Tucci talks

HOPKINGTON Mass. – When Joe Tucci first arrived at EMC Corp. just after the turn of the century, the company posted losses of more than US$600 million and was trying to integrate Data General, its high profile acquisition. After a brief stint as

president and COO, Tucci became full time CEO in January 2001 and he went to work on turning the company around. Since then, EMC posted revenues of US$8.23 billion in 2004, acquired Legato, Dantz, Documentum, VMWare and Smarts, and is trying to be a leader in information lifecycle management (ILM).

During his time as chief executive, Tucci — who came to EMC as CEO of Wang — moved a predominantly direct-only company into a company that does more than 50 per cent of its business indirect worldwide. At the same time, he inked a five-year deal with Dell Computer to resell EMC CLARiiON storage systems.

IT Business was invited to meet Tucci during EMC’s International Press day. The following is an edited transcript of his Q&A session with the media.

Q: You have acquired a lot of companies. Do you ever worry about being acquired?

Joe Tucci: Honestly, I tell you, I do not spend one minute worrying about getting acquired. I just want to do my job, but the industry will continue to consolidate. Sun bought StorageTek. NetApp bought a company today (Decru). I do not worry about the other side. But, we have value and we are expensive at US$35 billion. We’ll do the best for our shareholders. They would have to offer a substantial premium so not a lot of companies could acquire us. We are the acquirer. We are here for the long haul.

Q: EMC currently has just over 50 per cent of its worldwide revenues going through the indirect channel. Do you see that number increasing dramatically soon?

JT: Indirect revenue is one of those tough things to get a handle on. We have a huge direct sales force and they go out ahead of the forest getting new orders. They work with partners. We have a commercial sales force that we are building up and they work in a model similar to Microsoft’s model and help partners find new customers. We do not take those orders directly. It is a very cooperative model. But, I will tell you that so long as I am breathing we will have a direct sales effort. At the same time we are partnering. In the nineties, we were all direct and not that easy to partner with. Now I want to change that and make it as easy as possible to partner with EMC. 

Q: Are you going to further the Dell partnership? If you do are your concerned it could marginalize your higher end products and make storage more of a commodity?

JT: The Dell partnership is very important to EMC. Dell is a successful company. They don’t have just a good business model, but a great business model. And it calls for a 1.2 per cent spend on R&D and we spend about 11 per cent of revenues on R&D. So this is an expensive area. While some of the low end is commoditizing this is far from becoming a commodity market. I am 100 per cent convinced we can be a great service to Dell. Give them great products. Since we gave them storage they have become the fastest growing storage company on the market. This is agreement is evergreened every year. Still has another five years to run. We are totally committed to it and not worried about the competition. It is more of a partnership. I see a lot of opportunity in their commodity model business. Storage is complex and an area we work together.

Q:  What is your take on the recent Sun acquisition of StorageTek? 

JT: I want to be kind here. I think to me StorageTek is good company but it is a tape company. I believe tape is not a growth business. When we acquire something in EMC I make it a point to acquire a company that will accelerate our growth. Tape is a no-growth business. I don’t understand it. Tape is not going to be used for back up and recovery. Virtually all recovery will come from disk-based systems. Tape will be for archive. I think it will be a declining market. But, it will not go away. If I were in Sun’s shoes I would look for growth markets. But, it is fine and we will see what they will do.

Q: Your company is certainly putting a lot of effort into information lifecycle management (ILM), but so are other competitors. How is your offering different and how can you channel partners help bring your offering to market? 

JT: Imitation is one of the greatest forms of flattery. If we do something there will be copier. Centera, for example — all of sudden every vendor has something with content addressable storage. With ILM, we did not make up the name. I saw it first in a Gartner report. That is what we focus on. We’ll spend over US$1 billion in R&D for ILM. We have the services and partnerships. And, we have speed to market. I think it is great that other competitors have jumped on the ILM bandwagon. It will increase the size and importance of the market.

The best way to go to market with ILM is through business solving solutions. In the financial sector e-mail (is a problem of) size and expense that is building and you want to bring that down. Also you have to make sure they are preserved and instantly recalled even if they are seven years old. I can only spend so much money. Customers never want to be down. We do a complete e-mail archive storage management solution.

In some cases we’ll need partners. Some with software and some in integration but, we’ll build practices around ILM all the way down the line and that is the best way to go to market. 

Q: What is your evaluation of the Canadian market? How is EMC Canada and your channel partners performing in Canada?

JT: I like Canadians. Right now there is a tremendous amount of small and medium sized businesses in Canada. We are in the high end, but SMB is our next thing and you still have a lot of large companies in Canada and several mid market sized businesses up there and the growth rate is great in Canada. The Canadian economy is very good and we will continue to grow sales and support. We have a call centre in software up there and we are very committed to that market place.

Comment: info@itbusiness.ca

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