EMC, Microsoft's newest enemy

Joe Tucci has been going around saying that EMC is going to become a software company, and with the acquisitions for Legato and Documentum, the CEO meant what he said. Now, with the acquisition of VMware, the storage vendor has a chance to really deliver on this software vision, and, in the process, it could give Microsoft some serious competition. Furthermore, the new acquisition puts the other two in perspective and could be the biggest news -- and market opportunity -- yet for EMC.

Microsoft purchased last year Virtual PC from Connectix. The software sets up virtual machines on Windows and Macintoshes. But Virtual PC -- even its still undelivered Virtual Server version -- is decidedly down-market from VMware, and more focused on running desktops than servers.

Why is VMware so important? Several reasons. First, it puts EMC clearly in the server room, sitting upon those same raised floors and overly air-conditioned spaces where its huge racks of disk drives live. But it also delivers something to put on those big disk drives, and uses the SAN and NAS equipment in new and interesting ways.

Second, virtualizing servers is a very big way to consolidate resources, and at the heart of what EMC offers its customers is to expand your IT operation without having to expand the people that have to care and feed the machines. By running multiple application servers on a single physical array, IT departments can cut down on power requirements, maintenance, configuration and backup tasks.

Third, the whole server virtualization area can generate huge files as part of the application. The way VMware works is to create a single physical data file that contains the entire virtual machine's memory, virtual disk drive and settings. The file can be gigabytes and can be mostly empty space initially, until the virtual server's virtual disk fills up with stuff. That means more disk space to save each virtual machine, and more disk space translates into more disk arrays and cabinets, feeding back on EMC's core business.Finally, server virtualization is another way of satisfying "on demand" computing needs, and is line with what CA, IBM and HP have been pushing during the past year. If all you need to bring up a new server online is a big disk and virtualization software, then it makes things easier to reach that goal if your disk and virtualization vendor are one and the same.

Certainly, buying a document management vendor (Documentum) and a backup software vendor (Legato) are very relevant to EMC's storage business. But backup software is pretty much a one-time purchase: Once an enterprise figures out its backup strategy, they are just going through the motions and hopefully doing it on a regular basis, but not purchasing much in the way of new software. Same is true for document management: Once you have your system in place, you sit back and watch as the many minions create and store and hopefully retrieve their files from your system. With virtual servers, enterprises have the opportunity to build something new and create huge jumps in the demand for storage and equipment.

That's the good news. The bad news is that VMware doesn't quite work with EMC's gear yet. My friendly IT manager Sam Blumenstyk, in his SAN diary entry on VARBusiness' Web site, talks about this some more. Clearly, there is integration work to be done here.

http://www.varbusiness.com/sections/technology/tech.asp?ArticleID=44762

Meanwhile, back at the Redmond ranch, Microsoft is still in beta on the Virtual Server product:http://www.microsoft.com/windowsserver2003/evaluation/trial/virtualserver.mspx

Maybe this acquisition will kick start their release of the software. In the meantime, EMC has got themselves a gem of a company. Now comes the hard part: getting everyone to play along and integrate the various product lines and software tools to work together.