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EMC targets SMBs, delays Software as a Service (SaaS) plans

EMC is developing Software as a Service (SaaS) products but won't roll them out to partners until 2008; instead it will build its SMB marketshare with new storage products and support.

Despite the eagerness of its CEO to jump into the Software as a Service (SaaS) market, EMC Corporation will not introduce any new channel programs around SaaS nor will it make significant changes to its channel program in July. In the month ahead, however, company officials say partners should look for new storage products targeting small businesses.

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EMC intends to introduce a host of storage products for small companies between the end of this year and early next year, and will continue to expand its presence at companies with revenues of $25 million or less - a market where EMC has barely played a role, according to EMC execs speaking at the company's end-user conference EMC World in Orlando, Fla. last week.

"We are looking at how we want to deploy SaaS and how we want our channel partners to participate in that," Pete Koliopoulos, EMC's vice president of global channels marketing said at last week's EMC World. "I can tell you the program is not going to change in July regarding SaaS and it's more likely that we would do something in January."

EMC typically makes changes to its channel in January and July in order to keep the changes consistent and predictable, Koliopoulos said.

During a conference call with analysts last month about EMC's first-quarter earnings, CEO Joe Tucci called SaaS a burgeoning market that EMC plans to enter. Tucci reiterated the point in an interview with journalists at last week's conference, saying the company has identified many opportunities in backup and archiving that it can turn into SaaS offerings.

"In backup and data archiving there will be many areas that we have identified that we can use under the SaaS umbrella," Tucci said. "We have not launched that yet, we've given no details, [but] we are well into the planning and we are not that far away from when we will launch," Tucci added.

Tucci said EMC would ramp up its presence in the small business market, which Tucci described as an area that "we really don't play in."

"We are coming out with a very robust broad line of low-end products. We have the Insignia product at the low-end today and you'll see us have a good family of products at the end of the year and the beginning of next year," Tucci said.

Tucci also noted that as these products are introduced, the company will develop channels for it, and SaaS will be included to compliment its low-end storage strategy.

Mike Strain, director of storage at Overland Park, Kan.- based Alexander Open Systems, Inc., said EMC has realized that it could do a better job of servicing the lower end storage market.

"EMC has not done a great job of developing a strong small business solution. Microsoft has got a small business solution for its server software platform, HP has storage for small businesses and so does Network Appliance. EMC has not embraced that market very well," Strain said.

Strain also said he believes EMC is changing its thought process as it continues to develop a low-end small business strategy.

"This is a great move for EMC. Traditionally, EMC has focused on the enterprise space, now they are stepping back and saying let's look at this from the small business market as well and lets see if we can improve our offerings and make some money there," Strain said.

Evaluator Group analyst, Tom Trainer, believes the challenge for EMC in the small business market is to find the right pricing model that will attract customers to EMC's storage products, something IBM has been doing for small businesses that have storage needs.

"They've had a good start with the AX150 and the AX150i, but still the software that gets bundled into these systems is a bit pricey for companies earning $25 million market and less," Trainer said.

"EMC recognizes value in the low end of the market, and there are a large number of small to medium-sized businesses that could benefit from some of the functionality that EMC's larger storage systems offer if it's scaled down to a manageable cost structure," Trainer said.

Let us know what you think about this story; email: Nicole Lewis, Senior News Writer

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