EMC Ramps Storage Wars

EMC Ramps Up Storage Wars

As it unveils a lower-priced data-storage line, the company takes aim at mom and pop—and NetApp, IBM, HP and Hitachi.
Bigfoot is going after mom and pop.

Storage behemoth EMC (ticker: EMC) is expected to make a big splash Tuesday, by launching a line of lower-priced data-storage arrays that should rock the computing market's middle and lower tiers, an industry member says.

The Hopkinton, Mass., industry leader plans a global unveiling in New York, London and Singapore of the products, which will be priced below comparable systems from NetApp (NTAP), Hewlett-Packard (HPQ) and International Business Machines (IBM).

NetApp, considered EMC's toughest foe, commands roughly a quarter of the small-to-medium storage market, known as SMB. IBM and HP are also significant SMB players; some of their storage products are bundled with the computer servers they sell. EMC isn't in the server business, except through a nascent collaboration with Cisco Systems (CSCO) that offers machines that combine servers, storage and networking in a single box.

EMC's storage line, called VNX, will feature an entry-level array (VNXe), expected to start at $9,500 per unit. That would be the least expensive machine in its class—even less than those of Dell (DELL), a close partner of EMC, the industry member says. In fact, what little exposure EMC has to the fast-growing SMB market has been through its collaboration with Dell, which ratcheted up its own storage offerings by acquiring EqualLogic in 2008.

Since the start of 2010, EMC stock has moved up steadily, from around 18 to almost 25, and the VNX line might keep the momentum going. The biggest bulls on the company see it hitting the high 20s or 30 in a year.

EMC has long been a dominant player in high-end storage, competing with IBM and Hitachi Data Systems, a unit of Japan's Hitachi (HIT), which offer refrigerator-size arrays. But cracking the vast SMB market hasn't been easy. By undercutting its rivals' pricing and using computer resellers, EMC thinks it can sell 50,000 to 100,000 SMB units a year. The VNX line will include EMC's current middle-tier products, Celerra and Clariion, although their brand names will be retired.

EMC's marketing machine, which views this VNX launch as its biggest ever, plans various record-breaking stunts—including an Evel Knievel-esque jump on a Harley-Davidson over an unprecedented amount of storage gear—to underscore the point that the products are being sold at a record-low price. EMC also plans to shatter the record for the number of people crammed into a Mini Cooper, the pint-sized car that BMW has used to gain entrée to new customers at the lower end of the auto market.

The VNX line fires a broadside at NetApp, which has been aggressively acquiring companies to exploit the trend toward virtualization and data-center consolidation. Last week, it announced it's buying privately held Akorri Networks, a cloud-storage vendor, for an undisclosed sum. Look for NetApp, EMC and their rivals to continue feeding on smaller storage outfits over the coming months. The storage wars have only just begun.

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