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SCMP Reporter

Computer-storage systems titan EMC has vowed to handle more of China's growing information capacity, despite increased competition and cutting its research and development spending.

EMC president and chief executive Joseph Tucci made the commitment yesterday in Shanghai, bolstered by large-scale contracts the firm secured recently from China Mobile and the Shanghai Stock Exchange.

Mr Tucci admitted that Massachusetts-based EMC trailed rival IBM's external storage sales in the mainland, but he claimed EMC was now in a better position to seize market share from the competition.

'Compared with other markets worldwide, our business in China remains vibrant,' Mr Tucci said.

He said the company had posted more than 200 per cent sales growth in the mainland over the past two years, while continued triple-digit growth was expected.

'Information technology is one of the 'four pillars' of China's future economy,' he said.

'The foundation of that IT pillar will be robust information storage technology. More of China now runs on information and more of that information will run on EMC storage systems in the years ahead.'

IDC Asia-Pacific has estimated that Greater China's total external storage market will grow at a compound annual growth rate of 17.9 per cent from 1999 to 2005, when the market will be worth more than US$830 million.

Mr Tucci said China's telecommunications and financial-services sectors were EMC's biggest vertical markets. He declined to reveal financial details of those contracts.

China Mobile recently bought 34 raw terabytes of capacity - representing EMC's Symmetrix and Connectrix systems - and a suite of software, including ControlCenter, TimeFinder and PowerPath.

EMC's Shanghai Stock Exchange contract involved the replacement of Hewlett-Packard (HP), IBM and Sun Microsystems products in a move to standardise a centralised and automated storage platform as well as building a disaster-recovery site.

Mr Tucci said industries in China were in a continuous consolidation and development phase that played to EMC's strength in providing a 'one-two punch' for simple, integrated and automated IT infrastructure for organisations that placed information at the centre of their business.

EMC has remained strong in mainframe-class storage systems and storage connectivity offered by its Symmetrix line to large enterprises.

It also has a five-year pact with Dell Computer to resell EMC's Clariion storage systems to small and medium enterprises and government agencies.

Tom Zack, Hitachi Data Systems (HDS) vice-president for product marketing and management in the Asia-Pacific, noted, however, that EMC faced greater competition from IBM, Sun, HDS, Compaq and HP in the mainland.

Mr Zack said this was based on the significant technology and marketing upgrades these companies had made in the storage arena.

Another perceived vulnerability for EMC comes from its recent decision to reduce its research and development budgets over the next several quarters as part of its restructuring programme.

Mr Tucci, however, said EMC spent more on research and development - from US$900 million to US$1 billion a year - than all its competitors combined, and that any reduction would not affect EMC's competitiveness.

A new report from International Data Corp showed that EMC's worldwide share of the external storage systems market would be down 6.2 per cent to 25.3 per cent this year, from 31.5 per cent last year, affected by the overall slowdown in corporate IT-related investments.

However, the research firm said EMC's lead was too large to overcome and it would remain the world's leading data-storage systems vendor this year.



Shanghai Stock Exchange deal bolsters storage giant's determination to secure bigger market share