EMC and nLayers – another quart to be squeezed in a pint pot
A long, long time ago, I remember I was in a briefing with
EMC. "Storage is a software problem," I said, to much general agreement and backslapping all around. While EMC was no stranger to acquisition, this was before it had made any of its "strategic" software purchases such as Documentum, Legato and VMware. Having bought the latter for reasons only it knows, for a while EMC considered presenting itself as an enterprise management company – the one stop shop of software to manage the dynamic data centre environment of the future. The company it quickly fell back from this position, as it sought to sustain its hardware sales, while struggling to integrate the various products into a coherent software portfolio and, frankly, as it also discovered that there was little market for overhyped fantasies about how IT could run itself.
All the same, EMC has continued with its strategy to move from an over-dependency on hardware to one which balances hardware with software and services. What with the more recent acquisitions of Smarts (for network and IT event management) and now
nLayers, it looks like the company is being drawn inexorably towards becoming an enterprise management player.
It is perhaps worth explaining what is nLayers, a software product that enables the auto-discovery of IT assets (think: hardware and software) that exist on the corporate network, together with the dependencies between them. Knowing what’s out there is a well known challenge for IT managers, who waste much time and effort keeping manual or spreadsheet records up to date, who lose money paying for things nobody is using, and who have to cope with unexpected dependencies being turned up during an upgrade or new deployment. nLayers has a broad remit: by acquiring such a company and then saying that it is just for information management, EMC is once again trying to fit a quart into a pint pot. The product is capable of so much more; so is EMC, if it could just get its act together in enterprise software.
In recent times, EMC has been quick to downplay any enterprise management aspirations, preferring to explains its software portfolio in terms of the management and protection of information. Even so, it knows that the portfolio is capable of so much more. Smarts (with its own sales force) is deployed in ways that go well beyond this quite limited scope, and VMware (run as completely a separate business) doesn’t fit the description at all. Is it any wonder that Wall Street has reacted poorly to the nLayers acquisition.
EMC is going to have to do something. By attempting to straddle the two stools of information management on one side, and enterprise management on the other the company is giving itself something of an identity crisis. On the one side it has a goodly set of tools and capabilities to take on other enterprise management companies, who are themselves encroaching on EMC’s own base (CA for example, which is growing its information management portfolio, or Symantec if it ever manages to work out how to exploit the capabilities it absorbed from Veritas). On the other side however, and despite the fact that EMC's hardware business makes up proportionately less of its revenue year on year, it cannot risk undermining its position by looking like anything other than a storage company right now. As a storage company, EMC is a market leader; as a management software company, EMC becomes just one of many.
Nobody said life wasn’t going to be hard; meanwhile however, the company appears to be in denial. Judging by the nLayers acquisition, EMC is clearly resolved, or perhaps resigned to delivering a more comprehensive portfolio of enterprise management software. The question is, how can the company do so without alienating its existing storage customers and jeopardising new sales, or losing the faith of the financial markets. EMC needs to present a coherent strategy that covers all the bases, and fast; and this time it needs to have the wherewithal to stick with it.
