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EMC Assigns its Team of Competition to Offense and Defense Positions for Next Year's Games

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  • 1. TBR T E C H N O L O G Y B U S I N E S S R ES E AR C H , I N C . TBR EVENT PERSPECTIVE EMC Assigns its Team of Companies to Offense and Defense Positions for Next Year’s Games EMC Analyst Event 2013 Boston; Oct. 31, 2013 Author: Matt Healey (matthew.healey@tbri.com), Principal Analyst Geoff Woollacott (geoff.woollacott@tbri.com), Senior Analyst Christian Perry (christian.perry@tbri.com), Senior Analyst Jane Wright (jane.wright@tbri.com), Senior Analyst Krista Macomber (krista.macomber@tbir.com), Analyst TBR Perspective At EMC’s Analyst Summit, on Oct. 31, 2013, the company outlined a strategy for addressing upcoming changes in the IT landscape. Within EMC’s portfolio of companies, VMware and Pivotal have been assigned to play offense while EMC II (its information infrastructure company for storage hardware) holds up the defense. While the customer migration from traditional on-premises deployment models to cloud based delivery is well under way, this is only the beginning of the transition. As more applications are moved to both public and private cloud architectures, hybrid cloud will become the default architecture for IT. This will require vendors change the way they deliver IT, as customers will demand open architectures that enable them to work with a variety of cloud and traditional vendors as they integrate hybrid cloud into their existing IT environment. TBR believes that EMC has embraced this industry shift. During times of significant change in the market landscape vendors can react by going on the offensive and embracing the change, or by trying to defend the traditional architectures. In the short term, the easier approach is to try to lock customers into the existing architecture. However, this generally does not position the vendor for the long term. TBR believes EMC’s corporate structure positions the firm for the long term. By embracing a “house of brands” approach to marketing and operations by keeping EMC, VMware, Pivotal and RSA separate organizations, the firm has accomplished two things. First, each brand is forced to operate independently. This requires them to be open to partnerships with other IT vendors which will be a requirement as customers move to hybrid cloud architectures. Additionally, since the brands
  • 2. TBR operate more independently than segments within a traditional vendor, EMC has effectively built “cities without walls.” EMC limits its brands’ ability to lock customers into their architecture thus requiring continuous innovation to ensure that customer satisfaction. Second, EMC is able to add and modify its portfolio as conditions change. By keeping the acquired companies independent, EMC can add to the portfolio as they did with VMware and most recently Pivotal. Additionally, if conditions change, EMC can more easily exit businesses that no longer provide a competitive advantage. Pivotal will be key to EMC’s growth TBR believes Pivotal is the most significant offensive move EMC has made since the investment in VMware. Pivotal merges the PaaS technology from VMware with EMC’s big data capabilities, enabling customers to develop applications that can handle big data in the cloud. The other advantage of Pivotal is it is being described by EMC as cloud agnostic. By using Pivotal to develop applications, customers can deploy the applications on a various clouds. Pivotal aims to become the platform that customer will need to develop the new breed of data heavy applications as portability to a variety of cloud providers will limit the development time. By developing a platform that is open and provides orchestration among a variety of cloud providers, TBR believes EMC is playing offense in the changing environment. This offensive move has the potential to transform EMC in the same way VMware has over the last decade. It enables easy migration to the new consumption model and positions EMC to be a trusted advisor. Further, Pivotal positions EMC to participate in the production of the underlying products end customers will purchase in this increasingly consumerized industry. EMC has improved customer education on EMC solutions that lead to the new IT consumption models From a services perspective, TBR believes that EMC is making progress in further defining its offerings and formalizing service product marketing practices. EMC has never been a services lead vendor, rather choosing to keep services at between 20% and 25% of total revenue and keep the offerings closer to the product. Services are generally offered with the goal of supporting the customers and enhancing the customer experience. EMC detailed the cloud assessment offerings that have been enabled by the tuck-in acquisition of Adaptivity, a small organization with a unique analytics engine that provides cloud migration assessment capabilities that reduce EMC’s time to output. These tools will be pushed out through the EMC ecosystem over time to both customers and channel partners. Further, the overarching services strategy helps guide EMC’s approach to channel partners. EMC’s goal is not to become a services lead organization, but the firm utilizes the channel to augment their services capabilities. Customers can use either EMC services or channel services with EMC supporting the channel partner as needed. EMC is evolving its hardware platforms to accommodate the midmarket From a hardware perspective, EMC is innovating to help to protect its status as the enterprise storage leader. TBR views the midmarket as the largest opportunity for storage hardware growth, particularly as organizations in this space leverage cloud and big data to extract value from their data stores. EMC is effectively evolving its VNX unified (file, block and object) storage to compete with offerings from NetApp, HP and others by using multicore optimization to take advantage of flash. Although EMC has a reputation for offering high-quality hardware at a premium price point, the company is aggressively targeting the midmarket space from a price standpoint, which TBR believes will help secure a foothold. Flash is now a primary focus for EMC, as the technology is available in VNX, VMAX and Isilon. EMC stresses that its flash platform is built on new architecture, which the company says differentiates it from other platforms on the market that utilize decades-old platforms. EMC is also working to better integrate Syncplicity, its file sync and www.tbri.com pg. 2
  • 3. TBR sharing technology acquired in May 2012, into its storage arrays. In fact, EMC noted that just a small percentage of its engineers focus on hardware, with the vast majority working on software. This not only reflects the continuing market trend toward software innovation across hardware layers, but also EMC’s ability to adapt to changing market trends and customer requirements. Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com. ©2013 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce. www.tbri.com pg. 3