EMC CEO: IT Budgets Down, But Virtualization Strong - InformationWeek

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EMC CEO: IT Budgets Down, But Virtualization Strong

And by the way, Cisco won't be buying EMC's booming VMware unit either, Joe Tucci proclaims.

IT budgets may be suffering, but virtualization and storage products are continuing to do well, according to Joe Tucci, chief executive of EMC.

And by the way, Cisco won't be buying EMC's booming VMware unit either, the executive said this week. Cisco is preparing to unveil a new data center strategy with virtualization overtones next week and some industry wags figured Cisco, which has an ownership stake in VMware, would announce that it would buy VMware outright.

Not so, Tucci said in a talk with institutional investors in Boston on Tuesday, as he mainly discussed EMC and VMware, the virtualization company whose roughly 80% stock stake is owned by EMC.

"We have no intention of separating these two companies," he said.

EMC is going into the recession in a strong position and is working to pick up some market share during the tough economic times, Tucci said. Virtualization is attracting more and more users largely because it saves money by cutting server numbers, he indicated, and added that storage isn't impacted much by economic slowdowns. Customers purchasing EMC virtualization software tend to buy substantial amounts of storage at the same time.

Citing a new IDC report on storage, EMC said Wednesday that it grew revenue more than six times that of its nearest competitor in storage device management software in 2008, a year in which software accounts for about 40% of the company's overall revenue. Revenue in data protection and recovery software at EMC grew more than 20% year over year.

Tucci said EMC plans to leverage its leadership in virtualization and storage even as he predicted that IT products and services this year will drop by "mid to high single digits." While the company reported recently that it will cut 2,400 jobs this year, Tucci noted that no trimming is planned among EMC sales personnel.

EMC plans, too, to continue expanding its flash memory systems products. Tucci said EMC has completely sold out its flash drive products in the last two quarters, with sales fueled in large part by the plunging cost of flash, particularly as it drops faster vis-à-vis traditional standard drives.

"That's totally changing the game," Tucci told reporters.

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