It needs to present itself as one company rather than 'the Documentum sales rep, the VMware rep, the RSA rep and the rep from the EMC mother ship.'
EMC continues its drive to manage more and more of the total IT floor space. Its 21 acquisitions over the last three years all point to this, as does the evolution of a corporate strategy that continues to coalesce around information lifecycle management. We have been reporting on this strategy for years, but this should now have become quite plain for even the dimmest of EMC-watchers.
Why the company’s stock remains in the toilet is anybody’s guess. There has been an awful lot of speculation about this of late, but it probably points to a mix of two considerations. First, there is often only the loosest of connections between a company’s stock price and its actual business success. Some companies do well in their own markets, but because they miss some stock analyst’s expectation, they haven’t done “well enough.”
Alternatively, the flatness of EMC’s stock over the last three years (essentially, going back to when EMC began its aggressive acquisition campaign) may also reflect some folks’ desire to see more organic growth and a lower proportion of the overall increase coming through acquisition. That would also avoid the nastiness of the continual rounds of layoffs that EMC (and, it must be pointed out, almost every other company that buys another) goes through as it eliminates redundancies and, amidst that, also trims some dead wood.
Over the last three years, EMC has had a good history of incorporating these new companies gracefully within its overall corporate structure, setting up VMware, Documentum and Smarts as separate, interdependent business units. In most cases, they have retained much of the senior management of the acquired companies beyond the transition stages, although in a few cases there have been significant departures from this model.
As a potential buyer of EMC goods and service, none of this matters much to you however. The company’s recent announcement of the highest quarterly corporate revenue in its history indicates that large parts of its corporate strategy are working, and 13 consecutive quarters of double-digit growth are nothing to sneeze at, even if much of that money has come from the revenue streams of the acquired companies. CLARiiON and Symmetrix revenue continues to grow. The important point is that however they have become part of the portfolio, the products and services are there for you to choose from, if you wish, and slowly but perceptibly, they are becoming interoperable.
The company is now organized into four general business areas: storage; content management and archiving; security; and VMware. While all are important, the group for those of us in storage to watch is most definitely VMware, which continues to play a key role in enabling EMC to manage across the enterprise. I am told that it has a part - sometimes just a small one, but often not - in just about every sale EMC makes.
The challenge for EMC will be to discard some of the artifacts it has collected on its road to success. Particularly when it comes to large enterprise opportunities, buyers will not want to deal with the Documentum sales rep, the VMware rep, the RSA rep and the rep from the EMC mother ship. How effectively EMC can roll them all together into a single customer-facing entity will play a major role in determining whether that EMC rep will be the “one rep to rule them all.” Time will tell.
P.S. I know nothing about stocks, and have the portfolio to prove it.
Mike Karp is senior analyst with Enterprise Management Associates, focusing on storage, storage management and the methodology that brings these issues into the marketplace. He has spent more than 20 years in storage, systems management and telecommunications.
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