EMC Mulling a Storage, Backup Software Spinoff

EMC Corp. is considering spinning off a separate backup and storage management software company from its established hardware business.

EMC Corp. is considering spinning off a separate backup and storage management software company from its established hardware business.

EMC officials believe a separate development company would fare better selling software products not tied to the Hopkinton, Mass., companys hardware, according to sources familiar with the plans, who spoke on condition of anonymity.

The new company, to be named Diligent Technologies Corp., would be based in the Tel Aviv region of Israel, where EMC has operations, although EMC would keep its AutoIS storage management software suite in-house.

The plans for Diligent are not finalized, but one source close to the organization said that "it would either happen within the next few weeks, or it would not happen at all."

EMC officials declined to comment, although EMC has been recruiting for the new company in the Boston area and is seeking office space in Cambridge, Mass., for the U.S. office of Diligent, sources said. The backup-and-restore products created by Diligent would complement backup products from Legato Systems Inc. and Veritas Software Corp. Diligent also would develop software for tape virtualization and storage resource management, sources said.

Sources said Diligent has tapped Doron Kempel to head the new company. Kempel is a former EMC vice president who left last year and was sued by EMC for breaking his noncompete contract but has maintained close ties to EMC, sources said.

EMC officials this summer said an expansion into backup software was planned but talked of acquisitions, rather than of building a separate company. At least one user likes the product plans but questions whether EMC is the company to pull it off.

"Theres definitely an industry need for optimizing backup and recovery," said Larry Heminger, director of research and development at CardioNow Inc., an application service provider for cardiologists, patients and insurance companies, in Encinitas, Calif. Heminger runs 3 terabytes of storage on a DataDirect Networks Inc. storage area network, with Veritas NetBackup DataCenter and Storage Migrator software, hosted at a Level 3 Communications Inc. facility.

"If [EMC or Diligent] really do create a hardware-independent product, and the product delivered what they promised, I think itd be a viable thing," Heminger said.

EMC could face challenges to make the new division work, said officials at Fujitsu Software Technology Corp. Fujitsu Ltd. created a similar division, known as Softek, in 2001 to build storage management software much like EMCs AutoIS suite and to keep it separate from Fujitsus own hardware.

The advantage is that Softek programmers are "not being driven by the hardware being shoved down their throat," said Scott Kennedy, vice president of business development at Softek, in Sunnyvale, Calif. However, some customers prefer one-stop shopping and support, Kennedy said.

IBM, of Armonk, N.Y., has been merging its Tivoli software division back into the company over the past few years, said Brian Truskowski, chief technology officer of IBMs storage group.

"It just made logical sense that there was some leverage and capability we had by integrating [Tivoli] with the rest of the business," Truskowski said.