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EMC President and Chief Operating Officer David Goulden Discusses EMC’s Fourth-Quarter 2012 Financial Results

EMC announced fourth-quarter and full-year 2012 financial results on January 29, 2013. EMC’s President and COO David Goulden, discusses the results below. Additional information regarding EMC’s financial results is available here.

Image: David Goulden - EMC President and COO
David Goulden - EMC President and COO

January 29, 2013

What should we take away from EMC’s financial results?

David Goulden: Our differentiated strategy and unique value proposition enabled us to deliver very good results in the quarter and achieve record results for the full year. Our three strategic pillars of cloud computing, Big Data and trust resonate strongly with our customers and remain a top priority for IT departments. EMC’s broad, best-of-breed portfolio gives us a rich, differentiated base of capabilities to draw from as we work with our customers to transform both their IT departments and the businesses IT supports.

Cloud computing, Big Data and trusted IT are transforming IT and business. What’s driving customers’ interest in these major IT trends?

David Goulden: The challenges of complex and expensive IT infrastructures, data growth and security are at the core of the architectural shifts to cloud computing, Big Data and trusted IT. Our approach to cloud computing offers IT departments greater efficiency, control and choice. Once implemented, IT infrastructure can be managed in a more agile way, allowing IT to be more responsive to business needs. Big Data is triggering new approaches for deriving business insights and new opportunities to expand revenue. And as security concerns create challenges for IT on every side – the ability for customers to have and to offer trusted IT is a valuable advantage.

How do you see customers’ information storage priorities evolving at the intersection of these opportunity-rich trends?

David Goulden: For many years, information storage and management has been near the top of customer priorities, and this continues to be true. The continued explosion of information is an obvious reason storage takes precedence. An equally important factor is that information growth always exceeds IT budget growth, so customers constantly need help in implementing more efficient and cost-effective approaches to managing information. This is where EMC has been able to really make our mark. From our early days, EMC has been at the forefront of helping customers better handle the ongoing conflict between information growth and IT budgets. Earlier examples of these efforts include new storage approaches with the introduction of stand-alone shared arrays, protection technologies like RAID5, or architectures like fibre channel SAN. More recently, EMC innovations and solutions have included capabilities such as scale-out architectures, virtual provisioning, automated tiering, flash storage, compression and data deduplication. It is absolutely essential that we and the industry provide these technologies to help customers more efficiently and cost-effectively manage the growth of information – otherwise customers would be quickly overwhelmed. Much of EMC’s long-term success in this market is due to our ability to innovate and adapt with new technologies and approaches.

How is EMC helping customers leverage the benefits of flash technology?

David Goulden: A rapidly emerging opportunity is the use of flash in enterprise storage –both in storage arrays, which we pioneered five years ago, as well as in the server, a market we joined last year with our SLC-based VFCache product. This is an exciting space and one where the bulk of our opportunity lies ahead. Later this quarter, we will expand our presence in the PCIe-attached flash market with an MLC-based product line that we believe is absolutely best in class. This was a rapidly growing market in 2012 where point products have been the norm. We are excited to be introducing our new server flash line as part of the overall EMC solution. Our all-flash array, code-named “Project X,” is on track. When we more formally introduce it later this year, we expect it to be the very best all-flash storage array in the market. The feedback from our beta customers is outstanding. What will set EMC apart from the flash startups in the market today is the breadth of our flash portfolio. Users can work with EMC to find the flash solution that maps best to their particular workloads, whether it’s a hybrid array, an all-flash array or flash in the server.

How is Greenplum doing?

David Goulden: When we think about our biggest incremental opportunities, Big Data analytics is at the top of the list, with perhaps the furthest-reaching implications. The agility and power that EMC Greenplum brings to this market drove very strong year-on-year growth for Greenplum in the fourth quarter of 2012. The combination of Greenplum’s analytics database with their Hadoop implementation enables us to win against established data warehouse vendors as well as newer Hadoop-based software providers. This combination of technologies has become increasingly important because no single method can effectively support and examine today’s variety and volume of data in a timely manner. This was true at a global auto manufacturer who wanted to lower the carrying costs of inventory by getting a better handle on warranty parts. The Greenplum database changed the way their analysts used the data by enabling them to work interactively, near real-time and materially increase productivity and results. Pivoting on this success, the customer extended their interest in analytics from warranties to their assembly lines, where their traditional BI/DW architecture limited them to producing one brand analysis every two weeks. After implementing Greenplum’s Hadoop-based analytics solution, Greenplum HD, they were able to do a brand analysis in 20 minutes.

What strides is EMC making with its channel and service provider programs?

David Goulden: Our channel program capped off a year of excellent progress, making working with EMC simpler, more predictable and more profitable for our channel partners. Over half our storage revenue goes through our channel partners, and our focus is on making these partners more productive. Our VSPEX solutions have gone a long way toward making this happen, especially in the fourth quarter of 2012 where we saw a significant ramp of VSPEX sold. After just two full 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. Partners responded so enthusiastically because VSPEX offers a wider choice of configurations than other reference architectures on the market today. With configuration options that include technology from Brocade, Cisco, Citrix, Intel, Microsoft and VMware, VSPEX partners have much greater choice in creating solutions for customers. Furthermore, they can co-brand these solutions with EMC and make them their own to sell, service and support.

Customers cannot take advantage of hybrid cloud without service providers that can offer reliable, enterprise-class external cloud services. As a result, we continue to expand our Service Provider Partner Program, with 60 premier Service Provider partners in our program today, who offer over 325 cloud services powered by EMC infrastructure. Our focus here is bearing fruit, as revenue growth from our service provider program partners accelerated in the quarter, up over 70% from the fourth quarter last year. We saw demand for enterprise-class cloud services continue to ramp in the fourth quarter, and more of our own field reps are embracing the benefits of working with EMC’s service provider partners.

Any insight into EMC’s strategic focus for 2013?

David Goulden: As we look to 2013 and beyond, our strategy continues to be focused on cloud computing, Big Data and trusted IT. Some of our newer businesses, including emerging storage technologies, advanced security, Big Data, and the Software-Defined Data Center represent our biggest growth opportunities. These are areas of opportunity that persist in even slow or no-growth economic environments, and we are investing here to achieve our vision. We are confident that, by applying the focus and discipline that we have become known for, to a strategy that is resolutely focused on delivering the best technology for cloud, Big Data and trusted IT, we will continue to deliver value to customers and shareholders

About EMC

EMC Corporation is a global leader in enabling businesses and service providers to transform their operations and deliver IT as a service. Fundamental to this transformation is cloud computing. Through innovative products and services, EMC accelerates the journey to cloud computing, helping IT departments to store, manage, protect and analyze their most valuable asset — information — in a more agile, trusted and cost-efficient way. Additional information about EMC can be found at www.EMC.com

EMC, Greenplum and VSPEX are either registered trademarks or trademarks of EMC Corporation in the United States and/or other countries. VMware is a registered trademark or trademark of VMware, Inc. in the United States and/or other countries. All other trademarks used are the property of their respective owners.

Forward-Looking Statements

This document contains “forward-looking statements” as defined under the Federal Securities Laws. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) the relative and varying rates of product price and component cost declines and the volume and mixture of product and services revenues; (iv) competitive factors, including but not limited to pricing pressures and new product introductions; (v) component and product quality and availability; (vi) fluctuations in VMware, Inc.’s operating results and risks associated with trading of VMware stock; (vii) the transition to new products, the uncertainty of customer acceptance of new product offerings and rapid technological and market change; (viii) risks associated with managing the growth of our business, including risks associated with acquisitions and investments and the challenges and costs of integration, restructuring and achieving anticipated synergies; (ix) the ability to attract and retain highly qualified employees; (x) insufficient, excess or obsolete inventory; (xi) fluctuating currency exchange rates; (xii) threats and other disruptions to our secure data centers or networks; (xiii) our ability to protect our proprietary technology; (xiv) war or acts of terrorism; and (xv) other one-time events and other important factors disclosed previously and from time to time in EMC’s filings with the U.S. Securities and Exchange Commission. EMC disclaims any obligation to update any such forward-looking statements after the date of this document.

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