EMC plans to make
further acquisitions

26 Apr 2006

BOSTON: The CEO of storage giant EMC, which employs 1,400 people in Cork, has revealed that the company is planning to make further acquisitions and is on course to spending US$1.2bn on research and development (R&D) this year.. In the past three years the company has spent US$4.5bn acquiring 20 technology companies including Documentum, VMWare and Legato.

EMC chairman and CEO Joe Tucci told the company’s annual EMC world conference in Boston that the company intends to continue to ramp up the amount of investment it makes in R&D as well as acquire companies he believes will compliment its technology roadmap.

Under Tucci’s guidance EMC has embarked on an aggressive acquisition and product creation strategy, which he says he intends to keep up. EMC grew its revenues by 17pc to US$9.6bn in 2005. During the year the company invested more than US$1bn on R&D to drive the most prolific rollout of new products in the company’s history.

According to IDC, EMC is the revenue share leader in the external storage systems and storage management software markets. EMC was also ranked number one in the external RAID systems, networked storage systems, storage area network (SAN) systems, network attached storage (NAS) systems, replication software and storage resource management software revenue share market segments.

“In the past few years we spent US$4.5bn to build up our technology stock. 2006 will see us introduce more products and invest in more innovation than at any other time in our history,” Tucci said, pointing to a January survey by Morgan Stanley that outlined security software, security network equipment and SANs as the top three priorities of CIOs worldwide.

“This year we plan to ramp up our investment in new products. In 2003 we invested US$720m in R&D, in 2004 US$850m and in 2005 US$1bn. Our R&D investment for 2006 will be around US$1.2bn,” he said.

Tucci forecast the company’s core area of business in the future will be centred on what he terms information life cycle management (ILCM), a market that will be driven by the growing demands on firms to retain data for regulatory purposes. “This will include content management, archiving, data mobility, data protection and tiered storage. Fundamental to this will be information security management.

“At the highest level we are focusing on building intelligence into information management such as policies, classifying information and adding security.”

Tucci said that two important trends are impacting the information storage market and he intends to be at the forefront of this change.

“We term these two developments ‘game-changing technologies’. The first development is the trend towards virtualisation. Virtualisation lets a single server run several operating environments in compartments called virtual machines at one time. The acquisition of VMWare has given EMC access to vital virtualisation technologies.

“VMWare is a US$600m-a-year company and one of the most successful software companies ever. In the future all data centre infrastructure will be virtualised,” Tucci predicted.

“The second game-changing technology will be IP-based networking that will enable full resource management to CIOs anywhere,” he continued. “Having these two technologies we believe will really change the face of technology and IT over the next three years. Information should become better and easier to manage for CIOs.”

“What we are focused on investing in over the next year will be unified ILCM, virtualisation, ‘model-based’ resource management, information security and the information grid.

“Acquisition and development are central to our strategic approach. There are more acquisitions on the way. We intend to grow both organically and through acquisition,” Tucci concluded.

By John Kennedy