EMC Redefines Opportunity, Storage and Itself

By Charles King, Pund-IT, Inc.  November 5, 2014

Like most other vendors, EMC uses its annual analyst summit (held last week in Boston) to provide IT industry analysts an overview of the company’s business, its performance during the previous calendar year and its view of the road ahead. But the company also does some things quite differently than its peers, particularly as regards the participation of senior executives. For example:

  • David Goulden, CEO of EMC Information Infrastructure (EMC II, by far the company’s largest business) detailed the company’s financial performance across products, business lines and geographies. As EMC’s former CFO, Goulden is eminently qualified to do so, but his comments were strikingly more insightful than the homilies many other vendors offer.
  • Jeremy Burton, EMC’s president of Products and Marketing (formerly the company’s CMO) also went deep in focusing on the solution sets that make up the EMC Federation (more on that shortly), their alignment with current and future go-to-market efforts and how a subtle reorg of EMC II is designed to move things forward.
  • Chairman and CEO Joe Tucci offered his biannual (the other occurs at EMC World) “fireside chat.” That is unusual in itself (CEOs typically don’t spend much time at these events), but its format – a half hour of unscripted Q&A, where analysts can (and do) ask him virtually anything – is unprecedented for a vendor of EMC’s size. This year’s questions included queries about Tucci’s view on the company and its partners and competitors, issues affecting the broader IT market, and sensitive points, like demands by activist shareholders that the company divest its ownership of VMware and other assets. Tucci answered everyone without hesitation or evasion.

This was all good stuff and in line with what analysts have come to expect from EMC events. But the company is also at a crossroads, of sorts, where its future path will diverge increasingly from the past. Discussing its plans and justifying its strategy in such detail is itself strategic and should help ensure that analysts come along for or at least understand the journey.

Divergence and redefinition

What is the reason for EMC’s divergence? There are several, but at heart is the continuing commoditization of computing hardware, including the traditional enterprise storage arrays that once constituted the bulk of EMC’s business. That portion of the company is still fully intact and delivering value to customers but it is also changing.

Tucci noted that while demand for traditional storage solutions should remain strong at least through 2020, it won’t be a high growth business for EMC. That is at least part of the reason for the EMC II reorganization which has created distinct groups for core technology solutions (EMC’s Symmetrix, VNX, network storage, backup/deduplication and XtremIO shortly) and emerging technologies, including ViPR (storage virtualization), Isilon (massively scale-out storage) and DSSD (server-side flash systems).

This does not by any means suggest that infrastructure hardware is losing its relevancy. In fact, Tucci wryly noted that, “without hardware, software has no home.” But much as it has for the past decade, innovative software and value-added services will drive significant, sometimes radical differentiation for EMC solutions. If this sounds familiar, it should, since value-added software and services are central to the efforts of virtually every enterprise IT vendor besides EMC.

But the company is also pursuing numerous other opportunities that set it apart from its peers. For example, just a few days before the analyst summit convened in Boston, EMC, Cisco and VCE announced that EMC would take majority position in its VCE joint partnership (with Cisco) and bring VCE into the EMC Federation where it will operate as an independent business within EMC II (similar to RSA) and be run by current CEO Praveen Akkiraju and the rest of its senior management team.

VCE and its customers should benefit both from the arrangement and from EMC’s long track record of successfully nurturing innovative young organizations. Some would argue that this now makes EMC a systems vendor rather than a storage vendor. That may be so, but it is wise to remember that the company is not going to be developing server or networking hardware. Those for VCE’s Vblock solutions will continue to be sourced from Cisco, which will hold a minority position in VCE and also renewed a multi-year technology sharing agreement.

In addition, VCE will be free to consider relationships with other hardware players. Further, VCE will likely find new opportunities to provide customers greater value by deeply integrating its offerings with other EMC Federation technologies. The company will also remain firmly focused on high-value/margin converged infrastructure solutions rather than general purpose servers, another point that sets it well apart from traditional systems players.

A future in the cloud

During the Boston summit the company also launched a new and immediately available EMC Enterprise Hybrid Cloud Solution, integrating hardware, software and services from EMC and VMware to enable IT-as-a-service (ITaaS) in as little as 28 days. EMC also announced three new acquisitions that should add additional dimensions to its cloud strategy and offerings:

  1. Cloudscaling, a provider of OpenStack-based IaaS offerings for private and hybrid cloud solutions, and is a founding member of the OpenStack Foundation.
  2. Maginatics, a provider of a highly consistent global namespace accessible from any device or location, and
  3. Spanning, a provider of subscription-based backup and recovery for “born in the cloud” applications and data.

Again, EMC is not alone among enterprise vendors in developing its own cloud platform but both the company’s Federation and its solution portfolios contain numerous assets that should make its Enterprise Hybrid Cloud Solution and services compelling. The effort should also enhance the considerable investments EMC has made in cloud-related technologies, including CloudFoundry and OpenStack. Finally and most importantly, EMC’s strategy appears to be well-aligned with its enterprise customers’ needs and intentions.

Final analysis

The theme of EMC’s Boston analyst summit was “Redefine Opportunity” – a play on a broader strategy the company has been working for much of 2014: Redefine Work, Redefine the Possible, Redefine Flash and so on. But in EMC’s case, “redefinition” isn’t a simplistic marketing rubric but an expression of the company’s proactive, ongoing journey.

Just as software-defined technologies and methodologies are fundamentally enterprise data centers and IT processes, it is also playing a central role in EMC’s own self-redefinition. Whether arising from critically important acquisitions, like VMware, RSA, Data Domain and Greenplum or internal development efforts such as EMC’s ViPR, numerous Pivotal Lab offerings and VCE’s Vision systems management platform, software is providing a guiding light.

For well over a decade, EMC has engaged in innovative, sometimes unusual developments and deals that set it well apart from its peers. But those efforts all aimed to help the company to adapt to profound technological and market changes while continuing to deliver full value to customers and partners. That the company continues to redefine itself today and to plan further, future refinements are simply the next steps in an ongoing, successful journey.

© 2014 Pund-IT, Inc. All rights reserved.