Competing Against Encore Computer Corporation

The following article is intended to give more information on Encore Computer, who
recently announced the SP40 Universal Storage Platform targeted at IBM Mainframe
Systems and Open Systems. Included are key points to differentiate EMC from Encore,
and how to use these to compete.

When competing against Encore Computer, it is important to be aware of the following

differences between EMC and Encore:

 Financial Stability
 Service & Support
 Installation Base
EMC vs Encore Finacial Comparison
Financial Stability 1990-94 Revenue ($ in Thousands)
Encore Computer is 1400
R 1200 EMCCorp
based in Fort e 1000 Encore Computer Corp
Lauderdale, FL, and at v
800
the end of 1994, had e
600
n
approximately 850
u 400
employees. The e 200
company has been 0
struggling in the last 5 1990 1991 1992 1993 1994
years to find a market for
its core technology.
Since 1990, revenue has
continued to decline. The decline is due in large part to the fact that certain of the
Company's real time memory channel products have reached the end of their life cycles
and are increasingly less competitive in today's marketplace. In addition, the acceptance
of Encore's new open systems technology products in the information systems
marketplace has been much slower than anticipated.

Encore’s principal product EMC vs Encore Finacial Comparison

offerings are proprietary 1990-94 Net Income ($ in Thousands)
architectures developed
300
in the early 1980s. 250 EMCCorp
Although product I 200
Encore Computer Corp
enhancements were N
n 150
c
made over time, these e
o
100
older products have lost t
m 50
their technological edge. e 0
-50
Accordingly, Encore has
-100
been increasingly less 1990 1991 1992 1993 1994
competitive selling into
new, long term programs.
Replacement products based on open systems technology are becoming available,
including the SP40 Universal Platform, however, demand for initial versions of the
products has been disappointing. Encore has targeted the information processing
market as a strategic growth market developing a series of open system products. To
improve demand for its products, Encore continues to seek out strategic distribution
partners whose industry presence, expertise and sales channels will allow it to more
efficiently bring the Company's product offerings to market.

Encore and Amdahl Relationship

During 1994, Encore and Amdahl entered into a five year Reseller agreement which
allowed Amdahl the right to distribute the Company's Infinity SP under the Amdahl
brand. The agreement provides Amdahl with the exclusive marketing and distribution
rights to the product in exchange for purchase commitments of specified volumes.
Sales under the Amdahl agreement were anticipated to begin in the second half of 1994
with significant sales volumes scheduled in the first half of 1995.

However, since entering into the agreement certain significant contractual issues have
arisen delaying the sale of products. In February 1995, Encore notified Amdahl of its
intent to terminate the Amdahl agreement. Amdahl filed suit seeking to prevent Encore
from terminating the agreement. Shipments have not yet commenced, and according to
industry sources, the reseller agreement has been terminated.

Encore invested heavily in manufacturing and overhead support capacity necessary to

meet the sales commitments defined in anticipation of the Amdahl agreement. Product
sales have fallen well short of expectations and as a result, the capacity in place is not
being fully utilized adversely affecting all elements of Encores results of operations.

How to Compete on Financials

Encore Computer’s financial stability is in question. Revenues have declined steadily,
and they have not shown a profit in the last 5 years. This compounds Encore’s
immediate challenge to enter a new market with little to no experience. They must do
this with new products that are not field proven and have no installation base. They
must also build new distribution channels to market their products which includes
establishing new reseller relationships and creating a sales force. Whether or not
Encore can execute their plan still remain to be seen.
Service & Support

Encore Computer does not offer EMC Symmetrix EncoreComputer SP40

direct service or support. ShippingSince 1991 1995-96
Encore’s SP40 Universal Storage
FieldProvenArchitecture Yes No
Platform, as well as other Encore
products, is currently serviced %MFMarket Share- ‘95e 40% 0%
and maintained by Bell Atlantic. InstallationBase 8,000units ?
Bell Atlantic, who has recently ServiceProvider EMC rd
3 Party
joined resources with Decision
Servcom, now services over 30,000 different hardware products in over 170,000 sites
worldwide. Even though Bell Atlantic services an extremely wide range of products,
customers should be concerned with their depth of knowledge for this new, complex,
and unproven product. This combined with Encore’s financial hardships should make
most astute customers question the level of service they should expect from a
corporate, as well as regional level.

How to Compete on Service & Support

EMC provides customers with an established, focused, Worldwide support network.
EMC is one of the only storage vendors that manufactures, markets and maintains its
products. EMC’s service continues to receive the highest customer satisfaction ratings
within the industry.

Platform Testing and Qualification

The Symmetrix 3000 supports over a dozen Mainframe and Open Systems
environments. In order for EMC to attach to a particular platform, extensive testing
occurs to insure full compatibility with the host hardware and software. In addition to
testing, Corporate and Field CE’s are trained on each platform to provide service and
support.

EMC’s Engineering Lab includes all host CPU platforms and OS versions to support our
customers and provide:

 Compatibility testing between the host platform, OS, and EMC’s storage solution to
provide hassle free installation and operation
 Compatibility insurance testing with all new versions of the host OS with out requiring
OS modification or device drivers to maintain compatibility. (Remember, new OS
versions are typically released every 6 - 8 months)
 Test equipment for training and problem recreation assuring a high level of support
and quick turnaround for customer issues.

Although Encore claims support for many of the platforms EMC supports, to what
degree has this been tested? What about your customer’s particular platform? Has the
Encore service engineer for your customer’s location been provided with training on the
SP40 (in addition to the other 30,000 products he supports?) And to what degree?
Information from the field indicates that in the limited number of Encore’s installed sites,
much of the testing and problem analysis takes place on the customer’s CPU. Your
customer will want to be aware that he unknowingly might be a Beta site for his
particular platform and any problems or issues must be resolved inside his data center
with his equipment.

Installation Base and References

Be aware that Encore has produced a few reference sites (2 in Florida) who will attest to
the operational functionality of the SP40. Customer evaluations of the SP40 are a
common sales tactic, and Encore Sales reps are compensated for evals. Encore’s
strategy in many cases is to just get their box on the floor. This means that Encore
does have sites with the SP40 installed, but how many of these sites are running it on
production applications? And more importantly, how many actually intend to actually
purchase it?

How to Compete
EMC is the market leader in
Mainframe storage and is Mainframe Storage MKT Share
IDC 9/95
quickly establishing
Symmetrix as the leader in
high end, mission critical IBM
Open Systems storage. The 37%
EMC
Symmetrix 3000 incorporates 40%
mainframe class
performance and availability
features with world class
service and support to
provide Open Systems users
a true best of breed solution. Other* HDS
3% AMD STK 9%
*Includes Encore 4% 7%
When positioning Symmetrix,
it is important to focus on the
value of EMC’s storage products and how our customers are using this technology to
increase revenue, control costs, and gain a competitive advantage.
Reference selling continues to be
extremely effective when
differentiating EMC’s and Encore’s
service policies and strategies for Selected Customer List
two main reasons:
Airlines Financial Services Insurance
 Delta  American Express  Prudential

 EMC has thousands of

 Galileo International  Bank of China  CIGNA
 Lufthansa  Charles Schwab & Co.  Travelers

satisfied Symmetrix
 Alitalia  Citibank  General Accident
 USAir  DT Bundesbank  Zurich Insurance

customers in all major  Nomura

 Chemical Bank

industries for mission critical Telecommunications Manufacturing Distribution

 MCI  John Deere  Minolta
business applications.  British Telecom  Mercedes  Toshiba
 French Telecom  Bosch Siemens  RJ Reynolds
 Alcatel  Nike  Home Depot
 PacBell  Sony  Circuit City
 Bellcore  Ford  Bergen Brunswig
COR001. 14
 Encore does not!

Conclusion
Encore is trying to established itself as a player in the Mainframe and Open Systems
storage market. They have a lot of work ahead of them to achieve this goal, and it is
important not to underestimate Encore when competing against them. EMC has run
into Encore in a small number of deals, and has been quite effective in selling against
the SP40. It appears most activity is regionally based, in areas where an Encore rep
has set up camp. Be aware that they are out there, and we expect their activity in
EMC’s accounts to increase.

If you do encounter Encore in your deals, please notify Field Sales Support. For help in
selling against Encore, contact your local OSG Field Marketing Rep.

For additional information, please contact Scott Delandy in OSG Field Marketing.