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.