By William Fellows

Next year EMC Corp will pitch itself into the market for dedicated storage appliances or network attached storage using technology from its Data General acquisition. It will offer a more broad-based solution than its current Celerra server. Until it acquired Data General with its Clariion business, EMC didn’t have products which addressed the $10bn storage middle market. It said customers had asked for these and the quickest way to satisfy them was to buy DG.

EMC says it has about a year to decide whether it will fix and sell, or fix and keep DG’s Aviion server business. It can’t sell it off for a couple of years anyway under the pooling of interest rule under which it accounted for the acquisition. It has given Bob Dutkowsky charge of turning it around.

EMC CEO Mike Ruettgers said that DG Aviion and services revenue will drop as it focuses on specific sectors of the NT and Unix markets. DG plans a new push into the NT consolidation market and has a new ccNUMA architecture on the runway for next year when Merced arrives. Hewlett-Packard is free from EMC and apparently free to some companies according to Ruettgers, commenting on the competitive landscape in the storage market now its reseller deal with HP has ended. Ruettgers was referring to one of HP’s new revenue models in which it effectively gives away products in return for a cut of future revenue or transaction streams from ASPs and ISPs.

EMC says it wants to be the back-end for ASPs and ISPs rather than the supplier of disks to their outsourcing centers. Most EMC customers are not doing outsourcing, the company says. Revenue from North America was $839m up 34%. European revenue was $365m, up 24%. Asia Pacific was up 45% at $95m, and Latin America was up 10.5% at $32m. International revenue was 37% of total sales. EMC wants to grow this to be 50%.

Hardware sales were up 28% at $1bn and accounted for 76% of total sales. Software sales were $207m, up 76% to 15% of total revenue. McData sales slumped to $24m – $20m less than and $20m down sequentially – because IBM bought fewer Escon directors than it had planned. EMC says it has shipped $45m McData Fibre Channel Connectrix switches since they were introduced at the beginning of the year. Services were up 57% at $89m.

It installed 1900 systems in the quarter; 250 small, 950 medium and 700 high-end devices. 80% were the newest Symmetrix systems. Revenue from Fibre Channel sales were $400m, 40% of total system revenue. It has done $2bn Fibre Channel sales in total.

EMC reported third quarter net income up 54% at $309.5m over $201.2m on revenue up 33% at $1.33bn over $1bn. Earnings per share were $0.30, beating First Call’s average of analysts’ estimates by three cents. At the nine-month mark net income was up 52% at $819.1m over $536.9m on revenue up 34% at $3.75bn over $2.78bn. Revenue was up 3% sequentially where EMC had expected revenue to be flat. It will take a one-time charge this quarter for the acquisition of DG.