Will EMC Get Integestion from Gobbling Up RSA?

Look! Up in the sky. It's a storage hardware company. It's a software conglomerate. No! It's EMC.

The big news last week in the storage world had nothing to do with storage. EMC announced that it is acquiring security systems outfit and pioneer RSA Security for $2.1B. Zowie, that's a lot of money to spend. The fact that EMC was willing to spend that much money on RSA tells me two things. One, that EMC really realizes that the storage business is not enough to sustain it as a major player. Obviously, the Documentum and VMWare acquisitions were not a fluke. It also shows that the primary legs of a systems company these days are data protection, information management, and security. It kinda suggests what IT is spending it's money on doesn't it...

I find this tremendously gratifying of course. About 18 months ago, as I was writing my book, I suggested just such a model at Storage Networking World. Unfortunately, having realized that this was the model that was going to stick, I ended up changing most of the first chapter of my book, adding a couple of chapters and generally rearranging things. It was worth it but took extra time. If anyone would like to see that presentation, send me an e-mail. Or buy the book. But, enough about me.

The acquisition, at least from a product and technology perspective, makes sense for EMC. With VMWare, RSA, and Documentum, they now have a critical mass in products that secure the IT environment. Couple that with their traditional data protection products and you have a powerhouse that can lock down storage, server, and network systems, as well as the data in them.

The server piece presents a tricky problem. Servers are becoming, or have become depending on your point of view, a fairly low margin business with lots of rivals. If EMC were to acquire a server vendor, they could end up spending a lot of money while adding very little to their bottom line. However, a line of servers would give them a complete toolbox. It's a tough call. So far, the strategy has been to bulk up in software and that looks to be a winning solution. Frankly, I would not be all that surprised to see them jettison the storage hardware business to someone who really needs the help like IBM. EMC could then focus on developing software assets like data protection tools. The problem is that the storage hardware business still generates the bulk of their revenue. That's like crack, a very hard habit to kick.

So what's in the future for EMC. As I rub the crystal ball I see a couple of things. One, they could pick up one of the dozens of new data protection software companies, such as XOSoft or Avamar. Most of these companies have gone about as far as they could on their own. They would provide some more depth in their upcoming fight with Symantec.

It is conceivable that they could go for a company that is big and broad but struggling. CA comes to mind. It has a very large software portfolio, decent mainframe software, but is in serious trouble. If it were me, I would start talking to them, do my due diligence, but wait until they get even deeper in trouble. Keeps the cost down.

So, my hat is off to Tucci and company. I like the RSA acquisition and think it will benefit EMC and EMC's customers tremendously. Good luck EMC folks!