Will EMC Salvage BMC Unit?

Hopkinton to acquire BMC's abandoned storage software division and customers, sources say

May 28, 2003

3 Min Read
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EMC Corp. (NYSE: EMC) -- hoping to wake up its software business with a double shot of hot espresso -- is expected to emerge as the winning bidder for the storage management software assets of BMC Software Inc. (NYSE: BMC), sources tell Byte and Switch.

In February, BMC unexpectedly shut down its storage management software group and said it would phase out the Patrol Storage Manager (PSM) product. That left around 130 enterprise users of PSM high and dry -- not to mention several dozen BMC employees out of work (see BMC Folds Storage Unit and BMC Lops Heads).

"BMC has been actively looking for a suitor for its storage management properties, not from a revenue perspective but from a customer-support perspective," says a source familiar with the negotiations.

The source says the deal is "not a big-ticket thing for either party -- there are literally no dollars changing hands." Under the terms of the deal, EMC will acquire the rights to BMC's PSM software and existing customer service contracts, the source says. There would be some kind of reciprocal agreement whereby, for example, BMC would resell EMC ControlCenter (ECC) software.

EMC and BMC representatives declined to comment for this story.The big deal, according to observers, is that EMC would instantly gain access to those 130 or so enterprise customers, which aren't necessarily EMC shops. While EMC has a sizeable software business, the majority of that is software that resides on its own arrays -- as opposed to "open" software that is designed to manage multivendor SAN environments.

EMC, under the AutoIS marketing program it launched a year-and-a- half ago, has been eager to expand its software revenue base to open storage management software. Within the past year, it has acquired two small startups in the SAN management space, Astrum Software and Prisa Networks (see EMC Sucks Up Astrum, EMC to Acquire Prisa, Finally, and EMC Splits Into Three).

This isn't the first time BMC and EMC have been rumored to be tte-à-tête. About a year ago, EMC was said to be mulling an acquisition of BMC, in what at the time was viewed as a way for EMC to enter the enterprise systems management market. [Ed. note: But they're probably best known for their double-platinum rap album of 1983, "The Two MCs."] (See EMC Eyes BMC.)

Also noteworthy is the fact that EMC last year recruited Chris Gahagan away from BMC. Gahagan, now EMC's senior VP of storage infrastructure software, previously was in charge of BMC's Enterprise Systems Management group, which included its storage management products (see Chris Gahagan, SVP Storage Infrastructure Software, EMC and EMC Hires a Plumber).

Meanwhile, Byte and Switch has learned, EMC recently hired Jim Hilbert, previously GM and VP of IBM Tivoli's storage management unit. Hilbert is heading up a sales force "overlay" in the Open Software group to try to drive sales independently of EMC's direct sales group. Most recently, he was senior VP of sales for Asera Inc., an enterprise application service provider (ASP) startup acquired by SEEC Inc. earlier this year. Hilbert did not respond to requests for an interview.According to our source, at least three other parties also were bidding for BMC's storage assets: AppIQ Corp., Sun Microsystems Inc. (Nasdaq: SUNW), and TeraCloud Corp. Representatives from each of those companies declined to comment.

Others have tried to exploit BMC's sudden decision to pull out of the storage market by targeting its abandoned customers. Fujitsu Software Technology Corp. (Softek) even launched a formal upgrade offer for PSM users to switch to Softek's storage management suite (see Softek Makes Grab for BMC Users).

— Todd Spangler, US Editor, Byte and Switch

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