EMC’s GM of the Grid & Utility Computing, Ian Baird, mentioned at EMC World in Boston this week that EMC had invested in distributed caching technology developed by YottaYotta, a Canadian startup, for their “Grid Storage” strategic direction.

Distributed caching technology is crucial to creating WAN-based storage infrastructures that operate as if local, despite being spread over thousands of miles, where normal network latency would cripple response times. YottaYotta, an $80M startup based in Edmonton, Alberta, has been working on the technology since its founding in early 2000.

With Google’s gdrive initiative, as well as similar expected services from other major players, EMC is facing the threat of losing many petabytes of data now hosted on expensive EMC gear to web-based free or low-cost storage. As broadband adoption rates and quality improve, users will have less incentive to leave data in disaster-vulnerable single locations.

By promoting a network or grid based architecture to their lucrative corporate customers, EMC is hoping to stave off the fate of so many other big iron companies: being rendered irrelevant by high-volume, low-cost alternatives. This happened to minicomputers, 9″ and 5.25″ disks, mainframes, proprietary OS’s such as VMS, and countless other computer products. Storage hardware is one of the most profitable hardware businesses in the industry, helping keep otherwise money-losing computer hardware vendors afloat.

EMC, which is almost entirely a storage hardware and software vendor, except for their recent acquisition of VMWare, has been moving downmarket with lower cost Clariion products marketed by Dell and Intel. However the grid computing paradigm threatens to give big corporate customers a new and lower cost way to deliver storage services (such as IBM’s fledgling download grid) just as the web storage services like gdrive encourage downmarket customers to cut down on their storage consumption.

EMC’s biggest problem may be that grid architectures require greater integration between servers, networks and storage, integration that EMC can’t easily deliver since it has no server business. Maybe they’ll buy staggering Sun to get that piece.

What I don’t know and would like is whether EMC has an exclusive with YY. Distributed caching is really hard, and as other vendors realize they need it perhaps they will also go trotting off to scenic Edmonton (home of the free world’s biggest shopping mall) and lay their money down.

BTW, EMC spent $24,524M in 2005 and $20,297M in 2004 on strategic investments in private companies, which is the pot the YY money would have come from. No idea on how many other strategics they shared the money with.

I asked YY for comment, but no one was answering their phones. I hope to have more later.

Note: I was once employed by YottaYotta and still hold shares in the company.

A senior EMC technology manager would only confirm this morning that “We do have a grid project underway at an enduser site with YottaYotta, to leverage their caching know-how.” So it may be that no money has changed hands between EMC and YY. Investment contingent on successful trial? Or an NRE investment by EMC? In any case, congratulations to the engineering team at YY whose 6 long years of work on a very complex problem is finally bearing commercial fruit.