EMC maps growth strategy

The data storage giant outlines its plans for future growth at the company's annual meeting with financial analysts.

Matt Hines Staff Writer, CNET News.com
Matt Hines
covers business software, with a particular focus on enterprise applications.
Matt Hines
2 min read
Executives from data storage giant EMC outlined their plans for future growth at the company's annual meeting with financial analysts held early Wednesday.

Speaking at a gathering of more than 300 investors, analysts and journalists in New York, company CEO Joe Tucci reemphasized EMC's goal of becoming a provider of "information lifecycle management" technology through its portfolio of networked storage hardware and software product lines.

Information lifecycle management involves controlling and tracking data from the time it enters a database and is stored in a system until it is no longer needed. Its primary goal is giving users a more reliable method of storing and accessing information, regardless of where the data is kept.

"EMC is bringing our experience to bear on the challenge of intelligently managing all of our customers' information, from creation and use to archive and disposal," Tucci said. "We believe this information lifecycle management will drive the next major wave of EMC's growth."

Bill Teuber, EMC's chief financial officer, said the company will meet earnings projections for the rest of 2003. He said he expects its revenue growth rate to be in the "mid-teens" for the second half of 2003 and throughout fiscal 2004. Teuber also said he expects EMC's gross margins to improve to 48 percent or more by the fourth quarter of 2004. However, he warned that EMC's gross margins may fluctuate from quarter to quarter, based on varying rates of revenue growth.

EMC has been working hard to broaden its reputation as a viable provider of storage software, most recently by agreeing to purchase Legato Systems, a maker of backup and recovery software, in a $1.3 billion deal. Mark Lewis, executive vice president of EMC's open software operations, said the company would continue to build its ability to manage and automate networked storage systems.

IDC analyst Rick Villars said the concept of information lifecycle management remains in its early stages, but EMC appears to be making the right moves to deliver on its promises.

"Given where they want to go, EMC needs to continue to update its products and potentially make additional acquisitions," Villars said. "They have many of the components in place, particularly in light of the Legato deal. The challenge will be in trying to pull the pieces together."

Villars said EMC's greatest battle may be in developing the right sales and marketing message to convince buyers that they need to continue to make investments in new technology. However, he praised the Legato acquisition, saying the merger will prove valuable in fighting perceptions that EMC markets software merely as a way to sell more storage hardware.