By Network World Staff
Network World, 12/25/00

Storage is hot, so much so that market research firm Robert Frances Group predicts that 70% of IT investment dollars will be spent on storage this year. A good chunk of that money is going to storage powerhouse EMC, which market research firm Dataquest says captured 35% of the overall storage market with its Celerra, Clariion and Symmetrix product lines.

According to financial reports, EMC is indeed on fire. Storage revenue grew to $2.14 billion in the third quarter of 2000, up 47% compared to the same period a year ago. That marks EMC's highest rate of storage revenue growth in five years, the company says. Enterprise storage software revenue grew at 61% year over year, while year-to-year growth was around 40% for enterprise storage system and midrange storage revenues.

Overall consolidated revenue for the third quarter reached $2.28 billion, up 34% over the same period in 1999. At press time, its stock traded at a 52-week low of $44.75 and a high of $104.94 before settling in the $80 range.

In 2000, the company consummated a series of crafty acquisitions and partnerships that will garner it a place in the growing optical network and network-attached storage (NAS) markets. EMC acquired NAS operating system vendor CrosStor, partnered with Cisco, Lucent and Nortel Networks in the optical network market, and spun off McData, its Fibre Channel switching company.

The CrosStor acquisition is crucial to EMC's bid to dethrone rival Network Appliance from its midrange NAS stronghold. Vendors such as Auspex and Hewlett-Packard use the CrosStor operating system in a variety of NAS appliances. Just weeks ago, EMC announced it will integrate CrosStor into its new IP4700 NAS device.

EMC's participation in the standards process can't be ignored, either. The company works with vendors of Fibre Channel-over-IP technology to bridge its storage arrays over distance and is participating in the standards effort to send data natively over IP. EMC's own Fibre Alliance, while criticized by observers for its single-purpose goal of testing interoperability between Symmetrix arrays and other storage-area network/NAS hardware, counts 50 storage companies as members.

Going forward, EMC's biggest challenge is penetrating the midsize storage market while maintaining its strength in large-scale enterprise storage. Its Symmetrix series of storage products is holding its own in large companies; it must now attack the midrange space where Compaq StorageWorks products prevail.

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