Tucci Talks Roadmap

Part of today's earnings call was a glimpse at technologies on EMC's horizon

October 26, 2007

3 Min Read
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While posting a strong set of third quarter results this morning, EMC previewed plans for MAID, thin provisioning, Web 2.0, and a new family of low-end SMB systems.

"In the not-too-distant future we will announce a system designed for Web 2.0 data centers, and new, low-end, SMB products," said CEO Joe Tucci, on a conference call. "We do have more products coming out, there will be more towards the start of the year."

EMC will also enter the market for Massive Array of Idle Disks (MAID) technology, which is championed by Copan, Fujitsu, and Nexsan. "We will come out early next year with 'spin down' on our disk libraries," Tucci said. He did not reveal whether this will be traditional MAID or a disk-based, power-saving technology similar to that offered by HDS.

In response to a question from a financial analyst, Tucci also threw his weight behind thin provisioning, or "virtual provisioning" as it is known in EMC-speak. "We will have that on all our systems in the first part of next year," he said, adding that the technology has largely been dominated by a handful of "innovative" startups.

DataCore, MonoSphere, 3PAR, and Intransa are among the smaller firms banging the drum about thin provisioning, which aims to ensure that physical disk capacity is only used as it is needed.Despite recent moves by rivals HDS and EqualLogic, EMC has taken a cautious approach to the technology, which is only offered on its low-end Celerra systems.

EMC's report for the third quarter included revenues of $3.3 billion, up 17 percent on the same period last year, and above analyst estimates of $3.2 billion.

On a GAAP basis, EMC's earnings per share were $0.23 on net income of $492.9 million, up from $0.13 and $283.7 million in the year-ago quarter.

EMC's non-GAAP earnings per share were $0.17 on net income of $377.8 million, up 31 percent on the same period last year, and inline with analysts' estimates.

"In Q3 we saw strong demand for our information infrastructure products and services," said Tucci, explaining that the vendor largely avoided the spending problems that have recently blighted many of its competitors.EMC is also benefiting from demand by smaller firms, notably in iSCSI, which was also highlighted as a factor in EMC's third quarter figures. "We're seeing good growth in the adoption of iSCSI," said David Goulden, EMC's CFO, pointing to strong demand for the vendor's recently-launched low-end Celerra NS20.

EMC also used today's call to discuss its spin-off VMware, which reported a 90 percent year-over-year revenue hike in its own results last night.

"We're continuing to see VMware's virtual infrastructure as a strong driver for networked storage," said EMC's CFO David Goulden, explaining that VMware contributed 2.6 cents towards his firm's earnings per share.

Despite all the brouhaha around virtualization software, Tucci's comments on MAID and other new array features indicate that EMC's hardware offerings remain key to its long-term success.

"EMC is not running away from the hardware business," wrote TBR analyst Allan Krans in a note today. He points to the vendor's 20 percent hike in CLARiiON revenue this quarter and 8.6 percent growth in overall hardware revenue. "We believe that EMC's hardware portfolio remains the most critical element to its strategy."In trading today, shares of EMC rose $1.78 (7.9%) to $24.30.

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  • Copan Systems Inc.

  • DataCore Software Corp.

  • EMC Corp. (NYSE: EMC)

  • EqualLogic Inc.

  • Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY)

  • Hitachi Data Systems (HDS)

  • Intransa Inc.

  • MonoSphere Inc.

  • Nexsan Technologies Inc.

  • Technology Business Research Inc. (TBR)

  • 3PAR Inc.

  • VMware Inc.

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