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EMC Corp.
Fools Duel over EMC

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By in4life
December 29, 2000

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Wow, did this get long winded, or what...well, maybe it's worth a look anyway.

I've watched this board off and on for awhile now. I'm still somewhat surprised that I've never noticed much of a challenge to, what I see as, the incorrect notions that abound about just what business EMC is in. Granted, there is no doubt that EMC is in the storage industry. But that is a very broad statement. It's widely accepted that Brocade is in the storage industry, but we all know they don't make storage. I don't believe EMC does either. Again, I'll give you that EMC does sell storage. But I think it would be more accurate to say they resell storage.

But I strongly believe that if they only resold storage, they would likely be priced as a commodity company, making commodity company profits, just as David Langford has suggested will be the case in the not too distant future. But EMC has not fit that description since they first entered the storage market about 10 years ago. Why? I think it's because EMC has produced and sold something very unique since they first entered the storage business. And I think they still do so today. But if it's not storage they produce, what is it?

What EMC has always produced for it's customers has been continuously innovative solutions for accessing their stored information in a high performance and highly reliable fashion, with a keen eye towards facilitating the management of ever increasing mountains of valuable information. That was a mouth full.

How have they done this in the past, and how will they continue doing it in the future, you ask? Simply software. Well, that might be an over-simplification. In reality, I think EMC has built hardware when they haven't been able to satisfy their requirements from vendors. But make no mistake, their major innovations have come through designing software to make the hardware perform the way their customers need it to.

Even ten years ago, what EMC did that caught the attention of major customers was to provide faster access to the data by putting large amounts of cache in front of those disks. EMC wasn't the first to put cache in front of disks. They were the first to use really large caches. This seems like a hardware innovation. In fact, it wasn't. The real innovation was putting all of the required hardware together, and have it actually work, and work well. What was the glue that held all off this hardware together? Software. The software that runs inside their box.

Now it has been reported for years that EMC is a hardware company, and that it has fairly recently entered the software sector. And I suspect, some still think of EMC as relatively new in the software business. On the contrary. EMC has been in the software business since they entered the storage business.

For those that didn't know before, now you know how EMC made their first big splash in the storage industry. Their second big splash was reliability. They protected the disks inside their box. Yes, multiple copies. That too required innovation in software. Again, inside the box. And that began the process toward tape backups becoming obsolete. With tape backups of large databases no longer required, a huge barrier against "ever increasing database size" was knocked down.

I won't bore you with a long history of their innovations, but every one I can think of has been implemented primarily through the innovative use of software. And you can be sure, the innovations keep coming. And every one has been aimed at solving their customer's problems. And every time, they were pioneering a new approach, while the rest of the world was playing catch up.

Those first two big splashes came when EMC was primarily in the mainframe market. When the "open system" world of data became the next big storage market, many predicted EMC's demise. Didn't happen. Why? Well, arguably, although the "street" and it's denizens seemed to view EMC as an "mainframe iron" company, in reality making the shift from mainframe to "open systems" storage was not a departure from what EMC had always done. Again it was a software issue. And though the new hardware interfaces had to be integrated into the box for the new "open systems", the issues EMC dealt with were still the same. The issues were fast access to, high reliability of, and the management of ever increasing mountains of highly valuable information. EMC was still in business. And as we all know, in a growing way.

All of this is why, as an EMC shareholder, the thought of competing against new competition like NTAP doesn't particularly scare me. EMC has been developing innovative solutions for these daunting real issues that surround their customers information and solving their business needs for longer than most, and more successfully than any of the competition they've encountered. The interfaces, formats, and protocols are relatively minor issues. Everyone in the business will provide access to the data with whatever interface the customers eventually demand, and those interfaces will continue to evolve. For everyone. The real issues involve solving the problems that make the larger amounts of information the easiest to use in the most reliable fashion. As they say, "I want it, and I want it now". With EMC's continued commitment of R&D dollars, I think it's safe to say that they haven't lost their focus or their understanding of what products will be in highest demand. That is, the products that solve their customers problems.

And that is what EMC makes: Solutions to problems involved with the storage, access, and use of information...not storage.

Now, regarding David Langford's comment

"the rate of technological advancement is accelerating, and the need for greater storage space won't outpace the growth of technology forever, or even very much longer."

I found this statement, well, odd at first. But after some thought I find myself in agreement. Throughout human existence the advancement of technology has always driven the increase of information. The increase of information has always advanced technology. They drive each other. That is why information is so valuable to it's users. And that is why those that seek to use it in the most innovative ways will always succeed. The creation and access requirements of new information is snowballing and will continue to do so. It is the nature of things. And that is why I think that someday in the future, perhaps the not too distant future, EMC will be recognized by the stock markets as the most valuable company on the planet. Now that's a little bit bullish, huh?