EMC Courts SMBs

Comes down from enterprise to join rivals in SMB fray

March 10, 2005

4 Min Read
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You've heard it before: A major storage vendor has launched an initiative aimed at pushing SMBs (small to medium-sized businesses) into networked storage.

Specifically, EMC Corp. (NYSE: EMC) today unveiled a Making Storage Simple" program aimed at selling its SANs to SMBs (see EMC Takes Simple Approach).

For the project, EMC has beefed up its channel program and forged partnerships with a trio of companies SMBs are quite familiar with -- Cisco Systems Inc. (Nasdaq: CSCO), Intel Corp. (Nasdaq: INTC), and Microsoft Corp. (Nasdaq: MSFT). Software and hardware from these companies will be combined with EMC's wares in a series of turnkey solutions.

EMC's program is not to be confused with Hewlett-Packard Co.’s (NYSE: HPQ) Simple SANs project launched last fall (see HP and QLogic Aim Low). And try not to confuse the EMC Express Solutions packages of software and services for SMBs with the IBM Corp. (NYSE: IBM) Express Portfolio of products and services aimed at midsized businesses (see IBM Launches iSCSI SAN).

So what's different here? For one thing, other players, such as Dell Inc. (Nasdaq: DELL), HP, and IBM are also server companies that have played in the SMB space before with success. Since EMC has traditionally been an enterprise storage company, its full-bore entry into the SMB market underscores the potential it sees there.The storage guys see the SMB space as a largely untapped market. EMC estimates there are more than a million small businesses with storage budgets between $3,000 and $160,000.

The question is, How will the strategy work?

At least one analyst says it will only if EMC and others can present storage technology to the IT uninitiated at lower price points but without condescension or compromise. “The challenge is not to treat them [SMBs] like second-class citizens, or day-old bread,” says Ray Boggs, VP of SMB research for IDC. “In some respects, they’re more demanding because they don’t have the resources to waste.”

EMC seems to have put a lot of thought and money into its SMB strategy. The vendor spent over $3.5 billion in software acquisitions and claims it poured another $3 billion-plus into R&D over the last three years to make its products SMB-friendly. It purchased software companies Dantz and Astrum specifically for their SMB products, which are key pieces of EMC Express Solutions (see EMC Dances With Dantz and S&P on mmO2 Sale: No Change). On the hardware side, EMC launched a low-end Clariion AX100 SAN last May and a family of low-cost iSCSI systems last month (see EMC, Dell Get Small With SATA, EMC to Serve Up IP SANs, and EMC Mounts iSCSI Blitz).

The preparation reflects that to some extent EMC has resisted an easy-way-out approach. “The transition to SMBs is always difficult,” says analyst Arun Taneja of the Taneja Group. “I’ve seen so many times before where the temptation is to take an existing product, clip some of its wings, and place it in the SMB space so [vendors] don’t mess up margins on an enterprise product.”One offshoot of EMC's SMB program -- and those of other vendors -- could be increased sales of iSCSI. EMC pitches iSCSI as the protocol for small businesses because it’s cheap and uses Ethernet rather than Fibre Channel. Dell also sells EMC’s Clariion iSCSI systems, and IBM has an iSCSI low-end system (see IBM Slips iSCSI Into SAN). HP’s Simple SANs are Fibre Channel, but HP has hinted that iSCSI is on its roadmap.

“The majority of SMB customers don’t have any networked storage,” says Mike Wytenus, EMC’s senior director of midsized enterprise marketing. “With their budget, they’ll go to the cheapest connectivity offering. Now that we’ve jumped into the iSCSI pool rather than just having our toe in the water, the market will come to us.”

IDC’s Boggs warns against making assumptions, however, opining that the market won’t develop just because of iSCSI. He says SMBs don’t care about the underlying protocol, as long as everything works. “They really don’t care about the technology. They’re view is, ‘iSCSI, Fibre Channel, what’s going on? Will it meet my needs, will it work efficiently?’ ”

— Dave Raffo, Senior Editor, Byte and Switch

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