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Happy Problem: Big Demand: EMC Must Hustle to Produce Enough Data-Storage Systems As Customers Line Up

Posted on: Tuesday, 9 May 2006, 06:02 CDT

By Anne Krishnan, The News & Observer, Raleigh, N.C.

May 9--Triangle employees have spent months developing EMC's new data-storage system and getting it ready to debut this week.

Now the hard part really begins as they work to meet pent-up demand for one of EMC's fastest-growing brands.

Sales of EMC's Clariion systems, which are used to store information on computer networks, increased 32 percent in 2005 to $1.79 billion.

That kind of growth would be enough to keep local workers busy, but there's more to the story. News of the release of EMC's Clariion UltraScale CX3 systems leaked out this year, prompting many customers to put off their purchases, spokesman Greg Eden said.

"It was a very poorly kept secret that we were coming out with a new system," he said. "If ... [customers] could delay, they did so, so they could get the latest and greatest."

That means the Apex facility, which manufactures all Clariion products for North American sales, has its work cut out for it.

"We've got that pipeline of customers eager to get their hands on this new system," Eden said.

Business was robust enough for EMC to add 85 employees in the Triangle last year. Its local payroll numbers about 250 in Research Triangle Park and about 400 in Apex. The company had revenue of $9.66 billion in 2005, up 17 percent, and a $1.1 billion profit.

"The company is growing faster than the market, and our plan is to continue to grow faster than the market," said Bob Hawkins, vice president of EMC's North Carolina operations.

The growth will spur more hiring in the Triangle, he said, although he declined to say how much. The company's local work force grew 14 percent last year, outpacing the company as a whole, and about the same amount as in 2004.

EMC, with 27,000 employees worldwide, came to the Triangle in 1999 with the purchase of Data General. In Apex, it makes three midrange storage devices for medium-sized companies and departments within large companies. RTP workers largely develop the software that makes them run.

Among the company's rivals are Network Appliance, IBM and Hewlett Packard, but EMC leads the pack in the midrange storage systems market. At the end of 2005, the firm held 33 percent of the market share, with HP the next closest competitor at 26 percent, Eden said, citing information from research company IDC.

The broader external disk storage systems market, which EMC leads with a 21 percent share, grew 12.1 percent to $16.2 billion in 2005, IDC reported in March. The sweet spot for network storage systems was in mid-range products that serve a broad range of customers, analysts said.

EMC's advantage is the technology that it incorporates into its products, said Robert Toomey, senior vice president at E.K. Riley Advisors, a Seattle equity research firm. The company has significant financial resources and a drive to maintain its technology and market leadership, he said.

"From a business perspective, the competition is always fierce, so you have to be the best, be the first and you have to really take care of the customer to succeed," Hawkins said.

EMC's networked storage systems are refrigerator-sized -- or larger -- cabinets that contain hundreds of hard disk drives, a minicomputer and power source. Multiple computer servers can be linked to the cabinets, making the storage and transfer of data such as e-mail and bank account information far more efficient.

Clariion CX3 products have all-new software and hardware and double the performance and capacity of the last version, EMC said. New systems start at $27,000 and cost as much as $1 million, depending on how the storage system is configured. They're flexible, allowing businesses to mix and match the latest disk drives and software, EMC said.

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Copyright (c) 2006, The News & Observer, Raleigh, N.C.

Distributed by Knight Ridder/Tribune Business News.

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NYSE:EMC, NASDAQ-NMS:NTAP, NYSE:IBM, NYSE:HPQ,

Source: The News & Observer

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