Tucci: EMC VNXe Is An SMB Storage Game-Changer
EMC Chairman, President and CEO Joe Tucci isn't bothered by skeptics who believe his company doesn’t have the right stuff to dominate the SMB storage market. Those so-called Missouri Show-Me types are the kind of people he loves to win over, said Tucci in an exclusive interview with CRN. ’When you win over a skeptic, you have really created a loyalty. And I love doing that.’
That is just what Tucci is attempting to do by unleashing its VNXe/VNX storage family a secret three-year, companywide internal development project based on industry-standard Intel processors. Unveiled Tuesday, the entry-level VNXe is aimed at the heart of the SMB storage market and includes a breakthrough new version of the company’s revolutionary Unisphere software that for the first time gives EMC a complete unified storage line that spans the market for small business to the Fortune 500.
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Tucci is discussing the VNXe launch in the executive suite at the $17 billion storage giant’s Hopkinton, Mass., headquarters on a chilly winter afternoon just before Christmas. It’s the same conference room where three years earlier Tucci was first briefed on the VNXe product set—code-named Neo, a reference to ’The Matrix’ protagonist and an anagram that translates to ’One.’
VNXe, which represents an attack on the sub-$10,000 storage market, aims at longtime rivals Hewlett-Packard and IBM. But its two biggest targets are archrival NetApp and former top reseller partner Dell, both of which have staked a claim in the SMB market that is, to say the least, troubling to EMC.
On that winter afternoon, Tucci said EMC has built the simplest array—bar none—to configure, install and use, a contrast for a company considered by many storage junkies as long on power and complexity but short on simplicity. The big surprise with VNXe is, indeed, its simplicity and the aggressive, new price points. The entry-level model is priced starting at $9,260, according to EMC, bringing to the SMB record-breaking performance at a price less than Dell, NetApp, IBM and HP. Rich margins for partners are also part of the package.
Tucci is not playing for small stakes. He sees a worldwide storage market totaling some $50 billion, with EMC sitting on the sidelines in an SMB segment that some say accounts for as much of 30 percent of that sum.
’When we enter a market, we try to become No. 1,’ said Tucci of the bet EMC is making with VNXe.
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The VNXe SMB offensive ultimately may be Tucci’s biggest and boldest bet. That’s no small statement given the 10-year transformation EMC has undergone since the straight-shooting Brooklyn native took the CEO reins in January 2001.
Tucci has spent some $14 billion since he came on board, acquiring 50 companies—including 35 pure software companies, some of which are considered the most innovative in their market segments. Topping them all is EMC’s crown jewel: virtualization market leader VMware.
It has been a long road for Tucci in taking EMC from the 2001 dust heap of the dot-com collapse to the top of the storage software world. EMC could have been swallowed up like Sun Microsystems—one of the so-called Four Horsemen of The Internet—if not for his technology vision. In the early days, skeptics were questioning whether Tucci was the right executive to lead EMC out of the dot-com detritus. ’Obviously, I was the new guy so I got a lot of the blame,’ he said.
But Tucci set about doing what he has always done: defying the skeptics. He got the same dose of ’Do you have what it takes?’ when he joined troubled Wang Global in 1990 and took it from a tired office automation products company in Chapter 11 bankruptcy protection to a technology services power through a string of 10 acquisitions. When he was done, Wang’s market capitalization had tripled and the company was sold to Getronics NV.
One of the secrets to that kind of leadership is ’a lot of self-confidence,’ Tucci said. He doesn’t get too low when the critics are calling for his head or too high when he’s getting praise from the technology cognoscenti. ’I don’t get too impressed,’ he said in his standard meet-it-head-on tone. ’You with me? You have got to provide that bounce in life. And people watch. And if you have that bounce, then the company hopefully gets that bounce. If you continually get too low, too high, too low, too high, you kill the damn thing.’
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These days, Tucci is in danger of getting too high rather than too low. He’s getting lots of praise for reinventing EMC. That includes his bet on Intel industry-standard processor technology that led to his decision to bring on board 30-year Intel veteran Pat Gelsinger in September 2009 as president and COO of EMC’s Information Infrastructure Products group. Gelsinger’s job out of the gate was to make sure the company had the right product and channel plan to rewrite the rules in the SMB market.
Gelsinger said he was surprised at just how much work had to be done to set in motion an aggressive channel expansion. ’The first time they presented their channel plan to me I found it a little bit humorous coming from the number of VARs and partners that Intel drove,’ said Gelsinger. ’It was like we lost a digit or two.’
Gelsinger set about changing the EMC culture to get the whole company to make the necessary shift. Part of that included a task force known as S-75 (Sub-$75,000) aimed at getting every last group within the company to adjust to the new reality of a unified product set aimed at the Fortune 5 Million rather than the Fortune 500.
That meant making sure EMC has a big, broad channel that can deliver an SMB product designed for the IT generalist rather than a midmarket storage administrator, he said. By all accounts, what is going on now is an ambitious partner recruitment effort aimed at adding several thousand new partners to EMC’s ranks. That’s a big change for a company that has focused more on partner quality than quantity and been extremely careful about not overdistributing its products. The expansion represents a dramatic increase in EMC’s partner base given CRN’s 2010 Partner Program Guide count of 1,800 EMC partners in the U.S. and only 5,500 worldwide.
’These [VNXe] offerings open the floodgates for EMC and our partner community,’ said Gregg Ambulos, vice president of Global Channels Operations and America Channel Sales. He points out that VNXe represents the first-ever ’open’ product not restricted to a select group of partners. That means a new way of doing business with EMC’s distribution partners so they can quickly on-board new SMB partners. EMC’s new affiliate tier, which requires a $50,000 annual sales commitment, allows partners to resell VNXe after only three hours of free online training. ’We want to get out and get to the masses,’ said Ambulos.
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Getting the product specifications right was only a small part of positioning VNXe for success, Gelsinger said. ’The other 80 percent is the really big hill for us to climb,’ he added.
’We are in a three- or four-year cycle of building out and broadening the channel at that level,’ said Gelsinger. ’While we are happy with the partners that we will have in place for launch, the magnitude of what we need to go do is so much bigger. I really think we are going to be under way in this for several years until we really feel like we fully develop what we need in terms of our channel partners and channel relationships.’
Gelsinger is also leading the charge to crank up the EMC product machine for the second and third generations of VNXe. The storage industry in general is about 15 to 18 months behind the Intel processor product cadence, he said, and he aims to put EMC in lockstep with Intel processor releases to drive even greater price, performance and ease of use. ’If I am three to six months behind them [Intel], I could deliver anywhere from 50 percent to 100 percent more performance for free,’ he said. ’That is our objective—to be right on their cadence. The result will be features, function, performance that will differentiate us from the industry. That is our objective. We are going to be better aligned [with Intel] going forward, and we are well under way in that partnership to accomplish that.’
Gelsinger is serious about price/performance leadership. Only 45 days after taking the job at EMC, he made a presentation to the board of directors that focused in part on just that. His message? ’We have to go take the price points in the channel much more seriously if we are going to accomplish our objective to be the biggest player in storage and infrastructure going forward. This is a must-do for us.’
If everything goes as planned, Gelsinger said VNXe ’could be and should be a multibillion-dollar business for us going forward.’ Of course, he cautions, it won’t happen overnight. It’s going to take several years to build out an SMB channel. What’s more, he said, ’We have to change the perception of EMC.’
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Changing the perception of EMC is job one for EMC Executive Vice President and Chief Marketing Officer Jeremy Burton, a 20-year industry veteran hired by Tucci just 10 months ago to bring some of his SMB marketing DNA to EMC’s SMB attack. To dramatize just what kind of record-breaking impact the compact VNXe systems are going to have on the market, Burton at Tuesday's launch event plans to stuff 26 people into a Mini Cooper auto, setting a new ’Guinness Book Of World Records’ mark. If the Mini Cooper stunt isn’t enough, Burton is also recruiting his 10-year-old son Edward to demonstrate just how easy it is to set up and configure VNXe on stage before a crowd of industry analysts, press and customers at the event at The Equitable Center in New York.
’It has never been simpler and there has never been an opportunity to make more money with EMC gear,’ said Burton in a clarion call to partners. ’We are pressing the reset button on a number of perceptions around EMC: not affordable, too complex.’
The way Burton sees it, VNXe is somewhat of a Trojan horse that is going to come up underneath competitors such as NetApp and even Dell with ground-breaking price/ performance. ’This is not something that we have kind of bent and shoe-horned into making it look like an SMB product,’ he said. ’We think we’ve got it right. It took us that long [three years] because we wanted to make sure that we had the characteristics that were going to be successful in the SMB space.’
The Soul Of A New Machine
Douglas Wood, EMC vice president of integrated systems and components who oversaw the VNXe product development team of 140 engineers, said that from the outset the system was designed to drive the high value EMC is known for into a volume product. The team essentially brought an enterprise-class storage system to the SMB market, he said. It did so by leveraging EMC’s shared software assets to hide complexity with automated best practices and features Unisphere-driven click-and-point storage provisioning to work with SMB standard software offerings such as Microsoft Exchange, SharePoint and SQL Server in VMware, Oracle VM and Microsoft Hyper-V virtualized environments.
VNXe also was designed to maximize partner profitability, said Wood. ’We took two-thirds of the physical hardware costs out of this box and increased performance and flexibility,’ he said. ’In doing so we made room in the market for EMC’s profit as well as our partners’ profits.’
The product also includes more than 60 patents that are pending, including system architecture, service and support technology that is unprecedented, said Wood. ’This is not just a ’hot box,’ ’ he said. ’It is a box with an ecosystem for service and support that surrounds it.’ That includes a tight software link to EMC’s Powerlink customer service Web portal.
Wood boasts that the breakthroughs that come with VNXe and the unified product family open the door for partners to go beyond transactional sales to build long-lasting customer relationships around storage capacity expansion, software renewal and warranties. VNXe and VNX provide a wealth of new money-making solution plays for partners in the sub-$75,000 SMB storage market, said Wood.
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So just what kind of impact do solution providers see from the EMC product reset?
Jamie Shepard, executive vice president of technology solutions for Marlborough, Mass.-based International Computerware Inc. (ICI), EMC’s Global Services Partner of the Year, expects VNXe and the new VNX product family to drive explosive sales growth for ICI. He says VNXe alone will drive $5 million in sales for his company in 2011.
Shepard, who advised EMC on the new product, says VNXe is destined to forever change the character of EMC and its partners. He says the new VNXe product takes EMC storage provisioning into the Buzz Lightyear ’infinity and beyond’ era. ’They have brought storage provisioning and management into the 21st century and beyond,’ said Shepard. ’Before VNXe they had superior products but they were difficult to provision and manage.’
In fact, Shepard, whose company has thrived by bringing high-performance storage solutions and services to some of the biggest companies in the world, is establishing a new beachhead in the SMB market as a result of VNXe. He estimates his salespeople have walked away from as many as 100 deals over the past year because EMC didn’t have the right SMB product at the right price. ICI was playing right in the middle of the storage pyramid market and will now go downstream to take a big bite out of the SMB, Shepard said. ’This allows us to play through the entire sales pyramid,’ he said. ’Now we can walk into any account with an EMC solution.’
Shepard isn’t the only partner excited about the EMC product. Dan Serpico, president of FusionStorm, who was honored with EMC’s Velocity Partner Executive of the Year award, sees a ’significant opportunity’ for his $450 million national powerhouse with VNXe and the new VNX family. This comes on top of a FusionStorm EMC business that was up 50 percent in 2010.
Serpico said what excites him most about the product launch is the ability to make high margins in the SMB market. ’EMC does a very good job of driving margins and supporting high-margin business for the channel, especially in the SMB space where VARs like us are competing with the CDWs and Dells of the world,’ he said. ’The opportunity for margin in those markets has historically been very difficult. If EMC remains true to their history, the opportunity for us to make more money and to enjoy higher margins in this space is really significant.’
That commitment to a profitable partner model starts with Tucci, who said partners are going to be pleasantly surprised by the amount of money they can make with VNXe. ’You have got to make sure they can make a buck,’ said Tucci, speaking about EMC’s commitment to partners. ’That they can make their profit goals, their margin goals.’ And Tucci wants partners to know that he sees the product set strengthening the company’s commitment to them. He personally will be ’listening’ to partners to make sure that the company maintains its partner edge. And he is determined to not let EMC’s direct-sales force get in the way. ’We are going to ship virtually all of these products through our channel,’ he said. ’This is a channel product. And our sales force will be comp-incented to make sure it goes through the channel.’
There is still the matter of convincing those skeptics, though. ’The secret in life for success is how many of those people from Missouri can you show?’ said Tucci. ’So that’s OK with me.’
EMC’s SMB assault is just one more chance to prove the skeptics wrong. And that’s just what Tucci loves to do.
Joseph F. Kovar contributed to this story.