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EMC rolls out cheaper storage system

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CIOL Bureau
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NEW YORK: EMC Corp. has launched a cheaper version of its most expensive data storage system and vowed to take back the market share it lost over the past year to newer models from aggressive competitors.



It has been more than two years since EMC introduced a new version of its pricey Symmetrix line, causing it to lose market share to companies like IBM, HP and Hitachi. EMC's stock has fallen from over $100 to below $10 per share in that time.



"Clearly we've lost mind share and some market share in the past two years, and we're going to take it back," EMC Chief Executive Joe Tucci said, following a meeting with analysts in New York.



EMC expects the new version of Symmetrix, which it is calling the DMX series or direct matrix architecture, to account for more than 50 percent of its Symmetrix sales during the current quarter.



All of the three versions allow users to access data more quickly and have some similarities to EMC's lower-priced Clarion systems.



Companies have also begun to look for less-costly alternatives, buying simpler data storage systems that may not have the power of a Symmetrix but can still get the job done.



As a result, EMC has begun selling cheaper products, introducing lower-priced lines of data storage systems. It has also focused on the software side of the data storage business, where margins can be higher.



The pricing of the new system, which starts at $409,000 and runs to $2.5 million, appeared to be about 20 percent less than the previous Symmetrix system, analysts said.



That's what analysts had been expecting, Sanford C. Bernstein analyst Toni Sacconaghi said.



"Bottom line is solid architecture, reasonably close to our expectations, but there's an open question about how the competitive dynamic will ultimately play out and indeed where Street pricing ends up," Sacconaghi said.



Competition is stiff among IBM, HP and Hitachi, who said they aren't concerned about the new EMC machine taking share. EMC is ranked third in overall data storage behind HP and IBM, according to market research firm IDC.



Both HP and IBM say that they have an advantage by selling both computers and storage systems.



Peter Korce, a storage executive at HP, said customers want to buy their large computers and storage systems from the same company. "That is very important to many of our customers," he said.



IBM agreed. "It's really less about who has the fastest box -- and we think our Shark will outperform EMC -- it's more about integration," said Bob Samson, a vice president of sales at IBM.



Meanwhile, Hitachi's director of product marketing, Philip Townsend, said it's unclear how the pricing will pan out. The hardware pricing of 4 cents to 8 cents per megabyte of data that EMC has cited for the system doesn't include software and services, he pointed out.



Tucci said sales from the new Symmetrix systems have already been factored into the company's guidance for the quarter. He also stood by his outlook for technology spending to be flat during 2003.



© Reuters

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