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EMC soars on new strategy
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October 29, 2001: 12:41 p.m. ET
Data-storage supplier will make software that works on rivals' systems.
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NEW YORK (CNNmoney) - Data-storage specialist EMC bucked a broader downturn in the technology sector Monday after the company unveiled new software that runs on hardware supplied by its rivals.
The company's shares were up nearly 2 percent in heavy volume on the New York Stock Exchange. At the same time, the broader technology sector weakened.
The gains came after the Hopkinton, Mass.-based company, which is the top supplier of data-storage hardware, unveiled a raft of data-storage software products to run on hardware supplied by rivals including IBM and Hitachi.
By expanding the breadth of its offerings, EMC (EMC: down $0.05 to $13.36, Research, Estimates) is aiming to enlarge its nearly 26 percent market share for storage-management software with products that automate complex tasks and lower costs for customers that would need fewer technicians to run their data centers.
The company calls its new approach to the software part of its business AutoIS, which stands for Automated Information Storage Strategy.
"The growing complexity of our customers' environments has imposed an artificial ceiling on their growth potential," EMC President and CEO Joe Tucci said.
"The goal of AutoIS is to remove this barrier over time by helping customers reduce complexity, lower management costs, and automate many labor-intensive and inefficient processes," Tucci added. "Today marks the beginning of the most significant wave of new product introductions in EMC's history."
EMC's third-quarter storage software sales fell 27 percent to $243 million from $332 million in the year-ago quarter. The decline came as EMC's sales of storage systems dropped 59 percent.
Some analysts say they worry EMC's shift to sell more software to customers using the hardware of rivals ultimately could hurt its high-end storage hardware sales. Software sales account for about 20 percent of EMC's revenue and have been the catalyst for its lofty profit margins. But those margins have dropped dramatically this year. EMC wants software sales to account for 30 percent of its overall revenue.
Under its new strategy, EMC said its new software will be compatible with hardware from most of its rivals, including IBM (IBM: down $1.85 to $109.31, Research, Estimates); Hitachi Data; Compaq (CPQ: down $0.08 to $9.42, Research, Estimates); Sun Microsystems (SUNW: down $0.15 to $10.25, Research, Estimates); Hewlett-Packard (HWP: down $0.21 to $17.64, Research, Estimates); and Network Appliance (NTAP: down $0.86 to $12.30, Research, Estimates). 
-- from staff and wire reports
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