The sales kerfuffle comes at an inopportune time for EMC, considering the challenge it faces with HDS -- a challenge that's intensified by that company's recent alliance with Sun Microsystems Inc. (Nasdaq: SUNW) (see Sun Shines on Hitachi).
According to a Merrill Lynch & Co. Inc. research note issued today, the combination of Sun's and HDS's sales teams could threaten EMC in the field. Sun has 10,000 sales and systems support staff, 400 of whom are dedicated to storage. HDS has 600 direct sales employees. Together they will be able to contest far more deals versus EMC than in the past, asserts Thomas Kraemer, storage analyst at Merrill Lynch.
With a sales force of at least 5,000 (according to various published reports), EMC isn't likely to back off from any competition Sun and HDS can muster. Still, the alliance will no doubt turn up the heat for EMC. And persistent rumors of staff defections could take a toll that isn't directly related to EMC's actual headcount.
Indeed, competitors don't hold fire on the topic. "EMC has been bleeding staff for a while, says a spokesperson for competitor Network Appliance Inc. (Nasdaq: NTAP). Many come to us, but EMC puts the fear of God in its employees who are considering leaving." According to this source, EMC's tactics include issuing search warrants for employees' hard drives and pursuing defectors with lawsuits (see EMC Sues Over Secrets).
EMC's weathered other high-profile staff losses. One of the biggest came when the previous head of global sales, Peter Bell, left several years ago to found StorageNetworks Inc. (Nasdaq: STOR). He played a key role in building and managing EMC's Open Storage Group, which subsequently became a major growth driver for the company.