EMC Talks Flash Storage, Pivotal Initiatives On 4Q Financial Call8:21 PM EST Tue. Jan. 29, 2013
EMC on Tuesday pulled back the covers on its product road map a bit during its fourth-quarter and full-year 2012 financial analyst call to give a peek at plans to unveil new all-flash arrays, PCIe-based flash storage and other strategic products and initiatives for 2013.
While details on many of its upcoming product launches set for 2013 were lacking, the product look-ahead gave credence to EMC's expectations that growth in its total business for the upcoming year will be above that of 2012, which executives have called a record year.
EMC reported revenue for its fourth fiscal quarter of 2012, which ended Dec. 31, of $6.0 billion, up 8 percent over the $5.6 billion the company reported for its fourth quarter of 2011. Fourth-quarter GAAP income rose 5 percent to $870 million or 39 cents per share over the $832 million reported last year. On a non-GAAP basis, income was $1.2 billion, or 54 cents a share, up 10 percent over last year's $1.0 billion.
For all of 2012, EMC revenue was $21.7 billion, up 9 percent over the $20.0 billion it reported in 2011. GAAP income for the year was $2.7 billion or $1.23 per share, up 11 percent from last year's $2.5 billion. Income on a non-GAAP basis was $3.8 billion or $1.70 per share, up 13 percent over last year's $3.2 billion.
For EMC, 2012 was a year in which the company executed well to meet goals, said David Goulden, EMC president and COO.
"Our differentiation strategy and unique value proposition enabled us to deliver very good results in the quarter and achieve record results for the full year. ... In 2012, we delivered once again on our triple play: gaining market share, investing in the business and market leverage."
A large part of Tuesday's financial analyst call, both in the prepared remarks and in the question-and-answer period, focused on EMC's product road map for 2013.
On the flash storage side, EMC plans to expand its PCIe server-based flash storage line while introducing its first all-flash storage array.
EMC on March 13 will sponsor an EMC Strategic Forum in New York, during which it plans to unveil Project X, its first all-flash storage array resulting from EMC's May 2012 acquisition of XtremIO, an Israel-based flash storage startup.
NEXT: Project X And Other Flash Storage Initiatives Coming
EMC's Goulden said the company expects to start selling Project X during the second half of 2013.
Because of Project X's rich data services and its ability to do deduplication and a lot of data snapshots, beta customer use cases have so far centered primarily on two main markets, Goulden said.
The first is virtual desktop infrastructure (VDI), in which the ability to do high-performance dedupe of data across thousands of workstations is a must, especially when many of those workstations are booted up simultaneously, he said.
The second is database test and development, in which the ability to do multiple snapshots and keep multiple copies of data is a must, he said.
"We genuinely believe this will be the best all-flash array in the market," he said.
The March product launch will also include a new PCIe server-based flash storage accelerator, Goulden said. Unlike EMC's current model, the VFCache, which was launched last February using SLC-based NAND memory, the new version will be based on lower-cost MLC NAND, he said.
Goulden said EMC expects to start shipping its new PCIe flash storage accelerator late this quarter or early second quarter.
The new offerings complement EMC's current flash storage business. Goulden said EMC customers purchase flash storage with over 50 percent of all EMC VMAX enterprise arrays and VNX midrange arrays shipped to the market.
EMC this quarter is also planning to expand its traditional storage array line with the introduction this quarter of the VMAX Cloud Edition, the latest model in EMC's VMAX enterprise storage family. He did not give additional details about VMAX Cloud Edition.
EMC's RSA security business on Wednesday will launch a new security analytics suite, Goulden said. The suite "gives customers a powerful next-generation tool to manage compliance, security and risk as one process," he said.
Goulden also said that VCE, a joint-venture of EMC, Cisco and VMware to develop Vblock converged infrastructures, on Feb. 21 has planned a major product launch.
"All three CEOs of VCE's parent companies will be part of its biggest product launch yet," he said. "With the market for converged infrastructure on fire, it's important to have the market fully covered. And, we'll do this with new product introductions to extend our market leadership."
NEXT: Details On Pivotal Initiative Coming
The VCE market leadership to which Goulden referred was in reference to a recent IDC report in which VCE was shown to have a 50-plus-percent share of the converged infrastructure market, or better than twice the share of its largest competitor. Goulden said that demand for VCE Vblocks surpassed the $1 billion run rate during the fourth quarter.
EMC and VMware also plan this quarter to unveil details about the Pivotal Initiative, a new organization founded with cloud, business analytics and big data technology from VMware and EMC and headed by former VMware CEO Paul Maritz.
The Pivotal Initiative will be focused on developing big data analytics technologies and cloud developers' platforms, said EMC CEO Joe Tucci.
Currently, over half of EMC's storage revenue comes from indirect channels, Goulden said.
The channel charge is being led by EMC's VSPEX reference architecture, which was launched in the first half of 2012.
"After two quarters since its launch, partners have sold more than 1,300 VSPEX systems, which makes it by far the fastest-growing reference architecture in the market," Goulden said. "Partners responded so quickly because VSPEX offered wider configuration choices than other reference architectures in the market today. With configuration options that include technology from Brocade, Citrix, Cisco, Intel, Microsoft and VMware, VSPEX partners have much greater choice in creating solutions for customers."
Looking ahead at both EMC's and the IT industry's prospects in 2013, Tucci said he expects IT spending to increase 3 percent over 2012, while EMC's non-VMware revenue should grow about 6 percent.
EMC total revenue for 2013 is expected to reach $23.5 billion. Consolidated GAAP operating income is expected to be 18 percent of revenue in 2013, while non-GAAP income is slated to be 25.5 percent of revenue. GAAP earnings per share is expected to be $1.35, compared to $1.85 on a non-GAAP basis.
During the question-and-answer period, when asked by an analyst whether EMC expected the storage business to slow down because of new technologies that help customer gain increased efficiencies from existing capacity, Goulden replied that his company does not expect such an impact.
NEXT: Growing Storage Business Despite Increased Efficiency
The recent economic slowdown impacted IT spending and forced CIOs to look at ways to gain more efficiencies from their IT assets, EMC's Goulden said. That resulted in both the increased adoption of new technologies, like auto tiering, auto provisioning and dedupe, which customers say can help them save up to 15 percent of anticipated growth, and a slower refresh rate as customers looked to use their existing storage assets longer than in the past.
"[That combination] means the 'fleet,' if I can use this term, of storage systems out there is better utilized and certainly older than it was two years ago," he said. "We don't think the flow of bits is changing. There's just as much a flow of bits going into networked storage as before. It's just that those bits are being stored more efficiently. That gives us confidence that we expect to see storage can grow faster than IT despite these aging factors playing into the portfolio."
PUBLISHED JAN. 29, 2013