EMC CEO Joe Tucci says there are only two choices for companies in the fast-moving storage market: create change or react to it. Tucci, for his part, is doing his best to create change.
In the past year, EMC spent more than US$3.5 billion in cash and stock to acquire four software companies. 'Storage will change more in the next three years than it has in the last decade,' Tucci says after EMC's stunning US$635 million acquisition of VMware in December. 'I am totally committed to that. You've got to pick what kind of company you want to be. EMC is going to be a leader.'
EMC's acquisitions point toward where the company plans to lead: the open systems software market. In particular, EMC's latest acquisitions give the company its first midrange and entry-level storage management technology thanks to Astrum and Legato Systems, as well as email archiving via Legato, content management with technology from Documentum, and leading server virtualisation capabilities from VMware.
Tucci says the acquisitions, combined with EMC's own technology, can create a 'game-changing' shift that opens the door to the 'Holy Grail of virtualisation' in the storage and server world.
As part of EMC's information life-cycle management (ILM) and content management strategies, EMC software has already been virtualising storage devices from a common pool of storage resources.
With VMware, servers also can be virtualised, allowing both server and storage resources to be provisioned as needed. Virtualisation makes storage more nimble and adaptable, enabling customers to utilise all of their investment and thereby boosting ROI.
These actions come as the company looks for new ways to compete in a quick-moving storage environment. While the company's storage hardware business has pretty much bounced back after the dot-com bust, EMC still faces a sea of change in the storage software space as key competitors, including Hewlett-Packard, IBM and Veritas Software, make gains toward embracing the utility computing model, under which storage and server management and provisioning become increasingly automated.
Such moves threaten to commoditise the storage hardware business, on which EMC originally built its fortunes.
Furthermore, HP, IBM and Sun Microsystems are beefing up their storage software capabilities to protect their market positions and piggyback storage sales on their server sales. EMC, without a server platform, needs the software to differentiate itself and continue to be in customers' data centres regardless of server platform.
EMC executives say now that the company has made its necessary purchases, the primary tasks are to integrate the newly acquired technologies into complete customer solutions while making sure that each of the acquired companies continues to partner on its own with resellers, integrators and platform vendors, some of which are among EMC's most bitter rivals.
The storage channels generally appear to view the acquisitions as smart moves. EMC's software strategy through acquisitions is now bedded down and Australian resellers and system integrators -- who once shied away from dealing with EMC due to its direct sales past -- appear to have renewed faith in the storage giant.
Storage reseller XSI Data Solutions last month indicated it had taken on EMC's entire storage product range, in a deal that is expected to earn it an additional $6 million in sales revenue this calendar year.
An agency with EMC is something that 12 months ago, XSI would not have even considered. 'If you told me that [XSI would partner with EMC] a year ago, I would have said, “You're out of your mind”,' says Max Goldsmith, CEO of XSI.
He says that EMC's recent acquisitions indicated that the storage giant is becoming 'more of a software house' and make it a stronger vendor.
The bevvy of software products that EMC had acquired were difficult to digest, he says. 'That will take a bit of time, if that's all there, I want to get across that,' he says.
As a result of the new relationship, XSI would now be directly working with EMC's sales force, Goldsmith says. 'We can help them -- if we can help their accounts guys win deals that we would have won, that will open a lot of doors for us,' he says.
More at home selling its own XSI brand of storage services, the reseller found that customers were demanding a brand and XSI lost a few deals last year because it didn't have a big brand like EMC on its books, he says.
'We've rolled over -- we've [taken] the easy way out,' he says, adding that the company could have done an additional $6 million to $8 million in sales revenue in 2003 if it sold EMC. 'We had two customers in the last month say to us, 'You're the blokes we want to deal with us but you will deliver EMC,' he says.
Over the past 12 months, EMC has claimed it has a renewed focus on channel partners as it targets 25 percent sales revenue growth for the local operation this calendar year.
David Henderson, GM of partners and alliances at EMC Australia/New Zealand told <i>CRN</i> recently, that the company had employed five new sales staff to work exclusively with channel partners. These internal staff had been appointed to assist channels close sales. 'Selling SAN and NAS is complicated, he says, adding that channel-focused internal staff, would assist partners close deals much quicker.
Other resellers and system integrators, even those that do not partner with EMC say they see the acquisitions as nothing but positive.
They expect EMC's consolidation of the various technologies to mean more opportunities and to make it easier to tie non-EMC hardware and software into EMC products.
EMC products and services sales make up between 25 and 30 percent of reseller Enstor's business in Australia. Ken Wood, MD at Enstor, says the acquisitions were somewhat of a non-event for the company given that Enstor was already selling Legato and VMware products.
'Legato and VMware -- it's all good from our point of view. In both cases I thought there were very good synergies with EMC's business.
'Documentum was the only one that we didn't have anything to do with -- we're still looking at that and seeing whether Documentum is a fit for us to work with. It's a very different sort of beast from the rest of the products we deal with – so we haven't made a final call on that one,' he says.
Wood says when presented in the right way, VMware is a very compelling solution. 'We've been doing a lot of missionary work if you like, presenting it to people and it is quite compelling, but it is new technology and people are being cautious about it. There were a whole bunch of parallels between storage and server consolidation and the two products fit together quite well,' he says. Enstor last month picked up an award in Pheonix, Arizona, in the US for the biggest growth worldwide of any Legato partner.
Legato sales increased 64 percent for the reseller in the second half of 2003 over first half of 2003, Wood says. 'I think we can lay claim to having stronger Legato skills than anyone in the country. We had a couple of key wins that counted towards that….. and there was an element of customers being a bit more comfortable once EMC acquired Legato. 'There was no question of financial stability or support resources or that kind of thing,' he claims.
Marc Duvoisin, national practice director for enterprise servers and storage at Dimension Data, a partner of EMC, Legato, Documentum and VMware, says the acquisitions are good news for his
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