EMC Global Services

EMC hopes to ace services, but could end up with double fault

April 13, 2006

1 Min Read
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10:05 AM -- Remember the good old days of 2004 and 2005, when EMC was becoming a software company? Judging by its 2006 activity, EMC looks like it wants to be a services company.

Okay, that's an exaggeration. Though it's made a few acquisitions and rolled out a handful of new offerings, EMC hasn't spent nearly as much as it did in buying Documentum, Legato, VMware, Smarts, Dantz, and Rainfinity.

But EMC certainly is putting a lot of energy into services these days. (See EMC Unveils Grid Gameplan, EMC Buys Windows Expertise, EMC Extends Services, and American Express Picks EMC.) Does it want to grow up to be IBM Global Services, or merely use services to push more product sales?

The second option is more likely. Unlike IBM, EMC uses its services specifically to push its own products. Services are a good way to take advantage of customers looking to implement hot-button topics such as virtualization, compliance, and ILM.

It remains to be seen how well the strategy will pay off. While services have picked up in recent years, there's still far more revenue in product sales. EMC's services grew 20 percent in 2005, the same as software and a bit higher than systems, which grew 16 percent -- although services started from a far smaller base. And in the fourth quarter, EMC's systems revenue grew 19 percent, compared to 4 percent for services.The forecast doesnt look much brighter. According to IDC, storage services revenue will have a moderate 4.3 percent compound annual growth rate (CAGR) through 2009. That might prompt EMC to wish it spent more time concentrating on systems and software and left services to the outsourcers.

— Dave Raffo, Senior Editor, Byte and Switch

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