Tech titan: sector will survive crunch

31 Jul 2008

US$11.6bn storage technology giant EMC employs 1,600 people in Cork and last week announced 50 new jobs as part of a €20m investment. Joe Tucci (pictured) is the company’s chief executive.

There have been rumours that EMC may sell VMware, arguably its smartest acquisition to date. Can you tell me about EMC’s plans for VMware?

I truly believe that VMware is right at the nexus of three of the future high-growth areas in IT. The data centres of the future are going to be virtualised data centres and over 90pc of hardware will have a virtualisation layer and then, of course, infrastructure services on top of that.

Another growth area will be cloud computing, while the third area is going to be virtual desktop infrastructure and VMware technology plays very well there. When you look at where some of the macro trends for IT in the future will be, VMware is well positioned.

Our plans for VMware will be to continue to run it as a majority-owned company of EMC; we don’t have any plans to sell our 85pc share in the company.

It will continue to be an independent company and work in the most open, even-handed way possible with all other players in the IT landscape that choose to be part of this great technology. EMC will do nothing that advantages itself exclusively with this technology.

What dangers does the credit crunch pose for the technology industry and could we witness another technology downturn such as that of 2001?

IT spending globally in 2008 will be modestly up from 2007. Customers are investing in technology to help reduce costs. In our business, the underlying trends are server consolidation, storage consolidation and data centre consolidation to save money and get quick return on investment.

Smart companies that intend to be around are still investing in technology. While things have definitely slowed down, and businesses are subject to more scrutiny, there’s still some growth out there on the global landscape.

Earlier this year, you acquired Iomega for US$213m. What are your plans for the consumer IT space?

Study after study show that individuals will create most of the information online going forward. So whether it’s digital music that you want to store, a collection of high-definition movies, medical records you want to have on a personal basis, or e-learning, people will accumulate a lot of digital information.

That information needs a place to live and some of that is going to be in the digital home of the future.

According to most studies we have looked at, the middle class around the world will have at least a terabyte — that’s 1,000 gigabytes — in their homes in the next two to three years.

Once you get this information stored centrally, it’s easier to share, protect and manage. As a matter of fact, everything we do now focuses on this opportunity.

If you buy an Iomega storage device, in the box is software from EMC called Retrospect. This backs up your home PC onto the Iomega storage device. Then there’s also a service that’s in the box to subscribe to a cloud network online, so there’s a permanent copy sitting there for you. Every time you make a change on your PC, you can capture it in both places. That’s the way the world is going to work.

Data is on track to double every 11 days, and eventually every 11 hours. Can the storage business keep up?

Definitely. There are always new technologies. Companies in the data-storage business are building bigger and bigger drives — very shortly the two terabyte drive will be out in the industry. The industry is working on technologies such as Flash, which gives incredible speed.

Moore’s Law is alive and well and we’re continuing to produce new technologies that keep the price per byte down. I absolutely believe we can handle it.

It takes a lot of research and development (R&D). This year, EMC spent US$1.8bn on R&D.

That’s a lot of money to spend on R&D. Does this rule out any future acquisitions?

This industry is continuing to consolidate. Even though we spent US$1.8bn on R&D, it would be foolish to believe our engineers could invent every great new technology or make every great innovation in our space. So, being able to acquire gives you both capabilities.

We’re going to continue our spend on R&D, but obviously there are novel technology companies out there we will want to acquire to get to market faster. It’s going to be a combination of build and buy.

By John Kennedy