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).