Vendor Ratings, VDR Robert Passmore, Roger W. Cox, Adam W. Couture, Carolyn DiCenzo, Stanley Zaffos

Transcription

1 Vendor Ratings, Robert Passmore, Roger W. Cox, Adam W. Couture, Carolyn DiCenzo, Stanley Zaffos Research Note 6 August 2003 Vendor Rating: EMC s Renewed Offerings Rate With a strong position in hardware, EMC continues to expand its importance to users of storage products, but it still has work to do to establish a long-term leadership position in storage management software. EMC Overall Rating: What You Need to Know: EMC continues to expand its importance to users of disk storage products. It is currently in the Leaders quadrant, or otherwise in a strong position, in all but one or two of the storagerelated Magic Quadrants that Gartner has published. In hardware, it is a strategic vendor for many enterprises, and the outlook for the future is positive, despite the setbacks of 2001 and In storage management software, EMC has a comprehensive vision, substantial investments and a good position in several emerging segments. However, this market is dynamic, and EMC has work to do to establish a long-term software leadership position. Analyst Comments: After major challenges in 2001 and 2002, EMC has begun to recover, with renewed competitiveness. Its early position in storage management software, combined with gains in the past two to three quarters, drives our overall rating of EMC as positive. Detailed Rating: Initiative Corporate Viability Strategy Financial Marketing Organization Market Offerings Product/Service Symmetrix High-End Storage Arrays CLARiiON Midrange Storage Arrays Centera Content-Addressable Storage Celerra Network-Attached Storage ControlCenter Enterprise Storage Resource Management Legato Acquisition (Backup, Information Life Cycle Management) Data Replication Products Rating Strong Strong Strong Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Storage Professional Services Technology/Methodology Pricing Structure Customer Service/Support Sales/Distribution Support/Account Management Strong Corporate Viability: Strategy: EMC s overall corporate strategy is to be a full-line storage solution provider, with the exception of tape and tape libraries. To that end, it has pushed hard with investments and acquisitions in storage management software, while maintaining healthy investments in leading-edge storage hardware. It has innovated in content-addressed-storage and has aggressive programs to build professional and financial services to complement the products. It is setting the industry pace of development in most of its product categories. Its biggest challenges are in software, where, despite early leadership in market share, it must overcome its hardware-biased past, build a viable software sales organization and prove that it can sustain momentum. Its recently announced purchase of Legato Systems helps in this regard but provides the additional challenge of retaining Legato s channel partners, some of which are competitors. EMC also faces challenges in competing with the broad-portfolio companies that can bundle systems and applications with storage in some situations. Financials: EMC lost disk revenue market share and revenue in 2001 and 2002, with resulting income losses for much of the period. With the refresh of both CLARiiON and Symmetrix in the second half of 2002 and the first quarter of 2003, respectively, the introduction of Centera in 2002, strong pushes into storage software and aggressive cost cutting, EMC has returned to profitability and begun to show growth in revenue. Early signs are that it has stopped market share erosion in With more than $6 billion in cash and near-term investments, and with the announcement of a stock-trade acquisition of Legato worth $1.3 billion, EMC is financially strong and well able to sustain itself moving forward. It has a market capitalization of more than $21 billion, making it very difficult to acquire by anyone except IBM and Hewlett-Packard (HP). Marketing: EMC has remarkable clout and brand recognition in the marketplace. Its ability to place a product, brand or concept and gain recognition as, for instance, it has done with Symmetrix or CLARiiON is matched by only a few other vendors. It has a Web site full of great information, but access is through a long list of products with names unique to EMC, making it difficult for anyone but an EMC expert to find information. Finally, EMC has not done enough with its marketing to overcome lingering perceptions that it is proprietary and hard to do business with. Interestingly, the company has changed its policies, practices and strategy to largely correct its behavior in the market, but broad segments of the market still believe past data. Organization: EMC has moved to give its software business equal footing with hardware, and, by recruiting heavily from the outside, it has worked hard to balance out the hardware bias and behaviors that drove the company s success in the 1990s. It still has much work to do in this area, especially with the sales organization, which only in the past year began to form a very small software-only sales force. The acquisition of Legato provides a greater-than-200-person software sales force, but initially it will be managed as a separate organization so as not to disrupt the ongoing Legato business. This leaves unanswered the questions of how EMC s overall software products will be sold, and how the company will leverage the customer relationships of both companies moving forward. Legato also represents the biggest merger to date for EMC, and, although EMC has a good track record with acquisitions in recent years, this one will take time to absorb. 6 August

3 Market Offerings: Storage Hardware Products: EMC is a strategic vendor for many Global 2000 accounts. Its refreshes of the CLARiiON line in 2002 and the Symmetrix Direct Matrix (DMX) in early 2003 place its traditional hardware product lines in leading-edge competitive position and improve costs. Despite share loss in 2002, Celerra remains the No. 2 network-attached storage (NAS) product in the industry, and Centera, offering content-addressable storage, is innovative, unmatched so far by other major storage vendors and gaining traction in the market. EMC is in the Leaders quadrant of Gartner Magic Quadrants for high-end disk arrays, midrange disk arrays and storage area network (SAN) solutions. It resells SAN switches from the two Magic Quadrant leaders. Tape and libraries are the only major storage hardware area where EMC does not have a substantial initiative. Storage Management Software Products: EMC s AutoIS vision promises to deliver an automated storage utility, and, to that end, EMC is investing in or acquiring products in almost every storage management category. Its controller-based products like TimeFinder and Symmetrix Remote Data Facility (SRDF) have made EMC the established market leader in the replication segment. Its initiatives with the EMC ControlCenter suite especially SAN management, but also including storage resource management, expanded device management and provisioning have given it a large early share lead in the overall enterprise storage resource management segment. In addition, its announced acquisition of Legato provides a full set of products in the data management segment of the market. Although it is unlikely that EMC will catch Veritas Software in backup/recovery, the information life cycle management products are in the game for this emerging market segment. Independent file systems are the only major storage management software area that EMC does not participate in, although it has plenty of file system technology in such products as Celerra and Centera. EMC faces a number of challenges in these segments. Its strategy to deliver software that works with any vendor s hardware has fairly broad support for reporting and monitoring. However, for active management, such as logical unit number (LUN) masking and automated provisioning, it currently supports only EMC and limited, older HP hardware. It promises to deliver IBM, Hitachi Data Systems (HDS) and broader HP support in the second half of 2003, but it will then have to work to convince skeptical customers that it is serious. Acquiring Legato goes a long way to filling in the data management offering, but it will take substantial work to re-architect products in all segments to better integrate and leverage cross-product capabilities. (This assumes that EMC can successfully negotiate the merger process and create an integrated vision.) Finally, EMC had quality issues with some of last year s software releases. This is not consistent with the company s past and appears to have been corrected, but EMC must be watched carefully as it engages more engineers on broader fronts. Storage Professional Services: EMC has increased its investment in and focus on professional services by establishing specialized storage practices dedicated to fabric-attached storage, storage software and business continuity. Through an alliance with Accenture, EMC is expanding its capabilities to include consulting services aimed at storage management best practices for multivendor environments. These services are currently available in the United States and Europe, but EMC is promising to expand them to other geographies. Recently, it changed its service account management structure by implementing a client solution lead structure, whereby one person is responsible for coordinating all service deployments within an EMC account. Although this is a sound long-term strategy, initial implementation has caused confusion among some EMC customers. We have rated EMC promising overall in this area, but feedback from Europe is much more spotty on these initiatives, and it would be rated caution in that geography. Unlike, its competitors, EMC has been slow to warm up to providing true managed storage services and on-demand pricing. However, in July 2003, the company began to address this gap with the rollout of new 6 August

4 tiered storage and switch pricing based on remotely monitored utilization rates. Gartner believes that storage management services are under development and could be rolled out in the second half of Pricing: EMC has a lingering reputation for high-to-exorbitant hardware prices. Through the latter part of 2001 and early 2002, it made substantial adjustments in hardware pricing by extending discounts often as high as 90 percent to reposition itself to often be the low bid. Then, in July 2002, EMC reduced list prices and created more-commoditylike pricing for items such as disk drives. It also limited the flexibility of the sales force, which had often previously presented widely divergent prices, even to the same customers in different locations. If EMC were to publish and consistently maintain a public price list, it would have a tool to help resolve many consistency and channel management issues. EMC claims to be competitive, and our data mostly supports the claim, although we have seen some high first-bid situations, and EMC is clearly trying to obtain a premium with DMX over 8xxx systems. EMC s software pricing is based on raw disk capacity under management, has many tiers, and can result in surprises for customers that add storage to existing platforms. The scheme has the further issue that flat hardware budgets purchase ever-increasing capacities, which drive software expenditures up unless EMC constantly reduces its tier pricing, something that it has not done regularly. However, capacitybased pricing seems to be the trend for other vendors storage management software. Customer Service/Support: EMC has a service philosophy of owning the customer problem, even if it stems from another vendor s product. As a consequence, EMC customer satisfaction for hardware and software support is excellent. Customer satisfaction regarding EMC customer services and professional services are both independently audited by an external organization, and service employee evaluations are largely driven by their customer satisfaction scores. Sales/Distribution: EMC continues to have the largest, strongest storage-focused sales force in the industry. Although, historically, almost all of its revenue was obtained through direct sales, in recent years EMC has worked to establish strong channels especially with system integrators for Symmetrix and software, and with general value-added reseller channels for CLARiiON. Dell is a primary channel for CLARiiON in the small and midsize business, government, and education markets, and it is manufacturing low-end CLARiiON arrays. The indirect channels now move 25 percent of Symmetrix and two-thirds of CLARiiON. Although it must now deal with some channel conflicts, EMC s biggest challenges are in learning to sell software, especially to heterogeneous environments involving other vendors hardware. Related Research and Ratings: Magic Quadrant for High-End Enterprise Disk Array, 1H03 Magic Quadrant for Midrange Enterprise Disk Arrays, 1H03 Magic Quadrant for SAN Integrated Solution, 1H03 The Initial Storage Provisioning Magic Quadrant SAN Management Software Magic Quadrant EMC Introduces a New CLARiiON Update EMC s New Direct Matrix Technology: A Big Leap Ahead EMC s DMX Goes for High-End Performance Leadership 6 August

5 EMC s Survival: Sure Bet or Also-Ran? EMC Improves Competitiveness With Product Linkages Storage Services Magic Quadrant EMC Regains Competitive Edge With Next-Generation Symmetrix EMC Software Supports Heterogeneous Storage Hardware EMC s Purchase of Legato Makes Sense for Customers EMC s Purchase of BMC Storage Assets Benefits Both Vendors 2003 Enterprise Backup/Restore Magic Quadrant Magic Quadrant for Storage Resource Management, 2003 Rating Definition: Strong Solid provider of strategic products, services or solutions. Customers: Continue investments. Potential customers: Consider this vendor a strong strategic choice. Demonstrates strength in specific areas, but is largely opportunistic. Customers: Continue incremental investments. Potential customers: Put this vendor on a short list of tactical alternatives. Shows potential in specific areas; however, initiative or vendor has not fully evolved or matured. Customers: Watch for a change in status and consider scenarios for short- and long-term impact. Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this initiative or vendor. Faces challenges in one or more areas. Customers: Understand challenges in relevant areas; assess short and long term benefit/risk to determine if contingency plans are needed. Potential customers: Note the vendor s challenges as part of due diligence. 6 August

6 Strong Negative Difficulty responding to problems in multiple areas. Customers: Exit immediately. Potential customers: Consider this vendor only if there are no alternatives. Acronym Key DMX HDS HP LUN NAS SAN SRDF Direct Matrix Hitachi Data Systems Hewlett-Packard logical unit number network-attached storage storage area network Symmetrix Remote Data Facility Core Topic Storage Systems ~ Hardware Platforms EMC Headquarters: Hopkinton, Massachusetts Web Location: 6 August