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EMC's 2009 Strategy & Technology Update

In unclear, uncertain times, people tend to appreciate clarity and certainty. This issue extends across markets and industries, and finds expression in a variety of ways. During the past tumultuous months, some IT vendors have focused on defining the business value of tactical products and services while others have given their energies to developing and launching broad strategic initiatives.

A third option was apparent in the 2009 Strategy and Technology Update hosted by EMC in Boston for financial analysts. For over two hours, EMC president and CEO Joe Tucci and VMware president and CEO Paul Maritz walked the crowd through their companies' past and current status, discussed future plans and opportunities, and focused particular attention on the notable, evolving synergies generated by their organizations.

Tucci began his presentation with a simple statement of what EMC is and what it does: a technology company focused on IT infrastructure. In order to maintain its innovative edge, EMC spends 12 percent of its annual revenues on research and development and has invested some $7 billion in mergers and acquisitions (M&A) beginning in 2002. The long-term value of that strategy is apparent in EMC's balance sheet. Since 2002, the company's revenues have grown 19 percent annually while net income has grown 36 percent per year.

Tucci stressed the continuing importance of EMC's traditional storage business, but also detailed the ways in which the company has broadened its focus to encompass information and virtual infrastructure offerings. These are reflected in EMC's three business units: storage, security, and content management, as well as the company's close ties with VMware. But he was also clear about the challenges that EMC faces due to deteriorating economic conditions, slowing technology spending, and customers adopting "just in time/just enough" IT budget strategies. Despite these difficulties, Tucci was upbeat and said that EMC is following a flexible yet disciplined market approach emphasizing staying close to customers, retaining and attracting talent, being fiscally disciplined, deepening product innovation, and pursuing opportunistic M&A. Most important, Tucci said, was for the company to clearly "communicate, communicate, communicate" its circumstances and plans.

Tucci noted some particular bright spots for EMC sales during the past year, including data de-duplication, dynamic data mobility (automated information lifecycle management), and unified storage systems (which support multiple protocols including Fibre Channel, iSCSI, and NAS). In addition, he detailed the notable opportunities that server virtualization is driving for network storage, as well as expanding markets for Fibre Channel over Ethernet (FCoE), cloud-based storage, "green" IT, and solid-state disk (SSD)-enhanced storage.

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