EMC Keeps Laying Down SMB TrackBy Karen Schwartz | Posted 2004-11-09 Email Print
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With its most recent in a string of acquisitions, the storage company quietly snaps up Allocity, the developer of an always-available e-mail storage solution.EMC's recent acquisition of tiny Allocity Inc., the developer of an always-available e-mail storage solution, went virtually unnoticed by the storage world, but it may be indicative of a continuing trend at the company to expand its reach and better penetrate the small-business world.
The acquisition, which closed Oct. 22, gives EMC full access to Allocity's portfolio of products focused on lowering the TCO [total cost of ownership] of applications in the Windows environment. The Mountain View, Calif., company's flagship product is Live!Ex, a solution focused on reducing the cost of storage hardware and SAN (storage area network) administration for the Exchange environment.
The acquisition was so small, in fact, that EMC didn't even bother to issue a news release, something company spokesman Dave Farmer says is standard procedure for small deals. Farmer pointed out that while EMC has acquired 16 companies since the beginning of 2000, many of them didn't warrant a news release.
EMC announced the acquisitions of VMware, Documentum, Legato Systems Inc. and Astrum Software Corp. in 2003. In fact, the company spent more than $3.5 billion on acquisitions in 2003 alone. Other noteworthy acquisitions since 2000 include Prisa Networks, Luminate Software, FilePool, CrosStor Software, Avalon Consulting Group and Terascape Software Inc.
This latest acquisition, while small by EMC's standards, fits well with the company's strategy of providing simple storage management and configuration software for the SMB market, most notably for those customers that Dell Inc. can reach, said Brian Babineau, an analyst with Enterprise Strategy Group of Milford, Mass.
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Some competitors, however, have a different view.
"With little expertise in the SMB market, EMC is having to acquire external niche players in the space to augment their enterprise-designed hardware, so it's not surprising they're downplaying this gap in their portfolio," said Vince Gayman, director of SMB programs at Hewlett-Packard Co.
Nevertheless, the market should brace for more acquisitions from EMC, experts said.
"EMC has a formidable mergers and acquisitions team that always understands the executive strategy and can map those requirements to the current market landscape, and there is no shortage of deal flow in Hopkinton, Mass.," Babineau said.
Fisch agreed but said he expects EMC to focus for a while on digesting its large acquisitions. If there are further acquisitions in 2004, he expects them to be smaller, tactical plays such as Allocity.
From the storage industry perspective, however, EMC's acquisitions represent the larger market trend toward consolidation. "The big fish are getting bigger," Fisch said.
EMC's recent buying spree, which has focused heavily on penetrating the SMB market, also is indicative of the storage market as a whole.
"The SMB, more specifically the 'S', has been a market untapped by many storage companies, and EMC expanded its product portfolio to specifically offer those customers backup and data management solutions through the most well established SMB channelDell," Babineau said.
EMC's recent deals, he said, are an attempt to provide more value with good enough functionality at the right price point for smaller IT shops.
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