EMC Turns to Dell

Storage giant EMC is turning to computer maker Dell to assemble and sell a new device aimed at low-end customers, Reuters reported.

EMC CEO Joe Tucci told analysts in New York today he expects 10 percent of EMC’s revenue to flow through the deal, though he did not specify when, according to the wire service.

To date, Hopkinton, Mass.-based EMC has made its money selling high-end machines to airlines, banks and other institutions needing to harness vast amounts of information.

However, these customers have held back on system upgrades because of the slow economy, causing EMC’s sales to fall.

Details of the deal and new product are expected soon. Dell, based in Austin, Texas, is the second-largest computer seller behind Hewlett-Packard.

Eight months ago, EMC and Dell inked a five-year, multi-billion dollar reseller pact.

Dell became the leading reseller of EMC’s CLARiiON product line. CLARiiON became Dell’s standard offering for storage area networks (SAN) and high-end network-attached storage (NAS) installations.

In other EMC news, the company said it expects single-digit revenue growth in its second quarter (over the first quarter),
executives with the Hopkinton, Mass., data storage giant told analysts today.

It is also “comfortable” with analysts’ estimates of a loss of 2 cents per share for the period ending June 30.

The company, which has struggled in recent quarters because of the economy, did leave itself
some wiggle room. For example, it noted that, as usual, a significant portion of the company’s business will close in the third month of the quarter.

“IT budgets remain closely scrutinized and customers continue to exert conservative capital spending strategies,” said Bill Teuber, EMC’s CFO. “Despite the
economy, EMC continues to do a good job controlling the factors we can control.”

Most notable, EMC met cost reduction goals set in late 2001 ahead of schedule, Teuber said.

The company also outlined opportunities in networked storage, an area it hopes to see grow thanks to its open software initiative, AutoIS, that allows equipment from different vendors to work

At the same time that EMC is adjusting its own strategy, it also faces stepped up competition from IBM and Hitachi .

Earlier this week, Hitachi agreed to buy IBM’s hard disk drive business for $2.05 billion. The
firms also signed a supplier deal. In addition, Hitachi and EMC are suing each other over patents.

Shares of EMC rose 0.16, or 2 percent, to 7.34 at midday. In the last 52 weeks, the issue has ranged from 6.77 to 35.5.

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