EMC has the strength to withstand the current economic downturn and represents a less risky bet for users. EMC's large portfolio brings with it lots of integration challenges, but with its continued emphasis on R&D investment, users can be assured of getting a rich set of features and functions. EMC's Joe Tucci made it clear in his keynote presentation to customers that EMC is not "letting up on the R&D pedal." In an effort to gain share in the downturn Tucci also indicated EMC wasn't pulling back on sales people-- again good news for customers, as EMC's culture empowers sales people to access resources to satisfy demanding customer needs.
Is EMC gaining share in the downturn? It's hard to tell. Small companies like Compellent have reported outrageous growth year-on-year but from a comparatively tiny base. 3PAR, another relatively small firm, announced flat revenues in Q1 (year-on-year) while NetApp's revenues were off 6% in total and 20% in product revenues (year-on-year) in its fiscal Q4, which most closely aligns to calendar Q1. EMC's "Information Infrastructure" revenue - where it counts the core storage business - was off in the low double-digit range year-on-year.
What's perhaps more important is that EMC is generating free cash flow (FCF) in the downturn. EMC's FCF was $681M in the first quarter and its FCF from the Information Infrastructure business was $494M. By comparison, NetApp generated $45M in FCF in its comparable quarter while the smaller firms are not even on the radar in FCF terms.
Given these outstanding FCF figures it's hard to argue EMC doesn't get richer in 2009. While numerous companies may be weakened by the downturn, the Wikibon community expects EMC's predictions that it will emerge from the downturn stronger will be accurate.
The key issue for customers is that if EMC is intent on gaining share in 2009, how can customers take advantage of this posture? One way is EMC's solutions business, which offers some of the best customer 'freebies' in the business. Users should take advantage of EMC's solution perks to reduce implementation risk by ensuring performance and configuration testing on EMC's nickel.
The other strategy users should consider is to approach 2009 EMC acquisitions as a project, organizing cross-functional teams with visibility into all EMC acquisitions across storage, security, content management, and services. This will ensure the highest quality service and best price from the storage giant.
Action Item: EMC is strong and healthy, with bundles of resources, and loyal customers should take advantage of a buyer's market. Users should treat EMC negotiations as a project bringing together finance, legal, technical, business, and procurement teams with cross-organizational visibility. As part of this effort, customers should tap EMC's solutions group and secure free performance and integration testing for critical areas such as VMware.
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