King of the Hill

LMC has long been the kingpin of storage. But a tech slowdown and fierce
competition is threatening its position. Now, it's out to dispel any doubt about its
supremacy.
By Heinz Bulos
March 2003

torage is not sexy. In act, it`s quite
boring. Some enture capitalists
used to reer to the sector as
snorage`. It`s just a box that stores data,
ater all.

But storage happens to be a >48 billion
industry. lorget serers, orget PCs,
storage is one o the hottest growing
sectors in the tech industry. Up until its
peak, it has been growing 22 percent eery
year, around twice the growth rate o the
I1 industry.

It`s easy to understand why. 1here has
been an explosion o data in the past ew
years. Consider this: the world produced
about 1.5 exabytes in 1999 and 3 exabytes
o data in 2000. Between 1 and 2 exabytes
o unique inormation is produced each
year, roughly equialent to 250 megabytes
or eery man, woman, and child on the
planet. Soon, with the adent o rich
media, it will grow to 1 terabyte o data
per person. By now, according to a study
by the School o Inormation
Management Systems at the Uniersity o
Caliornia, Berkeley, more new
inormation has been created than what
has been produced oer the entire history
o mankind ,estimated at 12 exabytes,. 1o
better appreciate this little actoid, please
note that an exabyte is equialent to a
billion gigabytes. 1hat`s a 1 with 18 zeros
ater it, or 50 thousand times the olume
o the Library o Congress. 5 exabytes is
equialent to all the words people hae
eer spoken. I you store 12 exabytes on
loppy disks, they would stack 24 million
miles high.

It`s quite obious how it has come to this.
1he adent o computers, the Internet,
and digital technologies has allowed not
just organizations but more so indiiduals
to produce and consume an enormous
amount o content. 93 percent o
inormation produced each year is stored
in digital orm, and digital is the astest
growing ormat. Just think about your
typical day. \ou send and receie dozens
o e-mail, a good number with attached
iles, and sometimes to seeral people.
\ou download MP3 iles and upload
digital photos. \ou pass around \ord
documents and PowerPoint presentations
to colleagues. \our aorite newspaper
comes to you on your doorstep and your
inbox. \ou buy this magazine on a
newsstand or browse it on the \eb.

Now, think about the amount o data
produced by organizations. Bank
documents, hospital records, utility bills,
teleision programs, digital photographs,
legal contracts, court records, oice
memos, the list is endless. According to
research irm IDC, the amount o
corporate data doubles eery 6 months.
By now, companies hae consumed some
1.4 million terabytes o data annually. And
all these data, o course, has to be stored
somewhere. Now you see why storage has
suddenly become a sweet spot in the tech
industry.

And in the world o storage, LMC
happens to be the king o the hill.

S
Irom obscurity to supremacy
MC Corp. was started in 199 as a
amily business by Richard J.
Lgan and Roger Marino ,hence
the L and M in LMC, in Newton,
Massachusetts, manuacturing memory
boards. It was only 10 years ater when
the company entered the storage business.
1he company would hae aded away in
contractor obscurity i not or one
Michael C. Ruettgers, who was name
CLO in 1992. In less than a decade,
Ruettgers transormed LMC into one o
the hottest technology company in the
world. lrom sales o >386 million in 1992,
it has grown to >8.9 billion by the time he
stepped down as CLO. Proits likewise
increased rom >30 million in 1992 to >1.8
billion in 2000.

1oday, the company employs 1,000
people worldwide and has 100 sales
oices and distribution partners in 50
countries. In the Philippines, it has been
operating since 1995 through alue-added
reseller 1otal Inormation Management
,1IM,, and ormally established a
subsidiary, LMC Computer Systems
Philippines, Inc. in 2000, appointing IBM
eteran Ronnie Latinazo as country
manager.

LMC`s growth was phenomenal. By 1994,
it has already exceeded >1 billion in sales,
marking its entry into the lortune 500 list.
1he ollowing year, it has surpassed IBM
as the market leader in mainrame storage.
In 1998, its sotware business reaches
almost hal a billion dollars, making it the
astest-growing major sotware company
in the world. lrom 1995, it grew an
aerage o 3 percent per year.
At its peak in 2000, LMC led in practically
all storage segments. In the external
RAID market, it held 26.1 percent market
share. In networked inormation storage,
it had 30.5 percent. In the UNIX external
RAID segment, it held 29 percent. In the
S,390 mainrame storage market, it had
50.3 percent. LMC controlled 1 percent
o the proitable upper end o the market.
And then came the crash

lot has already been said about
the reasons or stock market crash
and subsequent downturn in I1
spending. 1here was the excessie
aluation o dot-com companies, the
oerspending during the \2K scare, and
the e-commerce hype. But it was thought
that storage would be spared rom the
carnage. Ater all, data was still increasing
at breakneck speed.

But cut back companies did. Leryone
was aected by the economic slump.
lrom a >31.2 billion market in 2000, it
dropped to >25.5 billion in 2001, an 18
percent decline. 2002 was another bad
year, with the worldwide storage market
shrinking by 10.6 percent.

Compounding the decrease in tech
spending was a sharp increase in
competition, and a consequent price war.
IBM, Sun Microsystems, lP, litachi
Data Systems, and Network Appliance
joined the ray. And so has Dell and Cisco
recently. Suddenly, eeryone was out to
get LMC`s lunch. I1 buyers, on the other
hand, inally hae credible and cheaper
alternaties to LMC, which one
competitor reerred to as Lxcessie
Margin Co., orcing the company to slash
prices ,and seeing its margins all rom 60
percent to 30 percent,.

1he result: LMC posted in 2001 a 21
percent drop in reenue and a net loss o
>508 million. Len in the ast-rising Asia
L
A
Paciic market ,share to global reenues
went rom 6.5 percent in 1999 to 12.5
percent in 2001,, LMC ailed to meet its
target o >1 billion in 2001.

As expected, its stock price plunged rom
an all-time high o >103 in September
2000. As o the end o January 2003, it`s
hoering at >.0, or 93 percent o its
high. 1o think that in the nineties, it
ballooned to a staggering 119,000 percent,
making it that decade`s best-perorming
stock on the New \ork Stock Lxchange.
Now, people reer to LMC`s stock as one
o the most spectacular lameouts. I you
like a more graphic example, say you
inested >1,000 in LMC stock ,at >0.3
per share, at the end o 1992, when
Ruettgers became CLO. I you sold your
shares on the last trading day o
September 2000, you would hae ended
up with about >132,800. Assuming you
bought at that same time, your >1,000 will
now be around >.

Crossing the threshold

oe 1ucci is just as unlucky. It was at
this cusp in LMC`s history when 1ucci
became CLO. le went in at the height
o the company`s dominance, inding
himsel a ew months later besieged by
alling reenues, thinning margins, intense
competition, demanding customers, and
disappointed shareholders.

But it was just as well. 1ucci is no stranger
to crisis. 1he ormer CLO o \ang
Laboratories Corp. is known or turning
around that company rom bankruptcy
and selling it or >2 billion. le is also a
salesman, and can thereore be expected
not just to cut costs to the bone but push
the top line aggressiely.

So ar, it seems he`s been doing a ine job.
lor the past two years, the company
underwent a restructuring. 1ucci cut the
number o employees rom some 24
thousand to the current 1 thousand. It
trimmed down inentories and testing
time. lor 2002, it doubled quarterly cost
saings to >316 million, equialent to
annualized cost saings o >1.25 billion. It
lowered its breakeen point by >336
million to >1.3 billion.

But great turnaround CLOs are more
ater the mold o IBM`s Lou Gertsner
rather than the notorious Chainsaw` Al
Dunlap. And in Gertsner ashion, 1ucci
struck a new strategy, not unlike that o
IBM in the mid-nineties.

lirst, he is pushing LMC towards
sotware and serices. Contrary to what
people think, LMC is not just a hardware
company. It has already been selling
sotware. But hardware dominated its
business. 1ucci wants to change that.
lrom 0 percent o sales, by the end o
2004, he wants the ratio to be 50 percent
hardware, 30 percent sotware, and 20
percent serices. LMC is now getting
closer to its goal.

1hat`s really a no-brainer. Gross margins
or storage hardware is alling down by
hal since the start o 2001 and 36 percent
annually since 1999, hoering between 25
and 30 percent o sales, while or
sotware, margins can go as high as 85
percent. Sotware is also the astest-
growing segment in the storage market,
around 25 percent, growing to >11.8
billion by 2005, according to research irm
Gartner. LMC happens to be leading the
segment as well, with a 30 percent market
share.

LMC already has an edge in sotware
anyway. Latinazo notes, \hat are the
stars o LMC One is the in the area o
remote mirroring, essentially ensuring that
you hae the exact copy o your data at
any point in time in a remote site. And
J
that product is SRDl. \ou can also do it
in a local position. \e hae a product
called 1imelinder. Both products address
business continuity, ensuring whateer
happens, you`re going to continue your
operations.`

Second, 1ucci wants to expand LMC`s
market. Known primarily or its high-end
Symmetrix systems, LMC is now pushing
aggressiely towards the mid-tier market,
through modular storage systems. 1he
company is betting on its CLARiiON
product line, a technology acquired rom
its >1 billion acquisition o Data General
in 1999.

Lxplains Latinazo, \e need to grow our
market. \e need to open up new markets
or us. \hen I joined LMC, and I`m
asked, \hat`s your target segment` I
normally say, 1he top 50 corporations.`
\hy 1he Symmetrix works best on the
bigger companies with more complex
enironments. But with the introduction
o CLARiiON last year, it opened up new
markets or us. \e cannot anymore just
talk to the top 50, we can now talk to the
next 500, because we hae a product that
spans the lower to mid-tier range o the
market.`

1he company has also struck a potential
pot o gold when it launched Centera,
which addressed another undersered
market - ixed content, also called
reerence or archial content, as opposed
to transaction-based data. 1his includes
X-rays, MRIs, CAD,CAM designs,
cheques, archied e-mail, and the like.
Research group Lnterprise Storage Group
estimates that reerence data will represent
54 percent o all inormation by 2005,
growing at a 92 percent compounded
annual rate, equialent to a >28 billion
market by 2006.

LMC calls this new segment content
addressed storage, or CAS. Latinazo says,
CAS is a new space that we`e cared out
o the market. \e were the irst to
introduce this product. It`s disk-based.
1raditionally, people were using optical
disks i they`re going to do archial. \hat
we`re predicting is that the price points o
disk and tape will probably cross maybe in
2003 or 2004, which means there`s no
price adantage or tape. And disk has
higher shel lie and aster perormance.
So we`re expecting a shit to disk-based
archial and backup. 1he Centera line
addresses the ixed content segment.`

According to Latinazo, 1here`s a latent
demand or the Centera. 1raditionally, it`s
been the optical disk. People hae been
archiing on tape and it`s only last year
that we came out with Centera. 1here`s a
huge market. And it`s going to be drien
rom how ast the country moes rom
tape to disk, rom paper to digital content.
1he goernment sector is an obious
segment or that. All the legal documents,
all the imaging applications or example
banks and goernment would be
candidates or that.`

Already, Centera has been winning raes.
1he company has built a reputation or
cutting-edge products. Says Latinazo, In
1991, we were the irst to come out with
the concept o external storage. In the
mainrame space, we said ,to our
customers,, \hy don`t you come up with
using external storage` In 1995, we said,
\hy don`t you connect all your serers to
our storage` So that`s the concept o
enterprise storage. 1hen in 1999, we said,
\ou can connect to any network, to SAN
and NAS.` And then now, we`re the irst
to say, \e will manage all your storage
products, be it LMC or otherwise.``

Aside rom introducing break-through
products, LMC is also orging key
partnerships. One such deal is co-
branding storage products with Dell or
the midrange market, currently dominated
by lP. It`s also partnering with
consultants such as Accenture and LDS
or implementation projects.

1he company is also expanding its
channel, adding to its direct sales orce a
number resellers to lower oerhead. LMC
Philippines, or instance, now counts
three resellers ,1otal Inormation
Management, ABBL 1echnology
Solutions, Sandz Solutions, and one
distributor ,MSI Digiland,, segmenting the
market based on size. Says Latinazo,
\e`e segmented the market. \e hae
enterprise accounts or tier one, which is
LMC-led. In the tier two account, it will
be jointly handled by our resellers and
LMC. And in tier three, it`s essentially by
resellers. \e need to moe rom a one-to-
one relationship model to a leeraged
model, which means the ability to coer a
bigger market. Our CLARiiON line is
marketed through a distributor model
whereas Symmetrix continues to be sold
through a alue-added reseller model.`

But more than anything else, LMC is
hinging his bet on two concepts that
could make or break the company. One is
networked storage and the other is open
systems.

LMC calls it Automated Networked
Storage. It embraces the concepts o
network attach storage ,NAS,, storage
area networks ,SAN,, and content
addressed storage ,CAS,. LMC oers
Symmetrix or the high-end market and
CLARiiON or the mid-market or its
SAN solutions, Celerra or its NAS
oering, and Centera or CAS.

Basically, i you want a high-perormance
storage or database applications like
OL1P, data warehousing, and LRP, you
go with SAN, which uses liber Channel
to connect storage with serers. I you
want ile access or sharing inormation
rom any network connection, or use in
sotware and product deelopment as well
as workgroup applications, you go with
NAS, which connects to an IP network. I
you want access to ixed content, such as
e-mail archies, you go with CAS.

Networked storage is the logical next step
in the eolution o storage ater direct
attach storage ,DAS,. As organizations
grew their I1 inrastructure, they`re bound
to come up with mishmash o disparate
serers, storage, operating systems,
management sotware, and applications,
or what`s called as a stoe pipe
inrastructure.

Automated networked storage promises
increased productiity through serer
consolidation, higher storage utilization
through serer consolidation, better back-
up procedures, business continuity, and
lower total cost o ownership ,1CO,, not
just through high-perormance hardware
but more importantly through centralized
sotware that can automate most o the
processes o managing storage systems,
such as replicating data, backing up data,
and allocating resources.

Latinazo notes, Networked storage will
be the dominant inrastructure as Gartner
and IDC predicts. Lnterprise storage
management is becoming increasingly
important because o the complexity.`
Indeed, it is the uture o storage. IDC
sees a >21.5 billion market by 2005 ,others
see it at >41 billion,, growing 15 percent
annually, while DAS would hae
decreased to a >10.1 billion market.

Latinazo explains that the needs o
customers point to networked storage,
1he customer is looking or
proisioning, meaning i you put
eerything into one system, you want to
be able to moe and allocate resources on
the ly. 1hey`re looking or agility to moe
data rom one point to the other as ast as
they can. 1hey want it not only timely but
eery time it`s needed, so aailability
becomes an issue. And or some reason
something happens, they don`t want to
lose data. 1hey should be able to recoer
and protect that inormation. And do that
at the lowest possible price. 1hat`s a tall
order.`

1he concept o open systems is embodied
in what LMC reers to as its AutoIS
ramework, which incorporates its suite o
sotware products, including
ControlCenter, Replication Manager,
StorageScope, and \ideSky, its
middleware that`s designed to work with
storage hardware o other endors.
Already, LMC has sold more than 13
thousand licenses o its arious
management sotware.

Customers hae been urging storage
endors or interoperability, an issue that
has rustrated I1 managers who hae a
hard time making all the serer and
storage systems they bought rom
dierent endors work together. 1he
industry established the Storage
Networking Industry Association ,SNIA,
and has been working on standards that
will allow an LMC storage work with an
lP storage, and so on. 1hat standard is
called Storage Management Initiatie
,SMI,, preiously known as CIM,Bluein.
Progress is under way, but LMC is already
pushing or \ideSky as the middleware
that can do that now ,and still be
compatible with SMI,, showing that it`s
moing aster than the industry.

LMC`s ability to moe ast comes rom a
history o innoation, supported by R&D
inestments and a war chest o some >5.
billion in liquid assets, representing some
60 percent o its total assets. It spent >80
million in R&D, or 14 percent o
reenues, which is more than what its
competitors dedicate to their storage
solutions. Since 1990, it has inested >5.4
billion in research and >2 billion in
cumulatie interoperability inestments. It
also more than 3,000 engineers ocused
on storage R&D. I you look at the
IBMs, the lPs,` Latinazo points out, it`s
probably 5 percent o their business. I
you look at the relatie R&D spent by
these companies, you would see the huge
gap between LMC`s R&D in storage as
against theirs. 1his strategy will drie us
orward in the coming years.` le also
notes that while LMC in the Philippines
has a head count o just 1, as opposed to
the hundreds employed by IBM and lP,
those 1 dedicated to the storage business
is more than what LMC`s local
competitors hae allotted or their storage
business.

\e`re number one in networked storage,
we`re number one in network sotware,
and we`re number one in storage serices.
\hy I you look at the igures, the
considerable inestments we hae in R&D
are ar greater than any o our
competitors. \e made an inestment on a
huge interoperability lab that ensures our
products will connect to the most number
o serers, the most number o operating
systems, the most number o databases
and applications. In 2001, we did >1
billion o R&D. Last year, we did some
>80 million. \ou`re gonna see it bear
ruit in terms o the richest set o
announcements in both hardware and
sotware in the next ew months.`

And what LMC can`t do quick enough, it
can buy. Its >5. billion cash and other
liquid assets allow it to buy companies
such as Prisa recently ,the eighth small
company LMC bought since the 2000,,
which gies it immediate access to
intellectual property and new technology.

Bearing fruit?

ll the eort is bearing ruit.
Recently, LMC reported its ourth
quarter results, with reenues up
by 18 percent compared to the preious
quarter. lardware grew 21 percent,
sotware, 22 percent, and serices, 11
percent. It still, howeer, posted a net loss
o >64 million in that quarter. lor the ull
iscal year o 2002, reenues amounted to
>5.44 billion, down rom >.09 billion in
2001. But net loss signiicantly decreased
rom >119 million in 2002 compared to
>508 million in 2001. Gross margins hae
improed at 39.4 percent. 1ucci is
conident LMC will be proitable in all
quarters o 2003.

In terms o market share, LMC still
dominates the major storage segments, as
o 2001. It led networked storage ,SAN
and NAS, at 43.3 percent share, SAN at
41.9 percent, NAS at 48.5 percent,
external RAID at 25.3 percent, and
storage sotware at 30.4 percent.

loweer, as o the third quarter o 2002,
LMC`s ortunes hae changed slightly.
According to IDC, lP has grabbed the
lead o the total hardware storage market,
with 2 percent market share, ollowed by
IBM with 20 percent, and LMC with 11
percent. Network Appliance dislodged
LMC in the NAS segment, with 38
percent share. lP nudged LMC out o
the top spot in the open SAN market,
with 30 percent. But or the combined
networked storage market, LMC still leads
with 28 percent reenue share.

In Asia Paciic ,excluding Japan,, it`s a
similar story. As o third quarter o 2002,
according to IDC, lP leads with 28.2
percent share o total end-user reenues,
ollowed by IBM, lDS, and Sun
Microsystems. LMC is only ith with .5
percent, in act, declining 14.8 percent
rom the second quarter. Asia Paciic is
the third largest geographical market or
LMC, with >15 million or 12 percent o
total, during the ourth quarter o 2002.
But keep in mind that total storage
includes all hardware storage products,
including DAS or internal storage. \hat
matters ultimately is networked storage
and storage sotware ,excluded in the IDC
study,, the two astest-growing segments.
LMC spokesman Dae larmer
commented on the report, 1hese market
share results only relect three months o
2002, are hardware only, and do not
represent LMC leadership and inestment
in open storage sotware. LMC leads the
most important segments o the storage
market. On the hardware side, where
these numbers ocus, year-to-date IDC
data shows that LMC is the reenue share
leader in external RAID, NAS, SAN and
networked storage.`
Latinazo gies his take, \ou need to read
in the ine line whether it`s measuring
hardware, hardware plus sotware, or
hardware plus sotware plus serices.
Most o the studies are pure hardware
studies. \ou might wonder i this is just
the business o LMC or example in
South Asia. No, because our business
inoles hardware, sotware, and serices.
And then you might say lP or IBM is
bigger than LMC, again you need to
qualiy that in terms o terabytes, in terms
o just hardware. \ou need to look at the
total because we don`t sell hardware alone,
we sell the whole solution package.
Number o terabytes doesn`t mean you
sold the most reenues because what`s
more important - reenues or terabytes
sold I`d argue it`s the reenues. lP and
A
Compaq traditionally look at it rom a
terabyte standpoint, because they also
count what`s inside their serers.`
Indeed, market share reports are oten a
see-saw ride. And the race, really, has only
just began. But clearly, there`s no longer
any comortable lead. And the ride will
only get wilder.
1ake or instance LMC`s bet on AutoIS.
Many experts agree this ramework is at a
more adance stage than the competition,
but it lends to potential problems or the
company, or or competing endors with
similar ambitions, such as IBM, lP, and
Veritas.
Latinazo argues, \hile a lot o
companies will say irtualization`, it`s still
aporware. \hile a lot o people talk
about it, ery ew people hae actually
done it. \e think it`s going to take them
longer than what our competitors think,
because what we`re leeraging here is
intellectual property that we`e already
had in the past. I you look at IBM, lP,
Compaq, they started out selling serers,
whereas we didn`t hae serers. So we
were orced to connect to their serers. So
since 1990, we hae been putting our
money into that interoperability. Our
Symmetrix line probably connects to orty
serer types and a typical competitor
would connect to nine, seen, ie,
depending on the brand. So that same
intellectual property was used in this
product. \e know how to connect to
them, now we can manage them, we can
draw data rom them. Out o our >80
million R&D inestment, 5 percent was
poured into sotware, because that`s
where the growth is and that`s where
dierentiation is. \e announced oer
orty new and enhanced products in 2002
alone.`

Sotware that manages a heterogeneous
enironment, meaning it works with
storage hardware o other endors, could
later be at the expense o hardware sales.
I1 buyers get the cheapest boxes at an
acceptable leel o perormance rom
other endors, and use LMC`s sotware to
manage them. But LMC doesn`t mind
that, it seems.

Lxplains Latinazo, 1here are two ways o
looking at it. People say, ley, it might
cannibalize your hardware.` On the other
hand, you can look at it rom a standpoint
o ley, it`s opening up new segments or
us.` And I`d like to think it`s the latter.
1he reality is a lot o companies hae
heterogeneous storage inrastructure.
1hat`s one market we should be attacking.
1hat`s one market where we think we
hae an adantage. I you look at our
business model, we`re shiting to sotware.
So i customers buy our sotware, it`s
aligned to our strategy that our growth
comes rom sotware and serices rather
than hardware, because that`s where
dierentiation and better margins can be
realized.`

And while its new products are break-
throughs, it might take awhile beore it
gains wide acceptance, particularly in
emerging markets like the Philippines. In
the country, DAS is still the dominant
inrastructure in most companies. And
with only a ew companies that can pay
seeral million pesos in storage
installations, and a good number o
competitors ighting or the same small
market, it`s not a surprise that LMC didn`t
expect phenomenal growth in the
Philippines in the last ew years.

But that`s now changing. Asked to
comment about preious
pronouncements o LMC oicials on the
modest expectations o growth in the
Philippines, Latinazo jests, \ith my
targets this year, not anymore.` le urther
explains, \hat`s driing inestment in
I1 It`s a actor o the economy and
inestment. Preiously, you see the larger
companies in the likes o Singapore.
\ou`re now seeing inestments low into
China, India. Naturally, that aects the I1
spending in the Philippines. But in terms
o maturity o the arious countries, that
also play a role in determining I1
spending. Came the crisis, we think some
countries which used to experience high
growth may not experience high growth,
such as Singapore. Companies plan and
inest based on a high growth scenario.
Most o these companies hae already put
their money in Singapore. So i you look
at inestment low, it`s going to China. So
we think that in South Asia, we won`t be
experiencing high growth in Singapore as
we used to.`

As or the Philippines, Latinazo beliees
the big growth drier would partly be
rom the traditional growth rom its
installed base but a big portion is expected
to come rom the new segments that will
open up. SMLs, or one. Because o the
big push we hae on the CLARiiON
line,` he notes. 1he moement we saw in
that space last year was ery encouraging.
\orldwide, we practically sold eery
CLARiiON product we produced. 1he
acceptance o the market was
phenomenal. I you look at South Asia,
where is the SML market It`s not in
Singapore. It`s in the likes o 1hailand, the
Philippines, India. So we`re expecting
signiicant growth rom these countries,
including the Philippines, in 2003.`

Latinazo enumerates its other growth
areas, Our traditional installed base is
banking and telco, but what we`re seeing
is a resurgence in the semicon industry.
Retail seems to be a promising industry.
Lducation is also one area. And, o
course, manuacturing. \e hae
goernment but it`s a unction o unding.
1he President came out with promising
news on planned spending and ocus on
I1, but it`s still drien by ,the, priate
,sector,. Global accounts is another area
where we`re seeing moement.`

Latinazo remembers the time he irst went
on board LMC and how things hae
changed. 1he product sets were
dierent. 1he segments that we were
targeting then were dierent. 1he
requirements were in the Symmetrix
standpoint. In recent years, you`ll see that
there`s a changing importance o
applications. In the past, e-mail or
example wasn`t mission-critical. Now, it`s
as mission-critical as other applications,
because the CLOs o companies are
dependent on e-mail. 1here`s a need in
the mid-tier space or high-perormance,
high-reliability, high-aailability storage
inrastructure. \hereas beore it was
more ocused on the high-end side o the
market. 1hat ollows also the global
trend.`

lrom 2000 to now,` he adds, there`s
more ocus on cost. 1here`s more
challenge or I1 shops to look at how to
manage and reduce cost in their
inrastructure more than eer. \ithin the
country, there`s also a greater appreciation
o an enterprise storage inrastructure.
\hereas beore, when we started, most o
the customers had a traditional mindset.
More than our competitors, the bigger
challenge or us was changing the mindset
o the market. It`s the thinking that
storage is peripheral to the serer whereas
our iew we`re looking at an inormation-
centric inrastructure where storage plays
a central role in one`s I1 inrastructure.
People continue to see storage as just as a
disk, not knowing that there`s a lot more
they can do. I think the market has shited
signiicantly. I`d like to think that our
inestment in the market in terms o
educating the customers and introducing
new technologies hae made a dierence.
Now, you`re seeing customers as seeing
storage as a separate and critical piece o
the inrastructure, rather than just as
peripheral.`

LMC also has to contend with conincing
CIOs that sticking with just one endor
that can oer end-to-end solutions isn`t
always the best option. IBM and lP in
particular can rightly claim they`re a total
solutions proider with the breadth o
their oerings, rom PCs and serers to
storage and sotware. Latinazo says,
1hat`s the traditional iew: \hy do I
need to separate this I don`t want that
headache. I don`t want to go through that
eort. I`ll just talk to my serer endor.`
And it`s only ater you`e walked them
through the alue o an inormation-
centric inrastructure that they start to
open up and realize here`s a more eicient
way o doing this.`

le adds, I the customer realizes that
storage is an important piece o the
inrastructure and it warrants a separate
decision, then there`s no adantage or the
serer brands. Companies, as what we`re
seeing now, are taking a separate decision
on storage. In act, our being serer-
agnostic positions us better in the market,
because we oer customers lexibility and
inestment protection. As a serer endor,
you`re expected to sell your serer and
your storage. \hereas we go in there with
an open mind and oer lexibility to the
customer to choose the best serer, the
best application, the best database, and
the best inrastructure.`

Another potential cause or worry is
LMC`s stock price. It`s a great company at
a cheap price, a perect acquisition target
or the likes o IBM and lP, or een
Cisco and Dell. But we`re already toying in
the realm o speculation.

Are you ready for LMC?

ertainly, no one`s writing LMC o.
Many experts still contend that
LMC remains the superior
proider o storage solutions. As Latinazo
stresses, \e`re the only storage player
who can proide an extensie line o
storage solutions, rom DAS to SAN to
NAS to CAS.` le points out that the likes
o Net Application only has NAS while
the rest either has DAS or SAN only.
Most o them don`t hae the sotware.`

And the trends point to their aor. Neer
mind the single digit growth in the storage
sector in the last two years. Analysts agree
it will eentually get back to its galloping
growth rate ,although not until 2006,.
Neertheless, the industry is still in its
early stage. 1oday, 0 percent o storage is
still DAS. But by 2005, it`s possible
serers would totally be separate rom
storage. Gartner predicted that by 2005,
80 percent o all storage will be networked
storage.

Storage serices, on the other hand, will
grow rom >26 billion in 2002 to >41
billion by 2005. And storage management
sotware will reach >1 billion by that
year.

In Asia Paciic alone, networked storage is
expected to account or 52.3 percent o
total disk systems storage reenue in 2005,
while the storage management sotware
market in the region will reach >1.1 billion
in 2006, at a compounded annual growth
rate o 25.8 percent.

And as LMC likes to say, it`s the only
company dedicated to 100 automated
networked storage solutions. 1ucci has
owed to gain market share in both high-
end and mid-tier hardware, sotware, and
serices. 1he better-than-expected ourth
C
quarter inancial results point to LMC`s
turnaround.

Latinazo enumerates LMC`s strengths:
more new products than at any time in its
history, the ull breadth o storage
solutions, proessional serice oerings,
the highest customer satisaction and
loyalty ratings, strong partnerships,
increased price competitieness, and huge
market lead.

Just recently, the company announced a
major upgrade to its Symmetrix line,
marking the complete reresh o all its
products. 1he new releases are more
modular, like its CLARiiON line, rather
than monolithic. In contrast to the old
bus-based architecture, the new models
use a matrix switched-loop architecture
that connects to up to nine trays
containing disks to storage controllers, or
aster perormance. LMC is expanding the
capabilities o both platorms, thus
making them attractie to a wider market.
1he new Symmetrix DMX line, or
instance, is aimed at mid-tier customers in
need o high-end storage capabilities. And
it is doing the same or its sotware
oerings.

I the market buys into the new products
churned out by LMC at such breakneck
speed and heady pace - and no one really
argues against the beneits o networked
storage and open systems - then the
company can indeed extend its lead. LMC
has proen itsel beore and shows strong
signs it`s capable o adapting to the
changing enironment. It may be an uphill
climb but LMC is determined to solidiy
its ooting as the king o the hill.