EMC reported revenue of $5.09 billion in the first quarter of 2012 yesterday, an increase of 11% from the same period in 2011. The result came up short of expectations, however, as analysts forecast revenue to come in at $5.12 billion. Shares dipped following the announcement to $27.94 as of Friday morning.
The consensus among analysts is that EMC missed their revenue projections due to weaker than expected sales of the company’s high-end storage products, which dropped 10% compared to Q1 2011.
A major bright spot, however, was services revenue. EMC reported $2.03 billion in services revenue in Q1, up 21% from the same quarter last year. EMC’s Information Infrastructure group led the way with $1.5 billion in services revenue, up 16% from Q1
2011. Information Storage servicesrevenue was close behind at $1.2 billion.
“EMC Services business continues to thrive, as customers seek guidance on the transformation of their own IT architectures,” said David Goulden, Executive Vice President and Chief Financial Officer at EMC, during a conference call with analysts following the earnings announcement.
“In addition to our existing design and implementation services for cloud infrastructures, in Q1, we added offerings specific to the delivery of IT-as-a-service. These new services which are aligned around cloud infrastructure, cloud optimized applications and end-user computing, helped clients accelerate the adoption, optimization and consumption of cloud technologies.”
Focus on Converged Infrastructure, Big Data Services
At last week’s VSPEX announcement, the role of services as enterprises begin to adopt converged infrastructures was a major topic of discussion.
“EMC’s Global Services business is involved in virtually everything this company does,” said Wikibon CEO and Chief Analyst Dave Vellante live inside theCUBE at the event. “Because converged infrastructure is complex, there is a lot of mystery, there’s margin in that mystery and EMC will be there to mop up whatever the channel won’t or partner with the channel in some cases and I think we’re going to see more and more model innovation on the services side over time.”
Services also play a huge role in Big Data scenarios, as we’ve covered here at ServicesANGLE extensively. EMC offers a range of Big Data-related services designed to help customers throughout the entire lifecycle of Big Data projects, said Bill Schmarzo, who serves in EMC’s Global Services unit overseeing information management and analytics-related services and consulting.
Among them is the EMC Vision Workshop, which is typically the first stop for customers as they begin exploring Big Data and looking for the most valuable use cases in their organizations, Schmarzo explained in a call yesterday. Said Schmarzo:
“This [EMC Vision Workshop] is a service we offer where we bring in both the line-of-business users and the IT organization and we run them through a series of vision exercises. We tease out the kind of questions they want to ask, the decisions they’re trying to make, to help them understand how using, for example, social media data might help if you’re a B2C company, or how machine data might help in a network operation. The idea is to come up with a prioritized lists of areas where Big Data Analytics can drive competitive differentiation and business value.”
Schmarzo said he is seeing significantly more interest in the Vision Workshops now than he did this time a year ago, a development he credits in part to interest from more LOB users that have heard about the potential of Big Data and want to learn how to apply it in their departments.
Getting Partners Involved
Services aimed at training current data center pros and data warehousing/business intelligence workers so they can develop the skills needed to thrive in the new world of cloud computing and Big Data are also critical. EMC has introduced a handful of new services to do just that, but the company needs to do more to get its channel partners involved to keep the momentum moving in the right direction, according to Wikibon Senior Analyst Stu Miniman.
“We’ve covered how EMC is driving some of those new training requirements for converged infrastructure, for cloud, for Big Data,” Miniman said on theCUBE. “Really they’re ahead of where the partner ecosystem is today in that space … They need to enable their channel partners.”