EMC, Virtustream and the Rise of Hybrid Cloud

Virtuastream - Graphic representation of a cloud

Posted on Friday, May 29, 2015

Confounding shareholder demands for EMC to carry out significant organisational restructuring, the storage giant has instead announced a $1.2 billion acquisition of Cloud service provider Virtustream. The move is a clear statement of intent for EMC, who saw their storage revenue fall by 1.5% in the past year.

There has been a significant change in the storage market, with many customers choosing to extend the lifespan of systems using post-warranty support, rather than taking the vendor-defined upgrade route. Others are testing the use of equivalent Cloud services to replace ageing hardware.

However the predicted wholesale move to Cloud storage/processing has not yet come about, as businesses experiment instead with hybrid deployments. And it is this trend that the Virtustream acquisition seeks to address.

Helping EMC protect margins

Virtustream are an established provider of enterprise-grade applications in the Cloud – particularly SAP – specialising in helping businesses deploy hybrid on-site/off-site solutions. Until the announcement, EMC lacked a true hybrid solution, offering private Cloud or traditional service, but nothing in between. A fact exploited by Cloud-aware competitors like Microsoft and IBM.

As Virtustream is integrated into the EMC product family, falling disk-based hardware sales will be compensated by increased uptake of hybrid Cloud alternatives. Or so the theory goes.

Using Virtustream’s experience in enterprise application migration and deployment, we also expect to see tighter integration between the VMware product range, and Cloud storage and processing services. Expect to see several announcements in the coming weeks and months about new services designed to accelerate hybrid Cloud uptake by existing EMC customers. 

Rather than simply trying to upsell clients onto new storage systems when equipment goes EoSL, EMC will be able to offer a workable  alternative to those organisations resistant to new purchases. And in doing so, EMC hope to be able to reclaim customers who are adopting post-warranty services rather than replace them.