EMC's 2009 Strategy & Technology Update

In unclear, uncertain times, people tend to appreciate clarity and certainty. This issue extends across markets and industries, and finds expression in a variety of ways. During the past tumultuous months, some IT vendors have focused on defining the business value of tactical products and services while others have given their energies to developing and launching broad strategic initiatives.

A third option was apparent in the 2009 Strategy and Technology Update hosted by EMC in Boston for financial analysts. For over two hours, EMC president and CEO Joe Tucci and VMware president and CEO Paul Maritz walked the crowd through their companies' past and current status, discussed future plans and opportunities, and focused particular attention on the notable, evolving synergies generated by their organizations.

Tucci began his presentation with a simple statement of what EMC is and what it does: a technology company focused on IT infrastructure. In order to maintain its innovative edge, EMC spends 12 percent of its annual revenues on research and development and has invested some $7 billion in mergers and acquisitions (M&A) beginning in 2002. The long-term value of that strategy is apparent in EMC's balance sheet. Since 2002, the company's revenues have grown 19 percent annually while net income has grown 36 percent per year.

Tucci stressed the continuing importance of EMC's traditional storage business, but also detailed the ways in which the company has broadened its focus to encompass information and virtual infrastructure offerings. These are reflected in EMC's three business units: storage, security, and content management, as well as the company's close ties with VMware. But he was also clear about the challenges that EMC faces due to deteriorating economic conditions, slowing technology spending, and customers adopting "just in time/just enough" IT budget strategies. Despite these difficulties, Tucci was upbeat and said that EMC is following a flexible yet disciplined market approach emphasizing staying close to customers, retaining and attracting talent, being fiscally disciplined, deepening product innovation, and pursuing opportunistic M&A. Most important, Tucci said, was for the company to clearly "communicate, communicate, communicate" its circumstances and plans.

Tucci noted some particular bright spots for EMC sales during the past year, including data de-duplication, dynamic data mobility (automated information lifecycle management), and unified storage systems (which support multiple protocols including Fibre Channel, iSCSI, and NAS). In addition, he detailed the notable opportunities that server virtualization is driving for network storage, as well as expanding markets for Fibre Channel over Ethernet (FCoE), cloud-based storage, "green" IT, and solid-state disk (SSD)-enhanced storage.Virtualization dominated both Tucci's and Paul Maritz's view of the future, through increasingly virtualized data centers and broad computing and application offerings. In addition, both see rapidly expanding cloud computing initiatives -- via privately owned internal clouds, hosted external clouds, and "private clouds" that blend internal and external cloud resources -- constituting a huge future opportunity. To be truly effective, cloud environments need highly integrated federation, information management, security, and virtualization features, mapping well against the solutions and expertise of EMC and VMware.

Maritz focused his presentation on three forward-thinking VMware initiatives: the Virtual Data Center Operating System (VDC-OS), vCloud, and vClient. VDC-OS arose out of a notable virtualization trend: though clients initially deployed virtualization to consolidate server hardware (and achieve CAPEX savings) they found that as IT infrastructures became smaller and cheaper that they also became more flexible. By expanding its virtualization expertise into other areas, including storage, networking, application, and workload management, VMware saw the opportunity to extend those benefits across the entire data center.

How to effectively manage those data centers in a highly integrated and automated fashion is the purpose of VDC-OS and the 2,000+ employees on the initiative's development team. In essence, Maritz said, the company's goal is to build a "software-based, 21st century mainframe" and it is no surprise that these same highly integrated, inordinately flexible virtualized data centers can also be managed and provisioned as cloud environments.

Maritz was careful to contrast VMware/EMC's approach to external cloud environments with other vendors, who he said envisioned "three or four global uber-clouds." According to Maritz, cloud services should be about customer choice and VMware is pursuing that goal through its vCloud initiative, which is focusing on driving industry standards for cloud environments and services. The company is also engaged in partnerships with Terremark, Savvis, SunGard, Logica, and over 400 other services providers and cloud-focused firms.

Finally, Maritz spent time outlining VMware's vClient, which aims to free users and organizations from traditional thick clients (PCs) with desktop-as-a-service solutions. In essence, vClient extends thin-client style centralized management and provisioning to virtually any sort of network-enabled business computing device, including thin clients, desktop PCs, and employee-owned notebooks. As such, it allows employees to securely connect to and interact with corporate networks no matter where they are located, offering new approaches to mobile computing and employee flexibility.Both Maritz and Tucci emphasized the heightened value proposition of VMware's and EMC's combined efforts. Though the companies are individual entities, they share common goals, are pursuing numerous similar efforts and solutions, and regard one another as equal partners. They also realize that no single company can do it all, and Tucci took time in his conclusion to highlight the companies' work with Cisco Systems, and to recognize the contributions of its cloud computing partners.

EMC's 2009 Strategy and Technology Update offered a clear portrait of a company working from strength -- effectively led, strategically visionary, readying new products for market, and financially secured. While uncertain economic conditions make it difficult to predict the future of any particular company, EMC and VMware both appear well-positioned to continue their history of innovation and success.

Find out more about innovative storage. InformationWeek and Byte and Switch are hosting a virtual event on this topic on March 25. Sign up now (registration required).

Charles King, President and Principal Analyst for research firm Pund-IT Inc. , focuses on business technology evolution and interpreting the effects these changes will have on vendors, their customers, and the greater IT marketplace.