History of EMC Corporation | EMC Corporation history | Era of EMC Corporation

EMC Corporation

Hi All,

A very good inspiring and real story about EMC Corporation which is established in late 1970's and how it became the world largest Storage provider.

EMC Corporation operates as the primary provider of information storage systems, software, networks, and services. Its famous  products are Symmetrix Information Storage Systems, the CLARiiON Information Storage Systems, Information Storage Software, and Information Storage Services.


EMC was started in the late 1970s, and raised rapidly through aggressive sales practices. In the mid-1980s, the company faced some trouble with its technology, but regained a leading place in its industry in the 1990s through the early introduction of a new generation of computer memory technology. In 1994, EMC co-founder Richard J. Egan was named the "National, Master Entrepreneur of the Year," an award sponsored by Ernst & Young, Inc. magazine, and Merrill Lynch, for his lifetime achievement as an entrepreneur. During the 1990s, EMC stock grew by 80,575 percent--the highest single-decade performance of any listed stock in the history of the New York Stock Exchange.

By 2000, EMC's customers involved 93 percent of Fortune 500 financial institutions, 98 percent of the Fortune 100, and 90 percent of the Business Week 50. The company was named the "Most Admired Company" in the computer peripherals industry in both 1999 and 2000 by Fortune magazine.

Egan began his career as an electrical engineering student at the Massachusetts Institute of Technology (MIT). There he worked on a team that helped to develop a guidance system for the Apollo lunar mission. The device designed by Egan's team helped the space capsule to return safely to earth after landing on the moon. After graduation from MIT, Egan founded a company called Cambridge Memories, later known as Cambex, which manufactured storage devices for computers. Under Egan's leadership, this company's revenues grew into the multi-millions.

After saying good-bye to Cambex, Egan worked as a technical consultant to other big computer firms, such as Honeywell. In 1979, he founded EMC along with partner Roger Marino. Like Cambex, EMC's main product was devices that allowed computers to store information. Egan created circuit boards that could be installed in popular computer models, in order to dramatically increase a pre-existing computer's memory. In this way, EMC's products were able to extend the life of mini-computers, allowing users to upgrade and keep on using old equipment, rather than having to buy a new machine.

Rather than put EMC's main stress on research and development or engineering expertise, Egan focused the company's energy on sales. To fill out his staff, he recruited bright young college graduates who had played competitively on sports teams in school. In addition, to foster team spirit and competitiveness in his salesmen, Egan set up EMC's sales offices in a bullpen configuration. Different sales regions were designated by pennants, which indicated the relative standing of the regions. In the center of the room, a brass bell was hung. Anyone who gained an order of $10,000 or more got to ring the bell. In contrast, EMC also strove to keep costs down in its engineering and technical support divisions.

In the early 1980s, such decisions brought EMC rapid growth, and the company became the subject of a case study used by students at the Harvard Business School. The company's sales and profits continued to grow through the middle of the decade. By June 1985, however, EMC's continued success had attracted the unfavorable notice of a competitor, and the company was sued for patent infringement by the Digital Equipment Corporation (DEC) which also made memory boards. This suit was eventually settled in October 1987, when EMC was granted a license for the DEC technology in question, and in January 1989, EMC paid DEC $100,000 to settle the legal action.

After this suit was filed, EMC added to its product line again, as the company introduced new 4 & 8 bit memory cards in July 1985. In August of that year, the company also increased its offerings for the Hewlett-Packard 3000 computer. 

In May 1986, EMC announced that it would offer stock to the public for the first time. The company planned to raise capital by selling 2.2 million shares. 5 months later, the company announced that it had formed a new unit, Network Intelligence, Ltd., to develop software that would seek out and remove defects in local area network programs. At the end of the year, EMC reported record profits of $18.63 million.

EMC then expanded the market for its products, when Marubeni Electronics began to sell EMC memory boards for upgrading existing computers in Japan. In addition, EMC continued to introduce new products, announcing that it expected the bulk of its future growth to come from products designed to enhance the memory of large-scale and mid-range computers.

Toward this end, EMC introduced a new class of products, disk drives, in mid-1987. The company rolled out a disk drive and controller for use in IBM 9335-compatible machines in June of that year, and, two months later, introduced an optical disk subsystem for use in DEC VAX computers, which boosted the storage capacity of these machines, as well as a similar system for use with machines built by the Prime Computer company. Next, EMC augmented its line of disk drives for computers made by other companies yet again, when it rolled out a product designed to be used in Hewlett-Packard RISC-based Spectrum computers

Ciritical Issues:

By September 1987, however, EMC had hit a hitch, as its new line of disk drives, which contained a small, inexpensive circuit board made by NEC Corporation, proved to be defective. When problems with the drives arose, EMC's response was to ship out new disk drives to customers through overnight mail. Because the replacement drives, which were much more expensive, were bulky and delicate instruments, they had to be delivered and installed by an EMC employee. In order to make this possible, the company was compelled to maintain inventories of the replacement drives at all of its 23 regional sales offices. In addition, its small staff of service representatives was severely taxed by the excess of problems.

As a result of these conditions, EMC's cost of doing business rose dramatically. The company's low-overhead philosophy, which had kept its investment in technical and service areas low, meant that the company was not well prepared to cope effectively with the crisis of its defective disk drives. By the end of April 1988, EMC's results had started to show the impact of this situation, as earnings over the previous three months dropped from $5.8 million to $1 million, despite the fact that sales rose by 57 percent. This reflected the fact that EMC felt compelled to keep shipping the problem drives, even after difficulties with the product had been identified, in order to keep up with sales targets.

EMC, which had experienced smooth sailing up until this point, came in for criticism as a result of these problems. The company's investors claimed that they had been kept in the dark and not notified early enough by EMC management about problems with the disk drives. "The company is in the doghouse," one financial analyst told Business Week, as the price of EMC's stock plummeted to $7 per share, half the level it had been in the wake of the stock market crash of 1987. "Their engineering and technical support is something they always skimped on," a competitor observed in Business Week.
In response to the difficulty with its disk drives, EMC's management made a number of changes. The company located two additional suppliers for the defective part made by NEC, and it also tried to beef up its engineering division. Responding to criticism that the company had focused on sales to the detriment of quality, Egan admitted that EMC should have tested the drives more thoroughly before shipping them out. In June 1988, EMC announced that it would raise the price of its products by five to 15 percent, due to the cost of the computer chips they housed. In addition, EMC brought in a new president and chief executive officer, Michael Ruettgers. "We had some serious quality and service problems," this executive later told the New York Times, adding, "We were overwhelmed."

As EMC attempted to respond to the problems its rapid growth had engendered, the company continued to augment its product line. In October 1988, EMC brought out a new magnetic disk subsystem for use in DEC VAX machines. One month later, the company also introduced a solid state disk drive for use in IBM 3080 and 3090 model computers.

Despite the contribution of these new products, EMC's disk drive problems continued to plague the company, causing EMC to report a net loss for 1988 of $7.82 million. In January 1989, EMC responded to its falling financial returns by cutting costs, as the company reduced its staff by one-third, letting 60 people go. This move was part of a larger shake-up directed by EMC management in the company's sales and engineering operations.

Two months later, EMC introduced another new product, in an effort to shore up its sales. The company's latest disk drive offering was designed to be used with computers manufactured by the Wang company. Four months later, the company made a large sale, signing an agreement with Storage Technology to supply $100 million worth of EMC's solid state memory storage subsystems for resale. These products were designed to be used with IBM-compatible machines.


Key Dates:

  • 1979:EMC is founded by Richard J. Egan and Roger Marino.
  • 1985:The firm launches four- and eight-byte memory cards.
  • 1986:The company goes public.
  • 1987:Sales grow 90 percent over the previous year to $127 million.
  • 1988:EMC reports a $7.82 million loss due to problems with its disk drives.
  • 1991:Sales rebound as the firm rolls out its new product line that uses RAID technology.
  • 1993:Epoch Systems Inc. and Magna Computer Corp. are acquired.
  • 1994:Sales exceed $1 billion; Array Technology is purchased.
  • 1997:EMC is ranked 16th inBusiness Week's Top 50 list of America's best-performing companies.
  • 1999:Joseph M. Tucci is elected president and chief operating officer; the company introduces the EMC Enterprise Storage Network.
  • 2000:EMC's market share in the information storage systems industry grows to 34.6 percent.
  • 2001:Ruettgers is named executive chairman and Tucci takes over as CEO.
  • 2016: Dell purchase the EMC at $67 billions which is the largest tech deal ever.

Additional Details

  • Public Company
  • Incorporated:1979
  • Employees:50,000
  • Sales:$8.87 billion (2000)
  • Stock Exchanges:New York
  • Ticker Symbol:EMC
  • NAIC:334112 Computer Storage Device Manufacturing; 334413 Semiconductor and Related Device Manufacturing; 334412 Bare Printed Circuit Board Manufacturing
TO know more about Symmetrix DMX and VNX/Clariion Architecture, refer the links below

Symmetrix DMX



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