EMC to Cut Back on Acquisitions, Focus on Business

 
 
By Chris Preimesberger  |  Posted 2007-02-07 Email Print this article Print
 
 
 
 
 
 
 

News Analysis: The storage giant says it will stop feasting on a steady diet of other companies and focus on the job at hand: storing and securing other people's data.

SAN FRANCISCO—Data storage giant EMC has been a consistent swallower of other companies over the past five years, acquiring no fewer than 31 of them—some large, some small—during that period. For the time being, however, the big whale from Hopkinton, Mass., looks as though it might lose some weight sifting through plankton instead of engulfing bigger, tastier fish. "Weve made a lot of acquisitions over the past few years, and RSA Security was among the biggest. It also has been far and away the smoothest acquisition," EMC President and CEO Joe Tucci told a throng of reporters and analysts Feb. 6 at the RSA Security Conference, being held through Feb. 9 at the Moscone Center here. "But it doesnt look like we will be actively seeking acquisitions in 2007 the way we have in the past. In my mind, right now, there is no company Im looking at to buy," Tucci said.
That will be welcome news to some EMC stockholders, a number of whom have disagreed wholeheartedly with the current administrations aggressive takeover strategy. They have contended—sometimes loudly—at quarterly earnings meetings that the company is growing too fast for its own good and could collapse under its own considerable weight.
In fact, the stock price took a sharp downward move when the $2.1 billion acquisition of RSA Security, the worlds largest data security company, was revealed last July. EMC reported 2005 sales of $9.7 billion; RSA came in with $310 million in 2005. In a wide-ranging question-and-answer discussion, Tucci and former RSA President/CEO Art Coviello—whos now president of EMCs RSA security division—touched on overall strategy, merger integration issues and other topics. "Oh, I think there will still be a lot of consolidation in the storage/security market to come," Coviello said. "But well be scaling back for a while, anyway."
Tucci said he likes the position the company is in today. And who wouldnt? EMC owns a whopping 28 percent of the worlds market share in data storage software and about 21 percent of the worlds market share in the external disk storage hardware market. EMC is also in the top three of several other world markets, including storage systems of all kinds and storage services. "Rather than do another large acquisition, I think right now for 2007, Id like to see us focus on the job at hand," Tucci said. "We might make some small acquisitions, perhaps in virtualization or in the services area. "In any case, there will be no big new moves on the chessboard. We need to beef up what we already have. There is no one area that we need to go into right now and make a purchase. Im happy with the EMC portfolio. We just need to do a great job in the integration and execution sense," he said. Tucci says EMC is planning to expand services to online sometime in 2007. Click here to read more. Then Tucci left the proverbial door open. "Unless something phenomenal crops up," he said, with a smile. Tucci said he thinks more tiering of storage will be forthcoming in 2007 and that "it wont be long until as you store, well be able to encrypt on the fly ... without slowing down the I/Os [input/output speed]. "This is not a very long road because of the [Intel and AMD] quad cores and other fast chips that are now available. Theres now plenty of horsepower to do that [encryption on the fly]," Tucci said. Coviello, who Tucci said deserves most of the credit for the "smooth" RSA-EMC merger, said he sees some trends on the horizon. "In identification and access management, were going to continue to try to broaden the types of authentication methodologies as we go along," Coviello said. "For example, of the top three banks that use Internet banking, all three are RSA users. They all use different authentication methods from RSA—picture-based, risk-based and secure ID. We need to break those out into other verticals. They already work well in finance. "We figure well soon be protecting 100 million consumer accounts [in 2007] and 20 million remote-access token users," Coviello said. "We are expanding our one-time passcode technology into other consumer devices, like cell phones and PDAs. It will take a little time to get into the sales and replacement cycles, but well get there." In data protection, Coviello said that RSA will "round out our encryption and key technologies. ... We have a pattern-recognition project; we now apply that to people, and we want to apply it to data. We have to go outside [make another acquisition] for that," he said. Will RSA eventually take risk-based authentication inside the firewall? "We are absolutely looking at that," Coviello said. Check out eWEEK.coms for the latest news, reviews and analysis on enterprise and small business storage hardware and software.
 
 
 
 
Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz
 
 
 
 
 
 
 

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