EMC executives said they expect IT spending to be lower than they originally forecast for this year, while claiming their sales will be impacted less than competitors.
Speaking on EMC’s quarterly earnings call, CEO Joe Tucci said he expects global IT spending to increase around 3% over last year, down from previous estimates of close to 4%. He said Europe buying was especially “choppy,” but “there is an air of uncertainty that permeates the world stage right now” when it comes to spending. He said customers are showing “more caution, more scrutiny and making more decisions” around purchases.
EMC president David Goulden added, “it’s clear things have gotten weaker over the last few months.”
EMC reported second-quarter revenue of $5.31 billion, up 10% over last year. Its midrange storage product revenue grew 7% year over year and its high-end VMAX revenue increased 3% year over year following a 10% year-over-year drop in the first quarter. The VMAX increase came after an upgrade of the platform in May.
Tucci said the spending slowdown means customers may delay buying storage but “you can only push off storage purchases for so long” because data growth remains high. He said he expects EMC will continue to outgrow the rest of the storage market in revenue growth. EMC has not changed its revenue forecast for 2012.
Goulden said flash storage will play a big part of EMC’s upcoming product launches, with its “Project Thunder” and XtremIO all-flash arrays on the roadmap, and enhancements to the VFCache PCIe flash appliance planned for later this year. He said EMC would add inline deduplication, higher capacity PCIe cards, multi-level flash (MLC) and integration with Cisco UCS blade servers for VFCache, which first launched in February.
Tucci said VMware’s $1.05 billion acquisition of software-defined networking (SDN) startup Nicira does not signal a change in the close relationship EMC and VMware had with Cisco. Tucci said there is still “a tremendous amount of opportunity” for Cisco products with VMware. He also said EMC and Cisco remain “extremely committed” to their VCE joint development arrangement.
Goulden said the worst is over regarding hard drive shortages caused by late 2011 flooding in Thailand and prices will drop in the second half of the year, but they will still not fall to pre-flood prices.