At a press and analyst conference held in late November in Cambridge, Mass., company executives outlined a range of new products and services that will maintain growth but not stray too far from the company’s core markets.
During that conference, EMC Chairman, President and CEO Joe Tucci sat down with eWEEK Editorial Director Eric Lundquist and eWEEK Senior Analyst Wayne Rash to discuss the company, new trends in the technology industry and the direction for business-to-business IT.
EMC is a company that has been invented and reinvented more than any tech company we’ve covered. What’s next?
Right now, my thought is to stay in the infrastructure space. It is a great space, and there is a lot to do there. My focus now is to say, ‘What can we do now to make security a much bigger business for us? What can we do now to make content management a much bigger business for usand et cetera [for other established EMC markets]rather than add another sphere of technology for us?’ We have a lot of opportunities.
So you feel you can accomplish your growth strategies within the existing technology spheres in which EMC now operates?
For the immediate term, absolutely. Will there be another sphere someday? Sure.
You’re looking at expansion in the current businesses? For example …
Would I like to be twice as big in security? Yeah.
And you define security in the bigger sense, correct?
Yes. The areas we are now most interested in include strong authentication, data leakage, encryption, centralized key management and event management.
Compliance activities have been a big driver for EMC. Now we are hearing about Compliance 2.0, where compliance requirements become consolidated. What should CIOs expect next when it comes to compliance?
If you look at compliance, it is one part storage, one part security, one part availability, one part content management, one part archiving and so forth. So how do we put those parts together in a seamless appliance or service? We have the pieces and parts to really help with this problem.
Overall compliance, but still geared to specific industries?
Yes, John Halamka [the CIO of Harvard Medical School, who spoke at a recent EMC event] sees the day when a patient has total control of their information, and I see that day also. You will opt in or opt out of the network.
While EMC has been seen as a leader in managing, storing and tiering structured data, a lot of new data coming into a corporation is unstructured, rich data, including video. What does that mean for EMC?
That we did see, and that is one of the reasons we went after Documentum. The big thing you need to have is a robust repository and management paradigm, which we have.
We have the products that we have amalgamated to really form a strong solution.
Clearly, the big winner for EMC has been virtualization, with your acquisition and later public offering of VMware.
EMC has a good growth business, and VMware has been growing at a fantastic rate.
But now Oracle and Microsoft are coming out with their own virtualization offeringsofferings that you have said are only at a 1.0 level.
They are at a 1.0 level. When we bought VMware, there were articles that said, “The analysts think this is about a $1.2 billion market, and EMC spent about $600 million to enter a $1.2 billion market. Does this make a lot of sense?” Now, people have come to the conclusion that this is going to be a double-digit billion [dollar] market, so you are going to have a lot of players come in.
When an Oracle jumps in and says, “Virtualization is important,” or when a Microsoft jumps in and says, “Virtualization is important,” then CIOs start to think that they have to have a virtualization strategy or they will be out in left field, and that puts a light on the whole market. That is a positive.
But what does that mean for VMware?
VMware is well over $1 billion in size. VMware is at Version 3.5. VMware has a huge base of the who’s who companies and huge traction in markets like SMB [small and midsize businesses]. VMware has the ability to scale from the desktop all the way up, and the other competitor products are not that scalable. VMware has total ubiquity of operating systems. It is way, way beyond the hypervisor.
Customers are going to say, “Do I want to build this thing stack by stack? Here is my Microsoft stack. Here is my Oracle stack.” Or do the customers want to put in a horizontal [VMware] layer and get all the services they need for security, business continuance, disaster recovery, mobility and everything else that you need to make a real platform? [These] are all things that VMware does and these hypervisors don’t do. VMware has all that stuff out today.
Yes. Let me ask you: If you are coming out of school today and you are a hotshot, do you want to go to a Google and VMware, or do you want to go to a Microsoft and Oracle? We have a great story. No one is going to make a decision without considering VMware.
Page 2: EMC’s New Tech Directions
Let’s talk about storage in the cloud, where EMC has zero market share.
Google has probably created the largest storage cloud. Not probably, definitely.
EMC is not a player. How do you become one?
Well, you’re going to see us enter. First of all, there is only one Google. But there are many companies that need to get into cloud computing.
I won’t say more on that now, but we are going to have a great hardware and a great software platform that other companies can use, and we will also use the platforms to offer services around archiving and around backup and other services.
So the cloud just becomes another tier in tiered storage?
It is more than that. There will be opportunities for SMB customers to say, “I don’t need this infrastructure myself, I’ll just use the cloud.” That is where companies like Salesforce.com built their business.
What is another example?
We bought this company, Berkeley Data Systems, which operates a service Mozy [online data backups] that has over 300,000 users, and some of those users are very big. GE uses Mozy, and that is one customer, but you can imagine how many customers we back up for GE.
Does that get you into the home market?
We think that there are some users that will have a terabyte of data at their home in the not-too-distant future, and that everything will be backed up in the cloud.
So you work with companies on the storage of data, the security of data, the movement of data, but you stop at providing the business applications that manipulate the data?
I’ve always felt that if you can stake out your claim, that is how you differentiate yourself from your competitors, such as an HP or an IBM, who are trying to do everything. Plus, I become important to an SAP or a Microsoft because I am not attacking their space.
Microsoft? What about VMware?
They are not happy with VMware, but I have that cordoned off.
[Microsoft CEO] Steve Ballmer is a friend of mine, so when he talks to Joe Tucci as the chairman of VMware, he knows we are fighting, but Joe Tucci, the CEO of EMC, is his partner. He knows I’m honorable, and he is honorable, so we know exactly where we are fighting. That is “co-opetition.”
And the applications companies?
The applications companies are our friends. The app companies right now are hating Oracle because, well, you know what I mean? I’m not saying Oracle has a bad strategy, but he [Oracle CEO Larry Ellison] is building out a stack for himself. And, by the way, the Oracle stack will run on our platform.
Will it be a vertical or a horizontal technology world?
If you really believe in SOA [service-oriented architecture], it will be horizontal. By not going there [business applications], I can make my partnerships cleaner.
Is there a company that has a similar strategy?
What is your crystal-ball forecast for IT spending in 2008?
First, there used to be an old analogy: If the U.S. catches a cold, the whole world sneezes. I’m not sure that is true anymore. As a matter of fact, I think it is not true. I think Europe is going to be good, I think Asia is going to be good, I think Latin America is going to be good. In the U.S., any slowdown is fairly well-contained to the companies that are affected by the subprime mortgage problems. The big wild card is: Does the consumer slow down significantly? Right now, the facts are that the consumer is not slowing down.
Final question: Here we are, sitting near the Massachusetts Institute of Technology campus. Is this business, the IT business, still a good area for a student to be going into these days?
Absolutely. There is a statistic that more than 50 percent of the engineers are baby boomers and are nearing retirement. This is a great business to be getting into.
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