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Carolyn Ong

Storage giant EMC's new high-end Symmetrix products are not expected to make a big impact in Greater China, where storage demands from small and medium-sized businesses dominate.

Industry analysts say the internal architecture in the Symmetrix Direct Matrix series, EMC's long overdue overhaul of its high-end products, leapfrogs current storage technologies.

But Symmetrix DMX, announced in Tokyo last week and priced at US$400,000 upwards, is not expected to sell well in Greater China.

EMC's Symmetrix customers are typically giant corporate buyers such as The Hong Kong Jockey Club and China Telecom.

While China's entry into the World Trade Organisation will dramatically increase storage needs in the mainland, the high-end of the market remains limited, according to a report on the Asia Pacific storage market from research firm Gartner.  Symmetrix systems are typically used in a mainframe environment or to deploy storage area networks.

EMC says the new DMX series offers bandwidth of up to 64 megabytes per second, and 1.2 to 42 terabytes of data capacity, outperforming systems from keen rivals Hitachi Data Systems and IBM.

'The perception in China is that SAN [storage area network] applications are mainly focused on the high end, which requires huge storage systems,' said Gartner analyst Roberto Atienza.

'These are seen as the province of the finance and telecommunications sectors . . . the size of each order is big, but a limited number of companies exist in these sectors,' he said. 'In this sense, the high-end of the market cannot propel the growth of the whole SAN market.'

Steven Fitz, president of EMC Asia Pacific and Japan, said Japan, South Korea and China made up 80 per cent of the company's Asia-Pacific revenues, with Japan the leader by a long distance. Between 40 and 45 per cent of EMC's Asia Pacific revenues came from Symmetrix sales, he said.

The Asia Pacific market contributed US$175 million, or 12 per cent, of EMC's revenue in the final quarter of last year, according to a report by Merrill Lynch analyst Steven Milunovich. That compared with US$884 million, or 59 per cent, in North America and US$390 million, or 26 per cent, in Europe and the Middle East.

EMC's revenues in the Asia-Pacific region have fallen since September 2001, despite the fact that the September 11 World Trade Center terrorist attack highlighted the importance of secure data storage.

Mr Fitz said China had been EMC's fastest growing market for the past two years, but the storage market was 'really in the education phase'.

'The mid-tier market is where the growth is,' he said. 'They need to understand technology before they can buy technology. We are educating the technical folks there. This is typical of a less mature marketplace.'

He said EMC had good partners in China, such as Digital China, 'and there is the Dell partnership, which is doing very well'.

Dell Computer resells EMC's Clariion line of storage systems, aimed at the mid-range market. Mr Fitz said EMC had gained 80 new customers in the mid-range Asia Pacific market in the fourth quarter.

EMC Greater China marketing director Wilson Fok said Dell was an important contributor to EMC's Asia-Pacific sales as customers in the region tended to buy from server vendors. Clariion product sales were up 50 per cent year on year in the final quarter.

Commenting on the fierce competition from domestic players offering cut-throat prices and established vendors like IBM and Hewlett-Packard, Mr Fitz called China 'an open game'.

'We have been [in China] for only three-and-a-half years. The China market is really only starting to pick up.'

Analysts said EMC's new DMX series was a critical step in the company's efforts to recapture lost ground in the high end of the market.

IBM is strong at the high end in China primarily because of its monopoly on mainframes used by most large banks, according to analyst Mr Atienza. It is also penetrating the telecommunications industry.

Hitachi Data Systems and IBM gained market share from EMC last year with technology that was superior and cheaper.

The company has the No 3 spot worldwide, behind Hewlett-Packard and IBM and just ahead of Hitachi and Dell Computer, according to research firn International Data Corporation.

EMC spent four years and US$1 billion developing the Symmetrix Direct Matrix Architecture System.

To create the system, it redesigned its hardware, adopting a new method of connecting its internal components.

The new Symmetrix 6 line consists of three models - the modular DMX800, pitched at small and medium-sized businesses; and the DMX 1000 and DMX 2000, aimed at large enterprises. The series also includes characteristics such as redundant components designed to keep companies' data available around the clock. It is compatible with EMC's existing Enginuity operating system.

'Although it is a year late, Symmetrix 6 is important both for resuscitating EMC's mainstay product line as well as its impact on other revenue lines,' said Merrill Lynch's Mr Milunovich.

But the new product arrives in a lacklustre storage market unlikely to rebound in the near future, according to analysts.



Tepid Chinese reception expected for EMC's new storage system