EMC’s stock dropped almost 7% today after they missed their quarterly revenue target by almost $100 million. They blame it on poor product mix. To my mind though, there is a bigger story here.
First, forecasting is the number one measure of marketing quality. EMC has managed many product transitions, knows its customers and its highly compensated sales force keeps track of every account. So what happened? Clearly, EMC marketing is out of touch with customers and their needs. If customers behave in unexpected ways, then you know your behavioral model needs changes. Companies who rely on tough account control tend to create a marketing culture that says, in effect, “sure they won’t like it, but we can make them do it”. This can work for years, but as IBM demonstrated in the late ’80s, when it starts to go wrong it can be fatal.
Second, a $100 million shortfall on a $1.3 billion business (my estimate of the size of the Symmetrix quarter) suggests more than a forecasting problem. Some of EMC’s big customers are going elsewhere. And they may not be coming back.
EMC’s bloated, disjointed product line, strong arm sales tactics, premium pricing and the failed ILM “marketecture” have started taking their toll. I hope EMC’s management can weather this storm for the sake of many thousands of EMC employees and still-loyal customers. Yet CEO Joe Tucci sounds increasingly desperate and I see little to suggest that he and his crew are ready for the radical re-invention that EMC requires.
I watched several once great firms, like DEC, lose their footing with tragic results. It would be sad if the world’s largest independent storage firm were to sink into a similar decline.
There exists within all companies all the elements for “The Best of All Possible Worlds”. In addition, “All the ingredients are there for every one to be happy and yet no one is happy”. Why is that?
How many tech companies can you say that about? Sun was one. McNealy stepped aside. The fire in his belly was gone.
Tucci never got high marks overall from the previous EMC management. But
he has done a better job than they would have under the same conditions. Like McNealy, the old EMC way is done. Joe tried, and did a lot of good.
Maybe Tucci is not the “Right Stuff” for EMC for the next round. His real task was to transition EMC to the “New Reality”. He saw that as Storge Management software. A lot of people did. ILM was meant to be only a part of that solution. ILM should be a real part of every Storage solution “THAT NEEDS IT!”. ILM is not the “absolute” next incremental step for existing EMC installations, as the EMC sales force wants to believe.
I’ve been installing ILM solutions, which I called the “Storage Hill”, for years and so has everyone else. And calling it something else. ILM is the a part of the right solution for certain situations. I haven’t seen many IT infrastructure architectures that can support ILM effectively. It takes more bandwidth than most shops have.
IBM solved their Storage greed and hubris problem by giving the Storage hardware away. Won’t happen at EMC, It might happen now at Sun.
Let’s face it! What sets EMC’s total Storage software solution apart from HDS, HP. IBM, for the big boys or any number of smaller players, if you design the Storage to fit the LOB (Line of Business) supported? The Google, Microsoft, and Yahoo solution of giant Data Centers and commoditized Storage fits their business model. They already have the bandwidth to sling Information and Storage around anyway they want to. Maybe not Microsoft but they have the bucks to do anything they want.
I once worked for a major Big Oil. They could spend $20-30 million dollars on a single “dry hole” well drilling operation and not bat an eye. They once drilled $140 million dollars of “post holes” as an ante to get into the bidding game with a country. They gave us $500,000 to buy Storage for the seismic Information.
They were offended when I took them to task for restricting the IT Data Center budget to $2 million dollars annually. They were even more offended when I told them their Data Centers looked like something a bunch of very bright High School students would throw together for a weekend science project.
Good points, Robert. I agree that Tucci did a good job of the transition, yet at some point you have ask, “transistion to what?” The original “what” was EMC v2: the software company. Yet, while VMWare directly confronts the customer issue of the needed low duty cycle server farm, there has been no similar attack on the analogous storage problem: the cooling of the enterprise data.
Heavy-duty, high I/O apps aren’t going away, but the market growth will be in protecting and managing huge stores of cool data. Can’t afford to do that on Symmetrix, so EMC’s answer is? ILM, I guess, but as many users have noted, the tools for classifying and moving data aren’t there, and even if they were, what EMC product would it make economic sense to move to?
Comments welcome.
Like many successful companies in high tech, the ability to “blink” and sense the market is often lost to the successes made in the past. For EMC its not about storage capacity or what thehave to sell but it is about what the make need to do to meet the future. The technology is only and enabler not an end in itself.
My guess is that the products at EMC are not wrong but their understanding on what their markets must do with a storage capabilty is! They have lost touch with their abilty to blink and shape their company to reflect the dynamics of the market.
It’s not the products; it’s the markets!