Editor’s note: EMC (NYSE: EMC), which has a major presence in the Triangle and is planning 1,400 layoffs, shows in its latest earnings report that it is making multiple changes. But the company, which has announced plans to be acquired by Dell, must move faster, writes analyst Krista Macomber of Technology Business Research.

HAMPTON, N.H. – EMC is building scale in emerging markets, but faster share gains are needed to sustain corporate growth.

EMC’s financial performance in 2015, including for the fourth quarter, demonstrates the company’s need to continue increasing its footprint in, and revenue base from, emerging technology areas.

The company’s CY4Q15 revenue of $7 billion was approximately flat year-to-year, as continued double-digit growth from VMware and Pivotal were offset by a 4% year-to-year decline in its core storage business, EMC Information Infrastructure (EMC II). Within EMC II, growth from emerging business segments such as flash storage was offset by continued shrinking demand for legacy high-end arrays.

However, EMC continues to transform to address evolving customer requirements, with EMC II President David Goulden noting the company’s share in emerging storage markets is higher in most cases than in the traditional storage market.

However, the pace at which the industry is transforming to new architectures, including converged and software-defined infrastructure, drove EMC to further disrupt its business model — and the company plans to be acquired by Dell during 2016.

For EMC, integration into Dell would provide additional scale and resources to more comprehensively and cost-effectively address customers’ modernization of legacy IT systems. However, the deal will not come without challenges.

In addition to navigating the impact of its planned integration into Dell on strategies in critical markets such as security and hybrid cloud, the combined entity will face evolving from product-centric roots to an outcomes-led, solutions- and services-rich approach. Building and presenting to customers, partners and investors a clear vision around how the integration into Dell augments EMC’s competencies will be critical to long-term success.

EMC navigates market maturity and its planned acquisition by Dell with its hybrid cloud strategy

As EMC works to reduce its reliance on legacy businesses, it seeks new avenues to accelerate its growth in hybrid cloud. TBR views this focus as astute; refined backup and archive and data management processes will be top of mind for customers in 2016 as they navigate increasingly complicated webs of on- and off-premises resources to increase IT efficiency and cost savings.

EMC increasingly focuses on functionality such as managed services (through its Virtustream acquisition), enhanced primary and backup storage cloud tiering, and object storage that meshes with evolving customer demand and requirements.

Additionally, it continues evolving its market messaging to highlight the business transformation and advantages enabled by its hybrid cloud infrastructure, positioning to bridge the gap between the hybrid base of IT and line-of-business decision makers influencing hybrid cloud purchases.

However, EMC’s planned integration into Dell threatens its momentum in hybrid cloud by throwing into question EMC’s road map. For example, EMC and VMware restructured the Virtustream business, shifting from a reliance on VMware investment dollars to appease investors and stockholders.

Especially as EMC adopted a cross-federation approach to hybrid cloud in 2014 and 2015, it is unclear how its web of capabilities will become integrated with Dell’s brokerage- and integration-centric cloud strategy.

This is a notable threat to EMC, as peers such as Hewlett Packard Enterprise and IBM position to capitalize on storage industry disruption. For EMC, remaining focused on messaging how it is modernizing its best-of-breed storage competencies for “as a Service” delivery — including through integrating capabilities such as archive, disaster recovery and object storage services capabilities into Virtustream — will help to avoid customer attrition and sustain its momentum.

EMC enhances its capabilities and builds use cases in the object storage market

In line with its quest to deliver more efficient data storage and management to customers amid continued hybrid cloud maturity, EMC enhanced its object storage capabilities. As customers’ pools of geographically distributed unstructured data grow, object storage is an important potential source of growth for EMC.

Aligning its object storage business more closely with customer demand for low-cost, scalable and easy-to-use storage designed for next-generation applications and use cases will help EMC monetize these investments by connecting its capabilities with real-world business outcomes for customers.

In January 2016 EMC updated its core object storage offering, the Elastic Cloud Storage (ECS) appliance, with enhanced capabilities such as search and management, as well as with integration with OpenStack. The company is playing to its security and disaster recovery competencies through integration with platforms such as its Data Protection Suite, as well as cloud connectivity capabilities such as CloudBoost, to differentiate.

However, TBR believes messaging a strong business case for leveraging object storage will be even more critical to accelerating sales. To do so, EMC is targeting service and content providers with the platform’s efficient scalability, as well as large enterprises navigating emerging use cases such as the Internet of Things.

(C) TBR