Joseph Tucci, CEO, EMC

Joseph TucciNEW YORK — For years, EMC was the vendor that competed with IBM, HP and
several others in the market for storage hardware from an outpost in
Hopkinton, Mass.

EMC is still that company in Hopkinton, but it’s double the
size and is no longer so one dimensional.

The vendor has added a number of different facets to its business. A handful
include e-mail archiving, content management software, server virtualization
and network and application infrastructure management.

In the last few years, information lifecycle management (ILM) has been EMC’s
war cry, but that is giving way to service-oriented architecture (SOA)
, a popular distributed computing model.

EMC Chairman, President and CEO Joseph Tucci is so confident in his
company’s products, and the ability of its global services team to sell
them, that he made one of his famous pledges Wednesday at the company’s analyst event here.

Tucci promised EMC would grow five of its core businesses — VMware, storage
virtualization, content management, resource management and security — to
$1 billion each in the next two to five years.

That’s a big boast at any level. Tucci sat down with
after the event to discuss the evolution of the company.

Q: Considering the barrage of acquisitions in the last few years, what was
the thinking that led EMC to this broad strategy that we see now?

We attacked it from several angles. Our revenues in storage because of the
recession and the lack of spending in 2000-2001 declined from the high
eights [billion] to $5.4 billion, and clearly we needed a strategy.

I really
felt uncomfortable because I felt if you could find a way to penetrate EMC’s
Symmetrix product family, that was it. Obviously, if you have a broad
portfolio it’s tough to attack.

We can have an off-product, which we’ve done
several times in one family, and still have a great quarter. I think [EMC
Executive Vice President and VMware President] Diane Greene said it best.

Software is a great business because you don’t have to make anything. Once
you do your development, there is no manufacturing cost. There’s a lot of
options around software.

But I feel a good balance. I don’t want to walk away from our heritage. So,
in the hardware, what we really did was put together a renewal strategy.

same day I said I want to diversify across hardware, software and services.
Before that we were 70-plus percent just hardware. So I said I wanted to make
software and services at least 50 percent of the mix.

I also said that we
are not only going to be the king or the leader of high-end storage, but we are going
to be the leader of mid-tier storage. At that point in time, we only had 9
percent share. HP had just bought Compaq and together they had I think a 42
percent share. This was not a lay-up statement, but we did it.

Now, you
heard me say today that our new goal is to obviously maintain those two
leadership positions, but then become the leader in low-end storage. So,
it’s part of getting size and scope.

We have more than doubled the business.
We now have approximately 46 percent of our revenue in hardware, 37 percent
in software, 17 percent in services.

Q: You’re entering markets where IBM and HP have been. If the intent is to
become a broad systems vendor, have you considered selling servers the
way those guys do?

If we can pull off this SOA/resource management strategy and create an
information infrastructure, and use one of the key assets we got that’s been
pretty much in stealth mode — the grid storage from Acxiom — most people have said that is the best grid technology out there.

There’s a lot of grid technology
out there, but this is the only one entire companies are running their
businesses on.

So, as far as getting the hardware it’s easy to do, but it’s
an area I’d rather partner than compete with. We have a very strategic
partnership with Dell, so it’s not very high up on my list at all.

But, I
think Diane [Greene] was right. Over time the server is going to be a
container on which I’m going to run my app. Then you run those containers on
virtual machines. We’re going to stay an infrastructure play and I think
that is going to be very good for us.

Q: A lot of analysts I talked to were surprised by the SMARTS buy [for
network infrastructure and application management].

Think of it this way: the king of managing the storage domain is us, with
ControlCenter. I’ve said two things — the platform and framework days were
numbered, so you have Tivoli, you have OpenView, UniCenter and ControlCenter
in the same bucket.

So how do I take some of this knowledge and put in a new
model, which is SMARTS. The other thing I said was that you’re not going to
manage domain by domain, so if we don’t figure out how to manage this whole
thing, we’re going to lose this. You lose this, you lose control of your own

Q: How does your new purchase of [application mapping startup] nLayers
augment the SMARTS purchase?

We think it has absolute home-run potential, and we said there is like five
other things we can do as we looked closely at the technology. Then we came
to the conclusion that this is something we should own.

If we’re making this
much investment in and around it, we should make that bridge in case someone
else comes and buys it.

You and your team said that security is one of your next big target
areas, selecting buckets like vulnerability assessment, policy compliance,
securing the infrastructure. Is that something that will be developed in
house, or are you going to be acquiring one big company or smaller ones.

Some of it will be developed inside. It’s unlikely you’re going to find one
big company that solves all of that, so that’s probably a string of pearls.

We just bought
digital rights management provider Authentica. There’s a nervousness that
we’re going to do something big. On the other side, you don’t want to
comment — you never want to say never.

Q: Security is a big front, but things like nLayers and SMARTS bring you
closer to the Web services territory. Are there any plans to offering Web
services infrastructure or business process management similar to what IBM,
HP, BEA Systems and SOA Software, offer?

I don’t want to say yes or no to that.

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