EMC squares up

Changes are afoot, claims EMC CEO Joe Tucci and the software giant is cleverly repositioning itself to take the lead in innovation ahead of its rivals

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By  Chris Whyatt Published  May 14, 2006

|~|EMCmainbody.jpg|~|CEO Joe Tucci promised more acquisitions would be made during his keynote speech at the EMC World event.|~|Image makeovers aren’t just the preserve of the fashion industry. Traditionally viewed as a storage colossus, EMC packed over 4,000 worldwide customers and partners into Boston Conference Center, in the US, last month, along with 200 journalists from around the globe and hundreds of its own technical engineers to hammer home one message: EMC is now an ‘information infrastructure’ company. “Information is at the core of EMC, not storage,” said a relaxed Joe Tucci in his keynote speech at EMC World 2006, held this year just a stone’s throw away from its headquarters in Hopkinton, Massachusetts. Changes are afoot at EMC, but as the dapper chairman and CEO explained, the company’s horizons have shifted through both evolution and revolution. On one hand, EMC has pursued an aggressive acquisition policy in the past three years, soaking up 20 different technology companies and spending US$4.5 billion in the process. Data content management firm Documentum, backup-recovery specialist dantz, and virtualisation outfit VMWare — which EMC described as ‘one of the most successful software companies ever’ — are among the most notable. And the company is set to continue in the same vein, with Tucci now promising further acquisitions he believes will complement the firm’s shifting technology roadmap, beyond just storage, and allow it to accelerate its rapid product creation strategy. “For now, the acquisitions we are looking at are in software and services,” Tucci claims, refusing to rule out a future systems or hardware acquisition. Along with buying more companies, there is also the small matter of ramping up revenues, which grew by an impressive 17% to US$9.6 billion for 2005. For Q106, EMC was delighted to report its 11th quarter in a row of double-digit revenue growth, recording a 28% year-on-year net income growth of 28% or US$380 million. A break down of figures that stretch back to the turn of the millennium can be seen to follow the company’s subtle transformation from storage specialist through to information management vendor up to its present guise as an ‘information infrastructure’ company. In 2000, systems storage made up 74% of its total revenue mix: by 2005, this had decreased to 47% — the rest is now split between software storage (37%) and services (16%). And, according to recent IDC figures, EMC is now the revenue share leader in the external storage systems and storage management software markets. So it clearly stands in a position of strength. EMC’s figurehead, Tucci, revealed that he credits the company’s present success with a forward-thinking outlook: continue to innovate and don’t be afraid to disrupt yourself, is his personal mantra for business. So, unsurprisingly, the storage giant is not prepared to stand still in a market it says has lots of room to grow. Now is an important time for the newly-realigned storage powerhouse as it bids to stand out from the crowd, in particular burly competitors HP and IBM. “2006 will see us introduce more products and invest in more innovation than at any other time during our history,” he declared at EMC’s annual conference, which was attended by record numbers last month. A sizeable US$1.2 billion will be plunged into research and development (R&D) this year, which Tucci proudly claims represents a significantly higher percentage than that of IBM. “They spend around 5% of revenues on R&D, we are spending 11% on R&D. Ours goes 100% to the area that EMC is focused in. IBM’s 5% has to go into everything: chips, servers, database, software, storage, the whole lot,” says Tucci. Warming up to his theme, Tucci admits that IBM is the company EMC is most concerned with, but stressed that the storage giant does not compete with any one vendor across its entire rack. “When I talk about competition I have to talk about more than one tier. For strategy, it’s IBM. They compete in pretty much every place that we will and then they also have IBM Global Services and if they win an outsourcing contract, what do you think they do?,” Tucci asks. But, confidently pointing to the example of R&D investments, he adds: “On our side, why we win more than we lose from them is because we are focused.” When questioned further abo- ut how EMC tries to stand apart from the competition, Tucci insists that there are more companies making storage today than can possibly survive, shedding some light on EMC’s frenetic acquisition policy. “I firmly believe that in most technology sectors, with the long-term spend required, no more than three companies can make money,” Tucci claims. “After that you just have niche players. Some relatively successful; a couple of million dollars operations who hope to get bought,” he notes. ||**||ILM philosophy|~|Mark-Lewis2body.jpg|~|Left: ILM is crucial, says Mark Lewis, EMC chief development officer.|~|n spite of this overcrowded marketplace, EMC is bullish about its ability to grow twice its market in 2006. R&D investment aside, its strong momentum and market position, a stable economic environment, and a ‘world-class ecosystem’ of partners are listed as tangible reasons. One driving force stands out above them all: information lifecycle management (ILM). EMC is now pushing ‘phase III’ of its ILM philosophy to the forefront of its portfolio, describing it as a powerful IT customer strategy based on the simple fact that all information is not created equal. “Information has value,” David Goulden, executive vice president of Customer Operations, points out very simply, giving the example of today’s urgent e-mail being more important than, say, last year’s staff memo. Over time the value of information keeps on increasing or decreasing, he argues. That urgent e-mail may become a critical element for legal discovery or just more data cluttering your storage infrastructure, reckons Goulden, and based on its changing value to your organisation, your information requires different levels of accessibility and protection. “That’s what EMC can provide. That’s ILM,” he adds. The ILM ‘stack’ is crucial for enterprises and SMEs, according to EMC. The ‘stack’ consists of content services, storage security, archiving, data mobility, protection and tiered storage, with information security management weaved throughout. The storage giant considers this to be the future in terms of storing and managing information simply and effectively. “With ILM, our strategy is to help customers align their IT infrastructure with the business based on the changing value of information,” says Mark Lewis, EMC’s chief development officer. EMC World 2006 saw two key launches. Smarts Application Discovery Manager was the first, a resource management software tool that finds and models application behaviour, and yet another product to surface from the conveyor belt of its acquisition process — on this occasion Smarts, a real-time network systems management outfit. “IT professionals realise they need a solution that can automatically deliver and map application behaviour, and can also change in real-time as the infrastructure changes,” claims Chris Gahagan, senior vice president, Resource Management, EMC, about the product. “Only then can they fully automate incident management and triage, and gain the flexibility necessary to adapt to their changing technology environments,” he goes on to say. Tucci also raves about the impact Smarts-based technology has had on refreshing EMC’s product line, describing it as ‘game-changing’ technology for tying storage and the servers to the network, and linking the applications all together. The other key product release saw EMC unveil its Assessment Service for Storage Security, an information-centric approach to helping organisations secure critical information. Both releases indicate the company’s fresh focus upon software-as-a-service and increased security. “EMC’s information-centric security strategy is built upon the recognition that information security is becoming an information management problem,” says Dennis Hoffman, EMC vice president of Information Security. Information and data security is evolving quickly, Hoffman argues. Whereas today’s offerings concentrate on protecting the perimeter of an IT infrastructure, EMC thinks that vendors should assume the threats have already broken through that barrier, that they are already inside. Subsequently, it is the information which needs protecting: thr- ough encryption, vault and recovery management, tracking and audit, signature and personalisation, and digital watermarking. A combination of systems, software, services and solution offerings from EMC (and its partners) will be aggressively extended as its next major focus, the firm promises. “This strategy helps customers assess the security of their information infrastructure, directly protect their sensitive information and manage security information and events to ensure effectiveness and ease the burden of compliance,” Hoffman says. Overall EMC has crystallised the core areas of ongoing and future technology investments: unified ILM, ‘model-based’ resource management, information security, grid computing and virtualisation. These technologies, EMC believes will change the very nature of the industry. At EMC World 2006, Tucci made perhaps his biggest statement of the event when he identified two ‘game-changing’ technologies that EMC now views as critical: virtualisation and internet-protocol (IP) networking. “I personally believe that over the next three years all storage and server hardware products will be virtualised. The second game-changing technology will be IP-based networking, which will enable full resource management to CIOs anywhere,” Tucci announced. “Having these two technologies, we believe, will change the face of technology and IT over the next three years,” he added. “Information should become better and easier to manage for CIOs,” he went on to say. EMC’s recent acquisition of VMWare has given it access to vital virtualisation technologies, the company believes, though it tends to leave the outfit to its own devices given its links with a host of other competing vendors in the industry. Not only does EMC believe virtualisation to be one of the hottest technologies right now, it identifies one right place to be in storage virtualisation — the network. “We do have a share of the market that is capturing tremendous client share, with a product called Invista,” says Tucci, referring to another of his acquisitions. “People have realised this now [about storage virtualisation] and it has come to their attention,” he goes on to say. “Storing in the network is harder, but it has got much better benefits and much better price performance. It still takes a little bit longer, but very often doing things right we are convinced we will be a leader in this field, ” Tucci believes. EMC’s clear vision of its future is intrinsically linked with having its finger on the pulse of disruptive technologies: new innovations, products, or services that spring from outside the mainstream to eventually overturn the existing dominant technology in the market. Virtualising x86 servers — via VMWare — is again held aloft by Tucci. “If you look at 85% of servers by volume, not dollars, they are x86-based, either running on Opteron from AMD or obviously Intel,” he says. “So being able to virtualise right into the server chip level is really a game-changing technology,” he adds, eulogising the importance of storage virtualisation and recommending that the “proper place to virtualise storage is using the slice switches that companies like Cisco and Brocade have in the marketplace.” EMC is not afraid to champion the products of other vendors, insisting that no single IT company can successfully go it alone. The giant points to its partner ecosystem which includes SAP, Intel, NEC, Dell, Cisco, IBM and Oracle, among others as an example of its to dedication to collaboration. This is especially useful for customers if it helps to iron out complexity issues. “The number one issue I believe, if you talk to CIOs, is complexity,” says Tucci, heading the conversation towards applications services environment. “There is just too much complexity and their environments are just too sensitive to change. So therefore they have to concentrate hard on change control, they have to test, test and test again before they put anything in that is even close to the production. If they put something in and the infrastructure goes down, the business is hurting for weeks. Many businesses can’t function,” he continued. “If you get an appliance that’s easy-to-use, that can go into an infrastructure without [disruptive] impact, this is what a CIO really wants,” he adds. With a global sales force of 7,000, further key acquisitions planned, more product releases than ever this year, along with heavier R&D investment —not to mention that crucial image makeover — EMC hopes that CIO’s worldwide will be making its storage, or information infrastructure if you prefer, products the ones they choose for their data centre of the future. ||**||

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