EMC (NYSE:EMC) has been touting its software-defined storage (SDS) strategy during its EMC World 2014 event. EMC also launched ViPR 2.0 software-defined storage during the event, to help it improve the management of customers' storage infrastructure, and provide them with a platform to roll out more big data analytics tools.
Last year, EMC bought out ScaleIO, a privately held server-side storage software developer for an undisclosed all-cash sum, ostensibly to strengthen its flash portfolio. EMC's SDS strategy looks a tad confusing, since there is a considerable degree of overlap in the functions that its acquisitions are supposed to accomplish.
EMC also showed that it's not ready to let go of its traditional storage equipment business after it announced the acquisition of DSSD, a private flash equipment manufacturer, also for an undisclosed amount of money (the company has an uncanny habit of not disclosing how much it pays for its acquisitions).
Meanwhile, EMC looks to benefit from its strong relationship with Microsoft (NASDAQ:MSFT). The two companies are working hand in glove on the software giant's cloud. On the other hand, EMC's VCE joint venture with Cisco (NASDAQ:CSCO), looks doomed after Cisco acquired WhipTail to provide it with UCS storage infrastructure instead of relying on EMC.
EMC's SDN strategy
EMC intends to integrate ScaleIO block storage capabilities into its ViPR software platforms. The company also recently launched VMware-based vSAN, or virtual SAN, in March this year. EMC is the majority owner of VMware.
EMC labels both vSAN and ScaleIO as software-defined storage. Both are block-based, distributed transactional software stacks that bear similar architectural models. And both are related to ViPR. ScaleIO and VMware are both capable of turning commodity hardware into shared storage.
Investors are immediately tempted to ask, "Why would EMC customers need ScaleIO and vSAN if they both share similar characteristics? Moreover, won't ScaleIO compete with vSAN?"
The company's executives openly admit that there are many similarities between the two platforms. But they also point out that ScaleIO scales much better and supports more varieties of servers than VMware-specific vSAN. ScaleIO and vSAN both provide hyperconverged storage. Customers looking for a VMware-only solution can opt for either platform. But customers specifically looking for heterogeneous (external) storage will find ScaleIO a better option than vSAN.
EMC's ScaleIO platform should therefore help the company to reach a wider market with its software-defined storage solutions.
EMC supporting Microsoft cloud
EMC has a flourishing cloud partnership with Microsoft. It is partnering with Microsoft in the Microsoft Cloud OS Accelerate Program, which is aimed at providing incentives for customers to accelerate the deployment of Windows Server 2012 R2 with Hyper-V virtualization using EMC's infrastructure. EMC and Microsoft are also working together on the integration of Microsoft Private Cloud using EMC's VNX storage.
Microsoft recently became the second-largest cloud-services provider, behind Amazon's (NASDAQ:AMZN) AWS, after its cloud recorded a blistering growth of 154% in the third-quarter of fiscal 2014 year. Microsoft's cloud is growing the fastest among the major cloud-services providers, at almost twice the rate of IBM's cloud, which grew 80% during the quarter. IBM is now the third-largest cloud services provider. AWS grew 67% over the same period.
That growth gave Microsoft's commercial cloud an annual run rate of $2.9 billion. At this rate, Microsoft's cloud could overtake AWS, in sheer size, in as little as 4-5 years. EMC will no doubt benefit immensely from being the chief storage and data protection infrastructure provider for the fastest growing cloud.
EMC has of late decided to go the Cisco route, and decided to build its own hybrid cloud instead of being contented with just being a cloud infrastructure provider. The storage equipment manufacturer vowed to build its own hybrid cloud solution in two days flat during its EMC World event in Las Vegas.
EMC's hybrid cloud will be based on a software-defined data center architecture comprising technologies from the company's storage and data protection technologies.
Marriage with Cisco on the rocks
While EMC has a robust working relationship with Microsoft, its marriage with Cisco appears to be on the rocks. Cisco's VCE, or Virtual Computing Environment, joint venture with VMware has been ongoing since 2009.The VCE project is currently in grave danger of becoming a lead balloon. VMware will, perhaps, shoulder majority of the blame for the wrecked marriage since the relationship started developing cracks when it acquired Nicira, a SDN start-up, last year.
Cisco returned the favor by acquiring WhipTail, a storage memory and data systems manufacturer to shore up its UCS, or unified computing system, this year. EMC has traditionally been Cisco's provider of UCS storage components. Interestingly, Cisco also announced it plans to build a giant federated intercloud on the OpenStack platform, and not on VMware as many would have expected.
It turns out that EMC's decision to acquire ScaleIO, whose features closely resemble those of VMware, was actually well thought out (unless the company paid too much for the acquisition). ScaleIO scales a lot better than VWare, and also supports a wider variety of servers. The company can, therefore, appeal to a wider market using the new platform.
Meanwhile, EMC's strong working relationship with Microsoft in the cloud could prove to be a major revenue boon for the storage equipment company since Microsoft's cloud is growing the fastest among all major cloud services providers.
Joseph Gacinga has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Cisco Systems. The Motley Fool owns shares of Amazon.com, EMC, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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