. Still, some customers--including Bayer, Tyson Foods, Primerica Financial Services and Family Dollar--have replaced EMC storage with IBM, he said.

Last month, IBM added another $400 million to its storage effort, including a goal of hiring another 1,000 research, sales and support employees. The company has begun recruiting heavily at colleges, Samson said: "We welcome body piercing, tattoos, pony tails."

EMC acknowledged that its older design, the Symmetrix 5000, was getting elderly, but it argued that it served as a useful decoy to keep competitors complacent.

The new systems can hold as much as 19.1 terabytes of data--the better part of the 23 or so terabytes of information in the Library of Congress, Varga said. Most of that was made possible by using smaller hard disks--as many as 384 fit into a Symmetrix machine--with larger capacities.

EMC also announced new mid-range storage products from the Clariion line EMC acquired when it bought Data General last year. For EMC, "midrange" means that a typical configuration costs $180,000 to $200,000.

The new Clariion 4500 incorporates some features that previously were available only in high-end EMC products, such as the ability to connect to many servers of different types, Varga said.

EMC also made modest improvements to the software that runs on the Symmetrix machines, adding more features to make it easier to protect data.

It's good that EMC didn't add major new software features right now, said Gartner Group analyst Nick Allen. "When you're changing so much of the hardware platform, you really don't want to make it too complex" by making major software changes, he said.

EMC's software is written at a low level, called "microcode," instead of in a computer language that's closer to what a human can understand, which is the more common approach. That makes software development somewhat more difficult, and many see it as a liability within EMC.

EMC is trying to move away from the term "microcode," preferring instead to call it "enginuity."

Allen isn't concerned with the difficulties of microcode. "EMC is better at microcode than anybody else," he said. "They do a good job testing it, too."