When it comes to enterprise storage system leader EMC (NYSE:EMC), it seems most of the valuation analysis centers more on its spinoff VMware (NYSE:VMW) than on its primary business. Not that there's not good reason to consider its offspring: EMC owns 86% of the virtualization market leader. How VMware acts will ultimately affect EMC's valuation.

While virtualization is the sexy future growth story of EMC, information storage remains the primary source of revenue for the time being, accounting for about 80% of the total. The two are intertwined, however, as virtualization allows companies to achieve much greater utilization of storage resources, along with simplifying the workload of servers and networks.

CAPS take
More than 95% of the more than 2,000 professional and novice investors at Motley Fool CAPS have agreed that EMC will outperform the market. Nearly a quarter of those bullish investors are considered All-Stars, top-rated players who consistently outperform their peers. And 16 Wall Street analysts tracked at CAPS unanimously support the enterprise software solutions provider.

Top-rated All-Stars like MulyCat, with a 94.18 player rating, think it's imperative for companies to migrate to data centers that can better manage their information through the use of EMC's technology.

Companies that are running their own servers will be migrating their operations to professionally managed data centers. These data centers have the understanding of why you need EMC and they have the concentration of $ to be able to afford EMC. I run servers for a CRM database used by approximately 45 people. I have budgeted to move it to a data center at the end of 2008. I think I am typical.

My take
With long-term growth for EMC estimated at greater than 13%, its market multiple of around 26 does not seem outrageous -- though it doesn't make the company a bargain, either. Through its relationship with VMware, EMC's client base includes most of the Fortune 1000 companies. Intel (NASDAQ:INTC) retains a large position in the company, as does Cisco (NASDAQ:CSCO).

Yet even in its infancy -- analysts estimate that there is only 5% market penetration so far -- the virtualization field is so promising that the opportunity for competitors is still vast. That could mean that VMware may face greater competition from Microsoft (NASDAQ:MSFT). Microsoft is currently a distant second in the industry, with approximately 7% market share. However, with Citrix Systems (NASDAQ:CTXS) acquiring Microsoft virtualization partner XenSource, Microsoft could see an increase in the number of virtual servers running in Windows. Also, the launch of Windows Server 2008 next year may allow Microsoft to make greater inroads.

Even at a P/E of 26, EMC still might be undervalued, considering that it is well-positioned to capture growth in the enterprise storage system and virtualization market.

Your take
While the CAPS community is pretty uniform in its thoughts on EMC, your opinion counts, too. Make your voice heard and let us know whether you think EMC is a virtual shoo-in for your portfolio.

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Fool contributor Rich Duprey owns shares of Intel, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.