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EMC's Gelsinger Talks Cloud Storage, Pricing Pressure

Ahead of this week's EMC World conference, EMC president and chief operating officer Pat Gelsinger spoke with InformationWeek's Charles Babcock and Chris Murphy. Here, he discusses the limited role for his company in cloud storage, why EMC won't get into the cloud services businesses, and how IT needs to use big data better.

For one thing, he says IT has got the patterns of monitoring and data collection down; now it needs to use all that data for root cause analysis when things start to go wrong and have automated recovery procedures in place based on that analysis.

Given EMC's spot as the market share leader in storage and its VMware subsidiary's dominance in virtualization software, Gelsinger is a major influencer in the future of the data center. "The vision that we have is we turn management into automation," Gelsinger said. "That's the magic of the virtualized environment." Here's more of his thinking on these issues.

On Cloud Storage:
Gelsinger didn't dismiss the possibility of cloud-based storage becoming a dominant force in the enterprise--but he came pretty close. He offered IDC estimates that cloud storage's share of the enterprise storage market would be "in the teens" over the next couple of years.

Gelsinger: "It's interesting but not dramatic. It hasn't replaced private storage by any means. Most of the volume is being driven by consumer services. Enterprise use is being driven by test and dev. People go, 'It's an easy way to experiment, but they don't really do anything serious there."

"Why is that? Well, they need high performance. They need a five nines SLA. They're responsible for governance. They need to sign off on legal requirements. There's a SOX requirement or other financial requirements associated with failover, failback. There's a numerous set of reasons, a high availability requirement. As they go international, they often just don't have the network bandwidth to get to and from [cloud storage].

"We want to enable our customers to be freely able to make that choice, what things they build internally and what services they use from cloud. That's where the magic of hybrid cloud comes from, the ability to move across those two environments. We want to make sure the private cloud alternatives are just as flexible and as cost effective as those public cloud alternatives. When they run things internally, we want to make sure they're getting the additional benefits of governance, risk management, compliance, SLA and the other things they want to be able to control."

[Want to learn more about how Pat Gelsinger sees EMC and IT evolving? See this interview from nine months ago at VMworld EMC's Pat Gelsinger: One-On-One at VMworld]

On Cloud Pricing:
We asked if the public nature of cloud pricing from the likes of Amazon has changed the conversations EMC has with enterprise customers, and if they're using that for leverage.

Gelsinger: "Now, I can go out and get the rate card from Amazon or other services. It's a yardstick my customers will ask about, right? We have to be able to say, 'Here's our cost model. Here's how much it will cost if you put it in your data center. Don't forget the triple replication and two sites for redundancy and the networking costs and put the full cost model together. Let's look at what it would be if you did it internally versus trusted cloud providers."

"We deal with price pressure from HP, Hitachi, NetApp, IBM. What is new is that many of these cloud service providers are presenting it as a consumption-based model. You don't have to make a capital purchase. They're expecting that it's a consumption based model: buy five GBs on Tuesday and give it back on Wednesday. It's much more about a new business model difference than a new competitive factor on price."

Does EMC need to offer that new business model, and start selling storage as a service itself?
Here, Gelsinger offered a clear "no." EMC wants to sell gear to cloud providers and doesn't want to be seen as a rival.

Gelsinger: "Fundamentally our strategy there is to work with the service providers and make sure our business model matches their needs. We don't think of it as being one service provider [such as Google Drive or Amazon Web Services' S3]. We think of it as thousands, tens of thousands or hundreds of thousands of providers. NYSE, for example, is a customer of ours and is now a service provider of analytics and VM services. "

"On our earnings call, we said our fastest growing segment of customers was service providers. That was our fastest growing customer base in Q1. One way, we sell to the bank. The other, we sell to a service provider who is servicing the bank."

EMC laid out a goal in September 2011 to become a 100% fully virtualized company. What's the latest on that?.

Gelsinger: "Today we sit at 86% virtualized. Come the end of July, we'll be sitting in the mid-90s. We have a major upgrade of our internal systems to new SAP applications, conversion to virtualized databases and such. By the end of July, we will be operating IT as a service for EMC internally. We'll have a few legacy systems that will not be running virtualized in a software defined data center, but very few. We'll be operating internal IT mechanisms for self provisioning, automation of infrastructure and labs, business intelligence and big data environments. "

"At EMC World, we'll be showing an HR application that enables our HR recruiting team to do data mining of external candidates. In marketing, we'll do analytics on Twitter feeds that run concurrent with marketing campaigns, and in our manufacturing supply chain, where we're getting analytics on every drive and every frame of every customer. We do predictive analytics. 'We should be replacing this drive because it's already showing higher failure rates.' It's very exciting to watch these things. IT has become an enabler as opposed to a bottleneck with a list of delinquent projects."

EMC's Internal Move to ALL SAP
Gelsinger mentioned that EMC was upgrading to become an all-SAP shop, so we asked what applications EMC was leaving behind.

Gelsinger: "EMC is a big complex company. We've done 70 acquisitions over the last decade. There's some migration of applications to SAP. Others are an SAP upgrade eliminating proprietary customizations. Did we have some PeopleSoft, JD Edwards that we're leaving behind? Between the 70 acquisitions, we had some of everything."