EMC Corp. Wednesday reported double-digit growth for the ninth consecutive quarter. But the storage vendor also said sales of its midrange Clariion array cooled somewhat, as did sales of its high-end Symmetrix hardware -- mainly due to cautious customer adoption of the latest version of the high-end array, officials said.

Overall, EMC reported US$2.37 billion in revenue this quarter, a 17 percent increase from the same quarter last year, according to Bill Teuber, EMC"s chief financial officer. Sales were mainly driven by the company"s services business and midrange Clariion storage systems, as well as sales of software for enterprise content management and data backup.

The popularity of EMC"s server virtualization software, VMware, continued to skyrocket, with $101 million in sales during the quarter -- a 67 percent increase over the year-ago quarter, according to Teuber.

"We now believe 90 percent of our customers are using VMware in production environments," said EMC CEO Joe Tucci.

But even with double-digit revenue growth, Tucci said IT spending during the quarter was uneven. "We saw a bit of a slowdown in July, followed by a very slow August. But the last three weeks of September picked up nicely.

"Clearly it is tough out there," Tucci said. But "virtually all IT industry surveys show that storage is at or near the top for IT investment."

EMC"s software license and maintenance revenues were up 16 percent over the third quarter of 2004, with $865 million in revenues, representing 37 percent of total EMC overall sales. Teuber said content management software represented one of the biggest growth areas, with $48 million in sales, up 13 percent from a year ago.

Professional services, including systems maintenance, represented EMC"s fastest-growing business line for the second consecutive quarter, with $402 million in sales, which is a 25 percent revenue increase year over year.

Tucci blamed a 2.1 percent drop in Symmetrix sales, which represented $633 million in revenue this quarter, on the late launch of its latest DMX-3 model of the high-end array. The DMX-3 offers more than twice the capacity of the DMX-2 model and added functionality, prompting customers to take their time evaluating the hardware, according to Tucci. "It"s not surprising customers want to be a little cautious," he said.

DMX-3 was generally available on Aug 30, "somewhat later in the quarter than we would have liked," Tucci said, citing longer beta-test periods for the box. Tucci said lower-end models of the DMX-3 should sell faster when they eventually roll out.

Clariion sales grew 20 percent year over year to $425 million in revenue, with sales of the arrays through reseller partner Dell Inc. representing a third of EMC"s midrange systems revenue, Teuber said.

Tucci said Clariion sales were not up to "EMC"s execution standards" and blamed the slowdown on the new, higher-end Clariion CX700 array, which shipped later than planned and was comparable in functionality and capacity to its Symmetrix line. Up until the second quarter of this year, sales of the Clariion CX line of midrange arrays had grown at least 30 percent for 10 consecutive quarters.

"We didn"t fully ... ship the [new] CX line until the end of the first week of September," Tucci said. "Thus our late start somewhat stalled our customer uptake."

While Clariion won"t likely repeat last year"s growth rates, Tucci said he expects it to pick up in the fourth quarter. He also said EMC"s information life-cycle management strategy -- creating a tiered storage infrastructure by blending high, midtier and low-end equipment -- is being well received. He cited as evidence the higher sales of lower-end Clariion arrays and the content-addressed storage Centera array over larger-capacity models.

Tucci said EMC believes sales will continue to grow in the fourth quarter -- traditionally its strongest -- and said the company plans to spend $400 million by the end of the year to buy back its own stock, bringing its total for share buy-back to more than $1 billion this year.