(Editor’s Note: This is commentary and analysis provided by Technology Business Research after EMC’s first quarter earnings report released in April.)
By Krista Macomber, TBR Analyst
EMC closed the first quarter balancing top- and bottom-line expansion on the back of continued success in aligning its portfolio and go to market strategies with an evolving IT landscape. TBR believes EMC is capitalizing on accelerating migration to cloud and heightened demand for big data solutions, as customers seek new means to efficiency and business value as they encounter increasingly complex IT challenges.
Sustained momentum in the mid-tier, as well as in its RSA security and backup and recovery division, helped EMC achieve its ninth consecutive quarter of double-digit year-to-year growth in the first quarter of 2012, with revenue up a reported 11 percent to $5.1 billion during the quarter, as net income rose a reported 23 percent to $587 million.
Going forward, TBR believes EMC will maintain revenue and margin expansion by leveraging all aspects of its storage hardware, software and, increasingly, services capabilities to cultivate a message of high ROI that will support cloud and big data solutions sales.
In the words of CEO Joe Tucci, EMC recognizes that “information storage is not a one-size-fits-all world,” and will continue to leverage internal R&D, acquisitions and close partnerships to drive product innovation, such as VFCache released in February, that will help address evolving customer requirements. EMC will continue highlighting Greenplum as a medium for meeting demand for increased business insight amidst exponential big data growth, driving a message of real-time security analytics with RSA, and touting its expanding services capabilities to provide guidance in the shift to as-a-service delivery models for a strengthened cloud go-to-market approach.
EMC is looking to its partners as new fuel to hit aggressive financial targets through 2014 by executing on its core hybrid cloud and big data strategies.
Heralding 2012 as “the year of the channel,” EMC is aligning its technology portfolio, support programs and roster of partners to establish the channel as a key lever to achieving its aggressive target of growing corporate revenue 10 percent to $22 billion in 2012 – and, ultimately, its goal of more than $28 billion by 2014. Evidenced by recent announcements, including the introduction of its VSPEX private cloud reference architecture and launch of its Canopy service provider business with Atos, EMC appears to understand that balancing a rich roster of partners, ranging from distributors to service providers to technology vendors, is integral to success as customers demand end-to-end solutions and support provided by a trusted IT advisor during the navigation of new IT models, such as cloud.
To more effectively compete against competitors such as HP and NetApp in the evolving IT landscape, EMC is moving forward with a single, unified global channel, having integrated Isilon and BRS into its core channel to cultivate a more cohesive and pointed go-to-market approach. The historically direct sales-focused EMC will prioritize increasing partner leverage and continued channel share gains to reach its financial targets in 2012, building upon the more than 5,000 new partners and 30 percent growth to new accounts won in 2011 to increase revenue and margins alike from the channel.
VSPEX itself reflects EMC’s dedication to maintaining channel momentum. While 2011 saw the release of EMC’s first channel-only product (VNXe unified storage), VSPEX represents EMC’s first channel-only solution. As IT departments are increasingly forced to do more with less, VSPEX and the concept of an integrated solution hits key customer sweet spots of flexibility, simplicity and efficiency – especially in the SMB sector. To help manage Vblock cannibalization and better target competing offerings, primarily NetApp FlexPod, EMC will target smaller implementations with VSPEX.
