As EMC adjusts to cloud, smaller firms thrive
When SimpliVity in early 2013 launched the OmniCube — which wraps more than 10 data center functions into one device — the company had raised $43 million in venture capital and employed 80.
Today, the Westborough information technology firm has $101 million in funding, just hired its 300th worker and plans to launch its convergence device in Europe and Asia.
“Expansion is off the charts,” said Jesse St. Laurent, vice president of product strategy. “Growth is bounded only by how fast we can find good people.”
The secret of SimpliVity's success?
The answer lies partly in the cloud.
St. Laurent said the OmniCube integrates seamlessly into both public clouds developed by businesses such as Amazon as well as private clouds owned by specific companies, which are becoming increasingly popular.
Clouds, which are typically hosted off site and not managed by the end user, allow companies to scrap costly servers and storage racks in favor of accessing data and applications through the Internet at a fraction of the cost.
Like SimpliVity, Natick-based Nasuni was also founded in 2009 and has enjoyed meteoric growth. The cloud-based data storage company has over the past year increased sales 183 percent and the amount of storage under management by 331 percent, said Wayne St. Amand, vice president of global marketing.
Nasuni added three executive positions over the past four months, St. Amand said, as interest in the company's products — which merge data storage, data backup and off-site disaster recovery — expanded from businesses with a few hundred workers to global firms with tens of thousands of employees.
“From a business perspective, this has been a very good and a very healthy thing,” St. Amand said.
The rosy prospects at SimpliVity and Nasuni mirror the cloud technology sector as a whole.
Worldwide spending on cloud hardware, software and services grew from $4.2 billion in 2009 to $13.7 billion in 2013, and is expected to jump to $27.6 billion in 2017, according to Framingham-based technology research firm IDC. Likewise, global capacity deployed on the cloud has risen from 4.5 exabytes (or 14.5 billion gigabytes) in 2009 to 32.7 exabytes in 2013, and is projected to soar to 140.9 exabytes by 2017, IDC found.
But the cloud could displace companies such as EMC that have thrived on external storage hard drive sales.
Information storage still makes up 70 percent of the Hopkinton-based company's revenue, and sales in that core sector have fallen three percent over the past year due in part to a shift in consumer preferences from traditional on-premise products to cloud storage models, according to Chicago-based financial services firm William Blair & Co. EMC also announced in January that it would lay off roughly 1,000 workers during the first quarter of 2014.
“The question ... is whether EMC's emerging platform can grow fast enough to offset declines in the legacy platform and rejuvenate growth in EMC's storage business,” Jason Ader, an analyst at William Blair, wrote in a May report.
Ultimately, though, Ader expects EMC to succeed, given its track record of being technologically proactive by spending $3 billion each year on research and development and 10 percent of annual revenue on acquisitions.
“EMC has acquired their way into a pretty robust technological set that supports a variety of cloud services,” said Paul Hughes, IDC's storage and data management services program director.
The company's cloud-oriented acquisitions include VMWare, which creates virtualization infrastructure products, in 2004; Isilon, a clustered storage system firm, in 2010; Pivotal, which provides a place to build data analytics applications for cloud-like environments, in 2012; and Syncplicity — a cloud file sharing service — also in 2012. EMC also launched Atmos — a cloud storage services platform — in 2008.
As EMC's then-chief technology and strategic officer Jeetu Patel pushed hard for the acquisition of Syncplicity since he thought businesspeople wanted an easier and more secure way to access content across multiple devices.
“You could either have a secure environment, or you could have a great experience,” said Patel, now Syncplicity's general manager. “We didn't believe they should be mutually exclusive.”
Syncplicity is one of the only cloud-based file-sharing systems to meet stringent corporate security standards since it runs applications in the cloud while keeping sensitive files within the company's data center, Patel said.
At the same time, he said Syncplicity offers a user experience on par with the best consumer-grade programs.
Simplicity's value comes primarily from facilitating the sharing of large files within or outside an organization, Patel said, and is used by companies with as many as 150,000 employees.
However, unlike hardware giants such as Hewlett-Packard or Oracle, EMC hasn't built a dedicated cloud service of its own, Hughes said. Rather, he said the company has focused on less expensive ventures, such as providing software and professional services to both end users and cloud service providers.
While H-P and IBM have benefitted from operating their own cloud infrastructure, Hughes said it's unlikely EMC customers will defect, given the challenges associated with migrating to a different hardware environment.
WBJ Web Partners
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