EMC’s Stealth Approach to Utility Computing

Analysis: In the wake of its bid to acquire virtualization software maker VMWare, EMC is insisting that the move is not an attempt to insert itself into the race for utility computing market share against rivals such as IBM and Hewlett-Packard .

Some analysts find this hard to believe, while praising EMC’s strategy.

After all, the Palo Alto, Calif.-based VMware provides server virtualization software for Intel-based servers, which allows operating systems such as Microsoft Windows, open source o/s Linux and Novel’s NetWare to run simultaneously and independently on the same Intel-based server or workstation, all while shuttling live
applications across systems with no business disruption.

These are functional characteristics of utility, or on-demand computing systems, which deploy at the touch of a button and self-regulate.

VMware enjoys partnerships with IBM and HP, both
of which make Intel-based servers. Many analysts have said it would make sense for IBM or HP to acquire VMware to help automate and facilitate their utility computing strategies.

Sageza Research Director Charles King said it seems EMC and HP and IBM are charting two distinct courses for utility computing.

“It seems to me over the last year to 18 months, IBM, HP and Sun have been
trying to frame the argument that heterogeneous IT management works best as
a systems vendor play and that you need to have someone’s fingerprints from
the front of the data center to the back-end,” King told
internetnews.com. “Frankly, that argument has been resonating in the
market, putting pressure on EMC, EDS and even Dell to an extent because they
don’t have the breadth or depth to explain why best-of-breed systems are
relevant in an increasingly componetized world. The question surrounding EMC
became: what do you need a storage specialist for?”

Chris Gahagan, senior vice president of storage infrastructure software at EMC, said acquiring VMware is the culmination of a stealth project the companies began working on a year ago. Gahagan oversaw the effort, called Project FX. The goal of the technical effort was to tie the virtualization of any server or storage device without the need for reconfiguration.

Ideally, this would provide end-to-end “virtual information infrastructure,” Gahagan told internetnews.com. This means a customer can have an idealized environment for their applications and operating system that is completely divorced from underlying hardware. There would be no applications interruptions or downtime around planned upgrades or maintenance. Customers would be able to provision new OS systems and applications in seconds instead of hours and would get much higher utilization and automation, Gahagan explained.

During a recent conference call, EMC president and CEO Joe Tucci emphasized that VMware’s relationships with IBM, HP and others would not change should the acquisition bid succeed. Gahagan echoed those sentiments, adding that VMware would enable EMC to complement utility computing offerings of IBM and HP.

“We believe there are ways for vendors who do not sell servers to offer grid-based computing,” Gahagan said. In the meantime, Gahagan said VMware is working to develop programming interfaces to ensure that no companies interested in using its technology will get shut out. This is in line with the company’s open software initiative to support other vendors “as well as we support ourselves.”

Neither IBM nor HP would comment for this article, but some analysts beg to differ on the notion that EMC will not be competing openly with IBM and HP.

Nancy Marrone-Hurley, senior analyst with Enterprise Storage Group, said operating system virtualization are major parts of IBM’s and HP’s respective on-demand and adaptive enterprise strategies. This means that EMC will clearly tread in the utility computing domain.

“EMC sees that if they can virtualize the operating system and combine
computer powers, they will be protecting the space for software
applications,” Marrone-Hurley told internetnews.com.

“They’re not going to let IBM and HP own the space with their file systems. EMC will now have a placeholder for the virtualization of a whole infrastructure. This has definitely put EMC in a more competitive state, which can target the utility computing market with their partners, such as Dell. By gaining the ability to put their software in any environment, EMC is making sure it will not be shut out by other companies.”

John Madden, an analyst covering utility computing for research firm Summit Strategies, who said he thought that either HP or IBM would have picked up VMWare long ago,
sees the prospective deal as both complementary and competitive to server vendors who sell Intel-based systems.

“I think the play is both offensive and defensive for EMC — offensive
because it makes EMC relevant in terms of virtualizing compute resources, and therefore makes the vendor an important player going forward in dynamic utility computing, and defensive because it prevents HP and IBM from picking up VMware themselves,” Madden said. “Of course, whatever EMC develops, they’re still going to have to rely on the policy-based management platforms being developed by HP and Tivoli to make dynamic utility computing a reality — even though EMC has some impressive management software in their own right.”

One thing that many agree on is that securing VMware is the third major software acquisition target by EMC to shore up its information lifecycle management strategy (ILM), the company’s pervasive play to manage information from its creation to its disposal. EMC earlier acquired data archiving outfit Legato and is close to wrapping up its on content management concern Documentum, both crucial pieces of the company’s ILM plan.

Gahagan said VMware would provide the underlying infrastructure to help ILM
work for EMC and its customers. In fact, he said, ILM provides proof that
EMC is not trying to eclipse IBM or HP in the utility computing space.

“We see IBM’s and HP’s approach as an attempt to manage the data center
efficiently,” Gahagan said. “We are trying to manage the information in the
data center through ILM. So, what you have are technologies in both camps to
solve a different problem.

Still, Sageza’s King thinks the competitive nature is clear: “The whole idea of
enterprise IT is managing information and the endpoint is in storage, so
what better place to launch ILM than from storage rather than from front to
back management? I think it’s pretty audacious. For the last two years, EMC
has been on an acquisition spree after consistently getting rapped by the
competition for not having a strategy. They clearly have one with ILM.”

Madden, Marrone-Hurley and King all see systems vendors as experiencing some
angst over EMC’s bid for VMware.

“If it was indeed a stealth project between EMC and VMware, which is news to
me, then HP and IBM can’t be too happy,” Madden said.

Both Marrone-Hurley and King said that of all the systems vendors, IBM may
be experiencing the most discomfort from EMC’s wandering into its utility
computing garden.

“IBM may view this as more of a threat competitively,” Marrone-Hurley said.
“HP has all these solutions but they don’t integrate until they reach the
customer. At IBM, the storage and server folks are more closely aligned.
They are used to EMC being competitive on the storage side, but not in
servers. EMC is getting into virtual OS and that is what IBM wants to do.”

“There has to be some discomfort at IBM,” King said, with EMC potentially
controlling VMware. “From a partnering standpoint, EMC needs to demonstrate
that they can manage these partnerships. If they can pull it off and let
VMware, Documentum and Legato do what they do well while keeping customers
happy, they will blunt any effort from IBM or HP to get customers off of
those products. If they can make this happen, EMC will have an early market
advantage as a single vendor that offers central management of IT.”