EMC fights on price to stay at the top in data storage

NEW YORK: EMC Corp. will keep slashing prices as needed to fight off rivals

challenging its leadership in the market for data storage machines used to

collect digital information such as e-mail, executive chairman Michael Ruettgers

said on Wednesday.

"Last year on our conference call, we said you could expect to see EMC

get more aggressive on pricing against select competitors in select

marketplaces," he said in a speech to investors at a Bear Stearns

technology conference here. "The expectation is that we'll continue to be

aggressive here in those certain sectors," he added. "We're driving

pricing down aggressively during the period and we'll continue to do that."

EMC has been facing increased competition from companies such as

International Business Machines Corp., Compaq Computer Corp., and Hitachi Data

Systems Corp., a US-based unit of Hitachi Ltd.

"I think it's a very competitive market, and they're saying 'Look, we

said we were going to do this last year, and we're doing it now.' ... They are

under a lot of pressure," said Bear Stearns computer hardware analyst

Andrew Neff. EMC said on Wednesday it captured 34.6 per cent of the nearly $17

billion market for external data-storage equipment in 2000, exceeding the

combined market share of its four closest rivals.

A study by independent research firm Gartner Dataquest showed that EMC picked

up 4.4 percentage points in market share for products that store digital

information such as e-mail and computer network traffic. EMC's external storage

products generated $5.9 billion in revenue last year. The report also appears to

lay to rest claims that EMC's market share is slipping. Hitachi Data Systems,

which boasted it was gaining on EMC, saw its market share drop to 5.3 per cent

from 7.2 per cent, according to the Gartner report.

Compaq ranked second with 10.8 per cent of the market, followed by IBM (8.1

per cent), Hewlett-Packard Co. (7.5 percent), and Sun Microsystems Inc. with 7.3

per cent, according to the Gartner study. Fujitsu Ltd. showed the fastest growth

in the industry, capturing 4.9 per cent of the market compared with only 0.4 per

cent in 1999, according to Gartner. Fujitsu racked up $833 million in storage

revenue in 2000, compared with just $49 million two years ago, according to

Gartner.

Gartner sells reports to the companies involved in the survey. Ruettgers said

in an interview after the presentation that one area where the company would cut

prices was for products around mainframe computers. "In the past we've

talked primarily around the mainframe and some areas like that."

When asked about Hitachi, he said: "They're the ones we're targeting

with this stuff." Ruettgers said that in regard to customer activity and

demand, things were still pretty dynamic, with different geographies all moving

at different paces. "I would say not dramatic improvement," he said.

(C) Reuters Limited 2001.