Editor’s note: Krista Macomber is Research Analyst, Computing and Storage Practice at Technology Business Research, Inc.
HAMPTON, N.H. – Cloud and big data built the foundation for EMC’s growth in 2011.
EMC (NYSE: EMC), which has a big and growing presence in the Research Triangle Park, N.C. area with both manufacturing and research-and-development, has expanded its technology in high-growth areas, such as public, private and hybrid cloud buildouts and big data warehousing and analytics, as well as its services expertise to expand its addressable market and drive 4Q11 and full-year revenue growth of 14% and 18%, respectively – balanced across its business segments.
EMC closed 2011 with a diverse ecosystem of partners and strong midtier momentum to continue building on. (Read the earnings report here.)
EMC is rebuilding from the discontinuation of its Dell relationship by establishing a large and diverse ecosystem of channel partners. As a result, EMC is maintaining double-digit midtier revenue growth – largely the result of Velocity channel program expansions and new product releases, such as VNXe, throughout 2011. In the fourth quarter, EMC reported midtier revenue was up 24% YTY, with nearly 2,000 new VNX customers added. Isilon’s scalability supports growing midtier company adoption, opening the door for penetration of new accounts across key verticals such as healthcare; EMC reported annualized and quarterly Isilon revenues both more than doubled year-to-year.
As a key lever in fueling the push into the midtier, EMC strengthened its partner ecosystem globally by expanding Velocity programs and introducing channel-focused offerings. As a result, the company reported more than 1,700 partners began selling EMC products for the first time in 2011. Additionally, VCE is experiencing momentum, delivering more than an $800 million annualized run rate in 2011 to EMC and its VCE partners, Cisco, VMware, and Intel, driven by adoption of Vblock Converged Infrastructure Platforms. EMC will continue investing and working with its VCE partners to build upon this success, positioning converged infrastructure as supporting cloud and big data applications.
EMC Will Cautiously Dip Its Toe into 2012
TBR believes EMC’s cautious forecast of 2012 is as much a result of internal uncertainty as external forces. Despite solid financial results through 2011, EMC is looking to the coming year with an eye of skepticism. As a result, the company’s Board of Directors requested that Joe Tucci remain at the helm of EMC through 2012, in order to help EMC navigate through anticipated challenges. EMC expects IT spending growth to slow from 2011 to 2012, pointing to concerns about the economic state of key regions and a tightened supply of hard drives due to flooding in Thailand.
Although hurdles are present in the global IT environment, TBR believes the EMC Board of Director’s decision to request Joe Tucci’s retention points to a lack of complete buy-in of the company’s succession plan by the Board. Such is evidenced by a key EMC competitor, IBM’s, promotion of Ginni Rometty to the role of CEO upon Sam Palmasano’s retirement in January 2012. IBM and EMC play in many of the same markets and have experienced similar financial successes through 2011, but their CEO succession plans have diverted.
Tucci has been instrumental in EMC’s core expansion strategies since taking the wheel more than a decade ago. He has spearheaded key strategic acquisitions, including VMware, RSA, and Data Domain, while overseeing a paradigm shift in portfolio – from purely a storage vendor to a provider of holistic IT solutions. These efforts have enabled EMC to elevate its portfolio in the minds of customers and partners, alike. The Board’s decision to keep Tucci as CEO demonstrates that EMC has yet to find or develop the right individual for the post, ultimately threatening growing partner and customer relationships. The company has taken strategic actions in the past couple of years, such as the hiring of Pat Gelsinger from Intel, to begin building a highway for succession.
However, Tuesday’s announcement indicates that there is further paving to be done in order to get to the right exit.
Although the company is looking to the future with a cautious eye, TBR believes EMC will continue to grow by leveraging its strong portfolio – from virtualization to storage – to capitalize on high-growth technology areas, such as analytics, big data, and cloud. EMC’s acquisitions, such a Greenplum, have expanded the company’s portfolio of data-creating technologies and shaped new demand for its core storage portfolio. EMC will leverage its multifaceted portfolio to drive bundled solution sales, ultimately helping maintain balanced revenue and profit growth in 2012.
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