EMC: Building storage blocks through acquisitions

Nine months, 3.5 billion dollars worth of acquisitions, and still looking for more. Welcome to the world of EMC, a company transforming itself into a data centre management company that will also sell storage boxes. GAURAV PATRA reports

WHEN EMC Information Systems NV acquired Legato Systems last year, it created ripples in the storage and information market. The next target was not too far. This time, Documentum was taken over. Moving into 2004, VMWare was acquired. What drives a traditional hardware company like EMC to spend roughly $3.6 billion on the acquisition of three software companies over the past nine months? Be it hardware, software or services, it seems EMC wants to be the number one in this business. The company is no more confined to pushing NAS and/or SAN boxes. Rather, it is called a complete ‘information management’ company. From EMC’s perspective, the basic tenet of ILM (information lifecycle management) is to provide the tools and services companies need to maximise the value of their information while reducing costs at every point. Gaining this additional intelligence is where software acquisitions have come in.

“People have started taking information management very seriously and we want that EMC should be their preferred partner. We add significant value to organisations, which want to leverage IT for competitive advantage,” says Manoj Chugh, president, India & SAARC, EMC Information Systems, NV. With its aggressiveness in acquiring new companies, the company has actually enhanced its product line to further improve the customer experience.

Acquisition is the key

As evident by the facts (see box), acquisitions have so far been the most important strategy of EMC. The company has used acquisitions as a strategic tool to get new technologies or to enter new markets. In the past one year, the company has spent approximately $4 billion in stock and cash to acquire these companies. The acquisitions have given EMC expertise in different areas of storage technology. For instance, the acquisition of Legato helped the company ramp up its product line in the ILM arena. ILM is one of the focus areas for EMC. Documentum was yet another interesting acquisition. As a result of this, EMC is now in a good position to offer document management and workflow solutions. By acquiring VMWare, a virtualisation company, EMC has tried to present itself as a total storage solutions company. Industry experts say that that these three vital acquisitions have helped EMC gain a large amount of recognition.

Since 2000, EMC has made several critical acquisitions which have helped the company manage heterogeneous platforms. “We want to help customers achieve a lower total cost of ownership (TCO) as time passes. These acquisitions will help us achieve the objective,” says Chugh. All these acquisitions have transformed EMC from being just a hardware company into a data centre management company. It has moved EMC into broad-based competition with companies such as HP, IBM and Veritas Software.

Total info management

In November 2003, EMC India made the significant announcement that they would be investing $100 million over the next five years. The storage major has identified four key areas for this investment. The company has decided to launch fresh storage products and solutions, invest more in R&D, increase its focus on network storage, and build more partnerships across the value chain.

Accordingly, in February 2004, EMC launched a new range of SAN/NAS products. The company refreshed its entire product line. From high-end SAN to the mid-range storage boxes to NAS and content addressable storage, all got a new look. Whether it is SAN, NAS or CAS, EMC now has products for all these segments. Apart from this, it also launched 12 new products. Today EMC has a range of products suitable for different storage needs in various organisations. For the structured data space, EMC has Clarion and Celerra. For unstructured data or objects, it has Centera. For workgroup applications it has Celerra, and for production applications the company offers the Clarion and Symmetrix range of products.

Although the company started its operations as an enterprise vendor, it has now realised the importance of the SME (small and medium enterprise) business in India. It recently introduced both high-end as well as mid-tier products for this segment. Within the SME segment, EMC expects that the mid-tier storage market will grow more than 100 percent. Chugh believes that as information needs grow, SMEs will move from internal storage to network storage, bypassing external storage.

EMC is also focusing on storage consolidation. Over a period of time, organisations have invested in a large number of servers that run multiple applications, and each server is tied to a specific storage device. Though an organisation may have multiple terabytes of storage, in terms of actual usage they are not used always. This means a huge amount of investment has been made, but is idle. Managing this infrastructures is yet another challenge. This is true in case of enterprise as well as mid-tier companies. “Day by day storage is becoming a strategic issue for companies, and consolidation is a must for them,” says Chugh.

In the next few months, EMC is going to focus more on its partnership and channel initiatives. The company wants to control a sizeable portion of the storage market in India by tapping the maximum number of partners. “Creating partnerships is very important for us. We believe that only partnerships can win customers for us,” declares Chugh. At present EMC has two global partners, Dell and Datacraft. In India EMC partners with Tata Elxsi, Wipro and HCL Infosystems. However, the company is looking at increasing the number of system integrators in the immediate future.

EMC now has around 100 people at its Bangalore R&D facility, and plans to increase that number. The company recently recruited three key directors. Ashok Ekbote will be director, Enterprise Business; Rajesh Janey will be director, Channels and Alliances; Anil Zachariah will be director, Customer Support. EMC is also looking at appointing regional managers. In terms of customer support there are two logistics centres in Bangalore and Mumbai, with a third expected very soon.

According to company sources, EMC is working on six different levels of ILM. From tiered storage at the bottom to integration and management services at the top, EMC wants to specialise in all of them. Last but not the least, the company might be looking at some more acquisitions to fill the gap at the top level—integration and management services. Although addressing different market segments through technology acquisitions can prove risky, EMC hasn’t failed so far.

EMC’s new storage platforms

Clarion CX A new line of next-generation Clarion CX300, CX500 and CX700 systems. Offers higher performance at the same price as earlier models. Proven, high-performance architecture scales from 5 to 240 drives in modular, pay-as-you-grow increments. Powerful storage management. Symmetrix DMX New DMX-2 technology-based platform. Offers up to 30 percent more performance than identically configured Symmetrix DMX systems. Breakthrough architecture surpasses all current and previous designs. Scalable performance to match today’s and tomorrow’s mission-critical, high-growth, always-available applications. NS 700 NAS Product Line Has expanded its NAS product line with new models and enhancements. The Celerra NAS gateways and integrated systems being launched include Celerra NS700G, Celerra NS700 integrated NAS system and Celerra CNS 514 Data Mover. Protects vital business data and eliminate downtime. Consolidates more file servers while improving service levels. Minimises storage overhead by consolidating SAN and NAS storage assets. Centera New platform enhancements are intended to enable up to five times the performance. Doubles data replication speeds of previous models. Centera Content Addressed Storage Systems Leverages technology to maintain long-term retention, assured content integrity. Redundant array of independent nodes architecture, no-single point of failure. Continuous data integrity checking/repairing. Self-management and self-configuration capabilities.

Acquisitions since 2002
Company	Date	Area of Function	Total Value
VMWare	January 2004	Intel-based virtual computing software	$625million
Documentum	October 2003	Enterprise content management	$1.7 billion
Legato	July 2003	Open-systems distributed storage software provider	$1.3 billion
Astrum Software	April 2003	Storage Resource Management software for multi-platform, mid-tier storage environments	NA
SANWare	October 2002	SANWare was dealing with back-up and restore software and storage resource management. The SANWare acquisition formed the core of EMC's India Development Centre in Bangalore	NA
Prisa Networks	September 2002	Storage Area Network management software	$ 20 million

gaurav@expresscomputeronline.com