EMC doesn't do free? Really?

In a blog post while I was down under, Storagezilla said that EMC doesn’t do free, in response to comments from Frank Slootman that they were giving away dedupe to get footprint.  Storagezilla basically says that this is untrue.  Click Read More to see what I think.

First, I would have just posted this as a comment on Storagezilla’s blog, but he closed comments on this blog entry. What’s up with that?

Storagezilla says that he can assure Frank (and vicariously us) that “there isn’t a CLARiiON array, DAEs, powerful Intel based server and contractual royalty payment to Quantum ending up in customers hands without EMC getting it’s [sic] margin.” I agree with that statement. But it’s not the same as saying that they don’t do free.

EMC does get its margin. There are laws in many states and countries that make it illegal to sell something for less than it costs you to produce it.  It’s considered an unfair trade practice.  So I’m sure that EMC always gets some margin.  But I also know that they sometimes give away their products.  How are these two statements compatible? Let’s take a look at three real examples.

They do things like this all the time:

  • Buy all that stuff and we’ll give you this new product of ours for free
  • Replace our competitor’s stuff with this stuff and we’ll only charge you a year’s maintenance

I know of a recent account where EMC told him that buying a Clarion without a Celerra head on it would be more expensive than buying the same Clarion with a Celerra head! That’s less than free!  He spent less money by buying more hardware!  And EMC gets to say that they sold more Celerra. 

Now, will EMC still make some margin on that deal? Their incremental cost of adding the Celerra head to that sale was the cost of the Celerra server hardware only; another copy of Celerra NAS running somewhere costs them nothing.  (Except in support costs, which they are getting paid for.)  So, sure, they got some margin.  They probably got a decent margin.  But did they give away the Celerra head?  Absolutely.  EMC does free.

I know of a Symantec account that’s getting tired of how much they’re paying them for maintenance. (OK, I know of a lot of them.)  They told me that they ruled out TSM (for reasons they didn’t go into), and were trying to decide between NetWorker and CommVault.  They told me that CommVault’s price was decent and that they preferred the CommVault solution (again, for reasons that they didn’t go into), but that the bosses were probably going to go with NetWorker. Why? Because their EMC sales rep was “giving it to them for nothing.”  All they had to do was pay a year’s maintenance and they could have NetWorker. 

Will EMC get their margin?  Absolutely.  What’s the incremental cost of giving them NetWorker?  The cost of a few CDs/DVDs?  Even less if they download it?  So as long as they sell NetWorker for more than the cost of the CDs, they get their margin. But did they give away the product? Absolutely.  EMC does free.

Finally, I know of a customer considering buying a dedupe appliance (which is what Frank Slootman was talking about and Storagezilla was commenting on).  And this customer was considering all the usual players.  And I know that EMC’s price was about 15% of what the competitor’s price was, AND EMC threw in three year’s maintenance!  That’s right.  They were 85% cheaper AND had free maintenance.  Will EMC get some margin on the deal?  Sure!  As long as they pay for the cost of the disk array and the Intel server that the dedupe software is running on, they get some margin.  (From what I’ve seen, dedupe vendors have a LOT of margin to play with.)

Do I also believe that there are accounts where EMC is willing to give away a dedupe head to make sure Data Domain doesn’t get the deal?  They did it with Centerra. They continue to do it with Celerra.  Why wouldn’t they do it here?

EMC is not above giving away most of its margin to increase its market share.  EMC customers get “free” things as part of their deals.  EMC can do that because they sell far more than just dedupe hardware, and Data Domain can’t, which is all Frank Slootman was trying to say.  And I agree with him (on this point at least).

6 thoughts on “EMC doesn't do free? Really?

  1. brerrabbit says:

    I’d like to make a comment, but two things to note first:

    1) Our backup environment is EMC from both a hardware and software perspective

    2) I have great respect for Mr. Preston’s opinions

    My comment:
    Will you guys give a rest? Please? I don’t give a flying flip about whether or not EMC gives away stuff free or not. What exactly does that have to do with anyone’s backup environment? It’s like arguing over what the definition of “is” is as our former President did. It does not add to my understanding of the pros or cons of a particular backup configuration or technology. Yes, a deep dive into the inner workings of the EDL4000 can, in some cases, be a very helpful thing, just it can for any other specific technology, but it has CLEARLY devolved into a personal tit-for-tat waste of time. It is time to move on, gentlemen.

    Thank you
    -DH

  2. cpjlboss says:

    David,

    First let me address why I feel EMC’s behavior (re: pricing) is important. I think it’s absolutely important for a customer to know that when they’re getting such a deal, they’re getting just that — and it’s likely going to be the last one they get. If a vendor is selling them something at significantly below normal margin just to get in the door, then the next sale is going to come at quite a surprise. I’ve seen it time and time again, and the customer gets screwed in the end. If the customer WANTS product A and they can leverage this type of behavior to get a one-time deal on it and they know that’s what they’re doing, then great. But the unknowing person that reads “EMC doesn’t do free” might think that “Oh, well, this is EMC, so they don’t do that.” Then they get the rude awakening next year when they buy more. Summary: I think exposing this kind of behavior is important.

    I see my job as making sure the truth gets out. Usually that has taken the form of informative posts like the one I did on performance. But when I see a blog that’s in my space putting out complete misinformation, I feel I have to say so. Of the blogs that I follow (e.g. Storage Soup, Steve’s IT Rants, about restore, about dedupe, the backup blog, storagezilla, Chuck’s Blog, etc.), most of them put out decent stuff, usually slanted a little bit their way, and I don’t feel the need to comment on the vast majority of what I read. But when I read something so blantantly wrong like “The 3D 4000 is that fastest/biggest/bestest thing ever,” or “EMC doesn’t do free,” then I feel I have to comment on it.

    The 3D 4000 post is SO last month, and EMC and I have agreed to disagree on that particular issue. There is no ongoing feud between me and Mr. Twomey. (In fact, you’ll find between that discussion and this one, you’ll find a post on Storagezilla where Mark actually linked to my blog in a very nice way.)

    Today I wrote a bunch of “posts.” Most were comments to other people’s blogs, and one was this one. Since I am one of the only bloggers I know that isn’t being paid by a vendor, my role is often one of adding the required “salt” to the “bought-and-paid-for” or the “already drank the koolaid” posts. I posted on Steve Duplessie’s blog that I didn’t agree that there was no value in pointing out product limitations, and another post that the EMC/Quantum/Dell relationship does not make them an “open standard.” I posted a comment on Storage Monkeys about SNW attendance. And finally, I posted this article. I’m just trying to get what I see as the truth out there.

    So, in summary, I don’t think there’s anything to move on FROM (i.e. there’s no ongoing feud here), and I think that the information in this post is important stuff.

  3. Storagezilla says:

    Comments auto close after a set period of time because the way I run things I’m not willing to wait for someone to ride out to defend Data Domain’s honor more than two and a half months after I first wrote the post. Or a year. Or ten years.

    You want to leave a comment on something, you can do so before I’ve written dozens of entires after that post and months have elapsed.

    Now to your point.

    What he was trying to say?

    There’s what *you* say he was trying to say and there’s what’s in the recorded transcript. I quoted from the recorded transcript and I didn’t have to put myself in his shoes, wonder if the room was too hot or too cold or figure out if he’s a man who suffers from a few winter aches & pains.

    I just read what he said.

    The point was that EMC did $90M in just deduplication products (DL 1500/3000 and Avamar). Not $0.

    No one got anything for "free" which according to all good dictionaries has a meaning thus

    "provided without, or not subject to, a charge or payment"

    No one in any of your examples got anything for free, they may have gotten a discount on a solution but they did pay EMC. I will not apologise for using the English language as defined and not in a way where someone might like a word to mean something other than it does, but won’t no matter how many stars they wish upon.

    But you did highlight something interesting when speaking to those customers. EMC wants their business and is obviously willing to cut them a much better deal than a lot of it’s competitors to get it.

    Something to keep in mind about EMC as IT budgets constrict:

    Great products at great prices.

  4. tburrell says:

    There Ain’t No Such Thing As A Free Lunch

    Anyone over the age of 12 knows that “free” depends a lot on how you slice it. Those “free” lunches the reseller takes you out for? Buried in the markup you pay for the product/service. Same with the coffee mugs/t-shirts/usb drives. If you don’t know this already, you shouldn’t have any purchasing authority at all.

    “Free” features bundled into a purchase? The markup is designed to allow sales to cut here and there, but still make the margin on the overall purchase.

    You can argue semantics all day- in the end, EMC is in this to make money just like everyone else, and customers need to keep an eye on the overall cost and not just get hung up on which “free” stuff makes it into the initial quote. Demand price guarantees from your suppliers for things like capacity add-ons (12 months or so- be reasonable, the market does in fact change) and you’ll get a much better number to plan your budget around. If they quote you a shelf of drives with the purchase, that should be the same you’ll pay for an additional shelf next month. The initial cost may go up a bit, but you’ll avoid nasty surprises later on.

    In the end, your relationship with the reseller will be better too, since everyone knows what their getting into. If they won’t do it- find someone who will.

  5. cpjlboss says:

    @Tom

    I agree. Silly to argue about, but I have to argue it all the time with customers who are telling me that they have no choice but to take a given product because it’s “free.” I tell them it’s not free, but they just look at the size of the PO and that’s that.

  6. cpjlboss says:

    @Marc

    I’ll give you this one. 😉

    You’re right; they’re never giving away anything for "free," in the truest sense of the word. So EMC doesn’t do free.

    FWIW, though, when I hear that a vendor is "giving away" their product, "for free or near free," I never assume that the speaker means ACTUALLY free in the truest sense of the word, as that would be silly. I assume they mean "next to nothing." And have seen EMC doing that these days (IMHO to expand their dedupe base).

    So I think we’re actually arguing over nothing. You interpret what he said in one way and are arguing against that (albeit using the traditional definition of the word). I interpret what he said in another way (partially because I hear DD folks saying the same thing all the time) and am saying that you are doing that.

    Move on, shall we? (Should I close the comments on this one?) 😉

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