Hybrid Cloud, What’s Next?

EMC began in 1979 as a reseller of memory chips. Through strategic acquisitions and in-house innovation, EMC now offers data storage, information security, cloud computing, Big Data analytics and virtualization that enable small, medium and large businesses to store, manage, protect and analyze data.

 

EMC began in 1979 as a reseller of memory chips. Today EMC offers data storage, information security, cloud computing, Big Data analytics and virtualization that enable small, medium and large businesses to store, manage, protect and analyze data.

Its transformation began in 2001 after the dot.com bust when EMC CEO Tucci realized EMC did not have the necessary product diversification to make it through the storm. During that time period prices for EMC’s flagship specialty storage systems dropped drastically. Per gigabyte prices dropped 90% from 1999 to 2003. In order to diversify, Tucci chose to increase its presence in software and services. Its first major acquisitions included Legato Systems, Documentum and VMware.

Legato expanded EMC’s portfolio into open storage software, provided seasoned software salespeople and created new channel partner relationships. Documentum expanded EMC’s portfolio into enterprise content management, allowing EMC to meet one of the greatest technology concerns of the day, the need to store increasing volumes of data and documents. Data generation growth was driven by regulations such as the Sarbanes-Oxley Act and the Health Insurance Portability and Accountability Act, which required companies to keep records for longer periods of time and produce them at a moments notice. Documentum excelled at managing huge data volumes and unstructured content.

The next technology disruption occurred when Microsoft released VirtualPC, a product that allowed different versions of Microsoft OS to run on the same physical machine. This allowed companies to continue running in-house applications on older versions of Microsoft OS, while running other applications on the latest version of Microsoft OS. EMC responded by acquiring VMware, a company that provided virtual infrastructure software that enabled 3 different types of operating systems, Microsoft Windows, Linux or Net Ware to run on Intel servers at the same time.

EMC continued to make major acquisitions and invest in in-house R&D to provide the latest technology to its customers. In 2006, EMC acquired RSA Security for $2.1B, to move into the cyber security. In 2013, EMC acquired Pivotal labs, a privately held provider of agile software development services and tools, which also specialized in Big Data analytics.

The last of its major acquisitions to date involved Virtustream, which it acquired in July 2015 for $1.2B. Virtustream will enhance EMC’s hybrid cloud capabilities for mission-critical applications, such as SAP. A hybrid cloud is an integrated cloud service utilizing both private and public clouds to perform distinct functions within the same organization.

While EMC has continued to make a stream of acquisitions to stay up to date with the latest technology trends, not all investors have been happy with the company’s corporate strategy. Hedge fund management firm Elliot Management has pushed for EMC to break apart its federation, which includes EMC’s storage business, VMware, Pivotal and RSA Security. Elliot Management believes each company can operate more efficiently on its own. However, CEO Tucci has fought back stating EMC as a federation provides profitable cross-selling capabilities.

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