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EMC refrains from new pricing models for Internet market

EMC is trumpeting its recent deal with Psinet as evidence of its presence in the ebusiness market, but has no plans to make risk-sharing deals like some of its competitors.

  • Jon Lambeth
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EMC is trumpeting its recent deal with Psinet as evidence of its presence in the ebusiness market, but has no plans to make risk-sharing deals like some of its competitors.

Nigel Ghent, UK marketing director for EMC, said his company was determined to be one of the key players in providing technology to the ebusiness market, but risk sharing deals were not part of EMC's business model.

HP - EMC's former partner and now bitter rival in the storage market - has been vocal this year about its plans to buy stock or make revenue sharing deals with Internet startups, allowing it to benefit directly from the growth of those businesses.

"We are not going to abandon all common sense business practices in the interest of greed," said Ghent, adding that for every Internet company that did make it big in five years time, 100 would fall by the wayside. EMC was not inclined to take that level of risk, Ghent said.

He claimed EMC was considered one of the four ebusiness mainstays, alongside Cisco, Oracle and Sun. He said companies such as Excite - which runs nearly 50Tb of EMC storage after only two years in business - and UK auction website QXL.com, were evidence of its strength in this market.

Around 10 per cent of EMC's revenue was now from the ebusiness or ISP market now, Ghent said.

EMC recently persuaded global Internet service provider Psinet to standardise on its storage, alongside a hardware infrastructure from Hewlett-Packard. Psinet is building 21 operations centres around the world. So far five have been completed, including one in London. Psinet has spent $15 million on storage with EMC so far.

Ghent said, contrary to popular opinion that the Data General acquisition was made to close a competitor, EMC would keep some of DG's Clariion technology to sell to the middle market.

"Although DG has investors spooked, the real threat is the increasing competition pressurising EMC's price premium of 50 per cent to 125 per cent," noted analysts at Merrill Lynch in a recent report.

"We are reassured that pricing is not an issue today. The company continues to diss the competition - customers are giving back HP/Hitachi storage and IBM's Shark is not ready for the big leagues - but users we speak to believe EMC won't be able to maintain its premium indefinitely," the report concluded.

IBM this week filed a lawsuit in the US against EMC, alleging that the storage maker violated a patent agreement and committed fraud by secretly transferring disputed patents to a shell company. EMC has denied the allegations.

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