EMC’s re-intermediation strategy

by Robin Harris on Tuesday, 18 November, 2014

EMC – and other legacy array vendors – are trying to become an intermediary between enterprises and the cloud. Are cloud-washed arrays a viable strategy?

EMC’s Joe Tucci is working to ensure that EMC can survive in a cloud world even if he doesn’t manage to sell the company before he retires. The acquisitions of TwinStrata, CloudScaling, Maginatics and Spanning are proof.

The acquisitions are recent and success remains to be seen. But there’s a larger question about the strategy: can an enterprise re-intermediation strategy be successful?

Intermediation works when transactors work at very different time frames, scales or knowledge levels. Costco, for example, buys by the truckload and sells by the box. Insurance brokers help you navigate complex financial products.

The Internet is the Great Disintermediator. Thousands of smaller businesses have been destroyed by Internet-based large business – think book and video stores – and more are endangered, such as newspapers.

Today, the cloud is likewise disintermediating the business of legacy storage providers. Getting some cloud mojo to buff aging architectures is the goal.

Will it blend?
The acquired vendors have shown that there is a market for cloud-enhanced local storage. The problem is that they haven’t shown it with high-cost legacy vendors.

TwinStrata, for instance, offered a commodity server box with their software for local storage of cloud data. A sensible low-cost solution for the mid-market.

But will enterprise customers want to load up their current storage silos with cloud extensions? And if they do, for how long?

The StorageMojo take
EMC’s acquisitions – and other “cloudifying” efforts – are defensive tactical moves, not long-range strategies. Helping customers use much lower-cost and more flexible cloud storage sold by others is like a bookstore searching Amazon for you.

Vendors will eke out marginal sales and maintenance extensions, but hollowing out the embedded storage component in arrays is asking switch vendors to take over the job of shuttling data off to the cloud. There are better ways to manage metadata than inside storage arrays.

Courteous comments welcome, of course.

{ 2 comments… read them below or add one }

Yaron Haviv November 19, 2014 at 5:18 am

Robin, I agree with all your points
Recent announcements such as Amazon Aurora (enabling turbo boosted, highly resilient, extremely cheap SQL service), and Facebook on their home-made switching fabric, should put EMC, Cisco, Oracle, HP under pressure, it’s yet another dent in the Enterprise systems story.
EMC would need to figure out how it blends in, probably would need to evolve to a data and BigData services centric organization vs a storage hardware company, and those services will span dedicated hardware, x86 white-labeled, mobile devices, and public cloud storage.
They must also be able to significantly lower the total cost (CapEx and OpEx) of the storage solution to stay competitive, abandon traditional approached as I wrote in my recent blog (http://sdsblog.com/2014/11/18/why-the-heck-do-we-need-san , I’m sure you will sympathy with my observations 🙂 )

Another move they can consider is to partner with the opposition to the large 4 providers (i.e. smaller/regional service providers and vertical SaaS vendors), and may end up selling them software and services running on top of Chinese/Taiwanese servers, or even becoming a niche service provider (like they started with VMware cloud).

Out of the system vendors EMC is in a better position, because they have deep software and services DNA, others who focus on hardware with a bit of integration services will be in a tougher spot.

Ryan November 21, 2014 at 1:18 am

Perhaps a naïve question, but if the big iron storage vendors had not built their business off steep margins in the first place–creating and fulfilling the “storage is expensive” perception–would “the cloud” exist as we know it?

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