Storage market leader EMC finds strategy with Dell

Growing interest in business intelligence and other data analysis techniques as a means of boosting corporate performance is creating new demand for data storage solutions. That in turn is creating more competition for long-time storage market leader EMC.

Currently, EMC commands 21.9 percent of the data storage market, maintaining a slight lead over Hewlett-Packard, which has 20.8 percent of the market, according to the most recent figures compiled by Stamford, Conn.-based Gartner.

Meanwhile, IBM, which commands 16.6 percent of the market, recently announced it is equipping 100 consultants and some channel partners with a new storage appliance—code-named Piper—that is supposed to make it easy for customers to migrate from EMC systems.

"This is a very competitive space, and EMC, as the dominant supplier, is the target," says Mike Kahn, managing director of The Clipper Group, a technology consulting firm based in Wellesley, Mass.

Ken Steinhardt, director of technology analysis at EMC, says his company is ready for the challenge. "We aim to outspend everyone else on R&D, outlisten everyone else in understanding what our customers want, and outperform everyone else in meeting those needs," he says.

Tom Hawk, IBM's general manager of enterprise storage, insists EMC doesn't know what customers want from a data storage vendor. "EMC talks about feeds and speeds and faster chips, but when we talk to customers, these just aren't hot issues," he says. "Customers want to know what they can actually do with the capability. It's not about buying more hardware; it's about managing information better."

All marketing talk aside, EMC has a strategy for sustaining a certain amount of revenue from data storage systems, even if it ceases to be recognized as the official market leader. That would be its alliance with Dell, which has changed the dynamics in both the PC and server markets by undercutting competitors' prices. Dell has been working the same strategy in the storage space for at least two years, and roughly 85 percent of the machines it sells are built by EMC.

"Dell is our biggest partner, not a competitor," Steinhardt says. If things stay that way, EMC should continue to do well in the storage business, at least from a revenue standpoint, even if someone else holds the title of market leader.