Meanwhile, EMC has refocused its strategy on software, to make up for the weakness in its hardware sales. It claims to be spending over 75 percent of its R&D dollars on software. And just recently, EMC agreed to begin sharing its APIs (application programming interfaces) with its competitors in an effort to fuel revenues (see EMC Goes Soft and EMC, Compaq Swap APIs).
Former executives say Yanais royalty deal, if it still exists, is implicated in EMCs product strategy. The engineering team is protecting its own personal cash cow and this has thwarted innovation, said one former senior EMC executive who now works in another industry.
Analysts have long criticized EMC for sticking with the same architecture for almost 13 years. Its highly unusual to have an architecture that lasts that long, EMC must have a reason to keep it going, says Dan Tanner, analyst with the Aberdeen Group. Those engineers' loyalties are cemented by money.
They are extremely good at what they do and they have their own way of doing things, but the market has changed, says David Hill, analyst with the Aberdeen Group who was formerly in charge of market intelligence at EMC from 1992 to 1996.
Wall Street analysts say the deal sounds deeply problematic. Its surprising that a sophisticated company, albeit a small one when it cut this deal, would write such an open contract. Legally, what were they thinking? says Laura Conigliaro, analyst at Goldman Sachs & Co..
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