Michael Ruettgers.

EMC Corp. isn't the only nimble, midsize player tearing a chunk out of IBM's hide. It just happens to have a competitive advantage in one of the hottest technology markets - data storage disk systems for IBM mainframes and compatibles.

While the demand for mainframes is uncertain, that for storage devices is galloping ahead. And EMC's product outperforms Big Blue's, says Michael Ruettgers, president and chief executive of the Hopkinton, MA-based company. These factors have helped to create a runaway bestseller: In just four years, EMC's share of the $5 billion storage system market has exploded from virtually nothing to more than 25 percent. Financial analysts expect 1994 net revenues to rise to $1.3 billion, while the bottom line is expected to exceed $250 million, an increase of 250 percent.

When Ruettgers, 52, joined the storage-disk maker as EVP of Operations in 1988, the company was in the midst of a crisis brought on by defective disk drives in its product - discovered only when customers began losing entire files of data. "I spent the first year and a half fixing those customers," he recalls. "We lost very few, but it almost put us out of business."

The experience led Ruettgers, who advanced to chief executive in 1992, to emphasize quality control. EMC also has won over customers with its storage product's innovative software, which anticipates the needs of users, speeding response time. Its biggest clients are those who must store mountains of data and retrieve it quickly, such as airlines, which book thousands of reservations a day; bank ATM systems; and delivery services, which use systems to track the progress of packages moving from sender to receiver.

Some clouds loom on the horizon. Determined to win back market share, IBM launched a mainframe storage product last year. Product prices have plunged by 50 percent over the last two years. In addition, more companies are turning to client-server computing, which links together smaller computers to complete large tasks.

In response, EMC recently launched three new client-server storage products and acquired Epoch Systems, a designer of storage systems for client-servers. "About three or four years out, we'll start to get balance in revenues from that business," Ruettgers says. The CEO also is seeking to address the needs of the largely untapped $3.75 billion middle market.

Some industry observers fear that IBM's new product could impinge on EMC's continued growth. "But the evidence right now doesn't lead us to that conclusion," says technology analyst Barry Bosack of Smith Barney. "Mainframe users have shown themselves to be very independent, and EMC has a tremendous reputation."