Is EMC the "Recession Womb"?

Although the popular term on the web is to call this a "blog", I still think of it as an editorial. Feedback, some comments posted notwithstanding, has been that I don't take a strong enough stance and that I simply review from my own analysis. I think this is why I think of this as an editorial.

Last month I didn't make the time to jot down my thoughts and nothing was burning inside of me to let out through my fingertips. But, through management prodding, here is what has been on my mind over the last few weeks.

There has been an ongoing debate on whether or not the US economy is truly in a state of recession. I certainly have seen costs go up, no doubt much of it from the increase in the cost of energy, making it so there is less disposable income for most people and companies. But what is companies' disposable income?

I'm not sure I know the answer to that, but I have my own thoughts on what it may be.

I think that companies that have a need to respond to their own growing data storage challenges are doing what they must to get there. But what I'm also seeing is less interest in what are perceived as "risky investments" in technology. The propensity I've seen this year thus far is that the prospective customers with whom we have engaged are more often than not going back to the womb, per se, when it comes to investments. Let me give a couple of examples:

(1) A local architectural firm did an RFI, to which we responded, followed up by an RFP, to which we also responded. According to the customer, the solution we provided was the only one that me all of the requirements. They felt that our response was the most complete and the statement of work clear and realistic. Did our sales rep get the deal? No. The customer said they felt safer going with EMC, even if they had to compromise some of their requirements for now. And, besides, EMC said they would take another $100K off the price.

(2) A local hospital was very dissatisfied with their support for EMC's (formerly Legato) Networker and didn't feel they were able to take advantage of the stated feature set because the support group could never get it to work (the issue was SAN-based back-ups to minimize traffic over the LAN). When they were looking for an Email Archiving tool, they went with Email Xtender, a product that is notorious for being difficult to implement and get to actually work. Why? I never heard why they would go with that instead of Symantec's Email Archiving or, better yet, Mimosa's NearPoint for Exchange. The devil you know versus the devil you don't?

(3) A local energy management firm, who were dissatisfied with their AX100's (although they liked iSCSI as the protocol), reviewed EMC's larger iSCSI offerings, NetApp's and EqualLogic's (now Dell EqualLogic) and were amazed at how simple, yet sophisticated, the EqualLogic PS Array was compared to the other two. Pricing was comparable after large discounts from NetApp and EMC were applied. Now, with the playing field roughly equal from a price perspective, which way did the customer go? If you guessed EMC, you are following the theme here. The answer I heard from the customer was that the EqualLogic array was too much on the "bleeding edge" of technology for them to feel comfortable with it. At the time of that statement, EqualLogic boasted over 2,000 clients and were bought a few months later by Dell for $1.4B dollars. Hmmm.

(4) A local uniform service company evaluated their EMC environment. They were pleased that Dell had bought EqualLogic and were about to place an order for four EqualLogic units. EMC came in and, reportedly, knocked another $80,000 off their price to keep the customer. It worked.

So, to me, this downturn in economic growth, call it a recession if you want, seems to be making customers in New England compromise on features to ameliorate risk perception. I have yet to see our firm's recommendations get NOT chosen because of technical capabilities. We seem to lose on last minute pricing reductions and risk perception. It's frustrating, but we fight the good fight. And despite all of this, our business keeps growing. But like the GDP, not where it could be.