EMC Advances, VMware Shift

EMC Corp. posted record second quarter financial results, showing an 18 percent year-over-year revenue growth. On the product side, EMC announces Documentum ECM release 6.5., which embraces Web 2.0 to foster new ways of working. Meanwhile, VMware Inc., a majority owned subsidiary of EMC, moves to counter Microsoft Corp.'s Hyper-V offering by making ESXio hypervisor available for free.

Focal Points:

• EMC reported record revenues for the second quarter of 2008 of $3.67 billion, an increase of 18 percent from the year-ago quarter of $3.12 billion. Net income for the quarter on a GAAP basis was $377.5 million or $0.18 per diluted share. This was 13 percent higher than comparable net income of $334.4 million for the same period last year, EMC added. Revenue from its Information Storage business, which includes revenue from storage systems, storage software and related customer and professional services, reached $2.87 billion, an increase of 14 percent compared with the year-ago period. The company's content management and archiving business increased second quarter revenue 18 percent year over year to $204 million while revenues from RSA, its security division, grew 15 percent year over year, reaching $144 million. VMware contributed second quarter revenues of $453 million, an increase of 52 percent compared to the year-ago quarter.
• EMC unveiled release 6.5 of Documentum ECM, which company officials claim is a suite of products that embrace Web 2.0 to foster new ways people can work together while mitigating new elements of risk. The new suite introduces new user experiences through CenterStage Essentials, Media Workspace, My Documentum, TaskSpace, and high fidelity forms components. CenterStage Essentials provides a new Web 2.0-like user experience with access control, library services, lifecycle management, searches, team workspaces, and templates, and is available for free. Media Workspace has a new configurable user interface and other features that improve productivity. My Documentum enables ease of access to repositories on PCs and Apple Inc.'s Macs and supports desktop files/folders both online and offline. TaskSpace provides a 360 degree view of case work with high performance document viewing and rapid application development. The suite also contains a new ECM Web 2.0-ready infrastructure that supports end to end XML handling, high volume content processing, limitless records management, large file handling, and new IT user technologies.
• Effective July 28, 2008 VMware is making its ESXi hypervisor, which was priced at $495 a copy, freely available. The ESXi version is an easier to install and use version of ESX. The release of free ESXi downloads is designed to counter Microsoft's effort to promote its Hyper-V hypervisor, now available as a $28 feature in Windows Server 2008. The rest of the VMware price list will not change. Officials state the ESXi move will "seed the market" with VMware's core product and give customers a chance to experiment before buying VMware's higher end products, such as Virtual Infrastructure 3 and Site Recovery Manager. The price list starts at $995 for Virtual Infrastructure 3 Foundation Edition and runs to $5,750 for Virtual Infrastructure 3 Enterprise Edition. Site Recovery Manager is part of a management and automation bundle priced at $3,995. 

Experton Group believes EMC continues to deliver on its innovation and vision, and to effectively leverage its acquisitions, even though its VMware subsidiary is undergoing a major transformational shift. EMC remains focused on the high growth components of the IT infrastructure space and is aggressively pursuing customers from enterprises to consumers across all channels. The new management at VMware is transitioning the company away from what is now a highly competitive low-end virtualization market towards a higher margin cloud computing and virtualization management space that it can dominate for the next three years. It is unclear if EMC intents to retain majority ownership of VMware for the long-term or if it will shift its course in 2009.

IT executives that view EMC as a strategic partner should keep abreast of EMC's solution strategies and road maps and determine how and where its offerings can be applied to enterprise challenges.