Originating Author: David Vellante
The massive trend in the past seven years toward storage consolidation, both at the high end and midrange of the market, has taken tens of billions of dollars out of the cost of managing infrastructure -- yet there's so much more to be done. With new technologies to improve utilization and reduce energy consumption at the high end, out-of-control exposure from the growth of unstructured content, the need for greater security across the board and pressure for out-of-the-box simplicity in SMB markets, it feels like we've hardly made a dent.
EMC dropped the flag in the race to secure the next round of customer commitments on July 16, 2007 and is trying to lap the competition with its January 2008 announcement which incorporates flash devices into the DMX-4. The company is intent on both protecting and mining its installed base while at the same time capitalizing on the hottest trends in the market. This is both an opportunity and a threat for storage vendors. On the one hand, EMC is challenged to position, refresh and help customers integrate its broad product line. The breadth and complexity of its solutions provides opportunities for niche players to gain a foothold in key customer segments. On the other hand, no matter what the customer problem, EMC sales reps seem to have an industry-leading solution in their bags to offer-- this recent announcement continues to incrementally enhance those solutions.
As EMC antagonists like Hitachi and IBM at the high end, and NetApp in file storage, emerging thorns in the side like 3Par and several other newcomers try to find their next $1B by taking it out of EMC's franchise, a serious battle looms on the horizon. In addition, the potential of clustered controllers, grid computing and new approaches to storage (e.g. the Google File System) put further pressure on EMC and will harden the company's resolve. The industry should expect EMC to become even more aggressive as it protects its turf and excercises its growing power in an attempt to freeze out or neutralize efforts by the competition to convince customers to adopt a better mouse trap.
Action Item: In the coming months, at this critical juncture in the storage industry, EMC will become increasing aggressive in trying to keep competitors from poaching on its installed base. Letting EMC lock customers in to an approach that will bias their decision-making over the next five years will bring substantial penalties to competitors. Competitive vendors should not be afraid to trade near-term gross margin for long term customer footprint and consequent economic gains.
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