Overview: EMC Corporation's 2014 earnings review (Part 2 of 12)
The investments and acquisitions route is usually followed by organizations in almost all the industries. This boosts revenue growth and market share. EMC Corp. (EMC) also followed the acquisitions route. However, its unique “federated business model” makes a difference.
“Federated” business model
EMC, Pivotal, and VMware’s (VMW) virtual infrastructure collectively forms the “federated” business model of EMC Corp. The business model is unique because although all three businesses focus on their core functions separately, they all play a vital role in the delivery of IT as a service (or ITaaS).
The previous graph explains EMC’s business model. EMC information security, VMware, and Pivotal are incorporated in their individual capacities. However, they function together to deliver complete IT services.
EMC information infrastructure
The EMC information infrastructure includes information storage, information intelligence, and RSA information security. All of the segments focus on flash, “big data” storage, software defined storage, and converged infrastructure to facilitate and enable public and private cloud infrastructure. Its core storage business is referred to as “EMC II.”
EMC acquired VMware—a privately held software company specializing in virtual computing infrastructure—for $625 million in 2004. VMware became the leader in the virtualization infrastructure solutions. It held the third position in Forbes’ list of the world’s most innovative companies in 2013.
It develops products and services in software defined data center (or SDDC), end user computing, and hybrid cloud computing areas. By employing VMware’s software, computers can run different operating systems. This gives EMC an edge over its peers including Oracle (ORCL), Cisco Systems (CSCO), and IBM (IBM).
Teaming up with VMware and GE, EMC formed Pivotal—an agile infrastructure for platform as a Service (or PaaS) and “big data” applications. As a “big data” and cloud company, Pivotal offers organizations great flexibility. It allows them to choose among EMC, Amazon, or Microsoft Azure.
Pivotal Labs, Cloud Foundry, Greenplum, Gem Fire, Cetas, Greenplum, and Vfabix suit are some of the products that Pivotal offers. It focuses on “big data,” cloud applications, security application systems, and data management systems.
The “Federal” business model of EMC, including VMware and Pivotal, gives the customers the flexibility to choose hardware and operating systems. It’s important to note that the segments are aligned. Organizations using VMware’s software or EMC’s hardware will likely purchase hardware and software. This allows the organization to earn profits.
EMC’s innovation and leadership position, combined with VMware’s dominant position in server virtualization and Pivotal’s increased adoption in the cloud space, allows it to cater to the organizations. This creates a smooth transition from the storage infrastructure on premise to the “emerging third IT platform” of social, mobile, “big data” or analytics, and cloud.
Browse this series on Market Realist:
- Part 1 - Must-know: EMC Corporation’s 2Q14 earnings review
- Part 3 - Must-know: EMC’s placement in the emerging data security market
- Part 4 - Why acquisitions are important in EMC’s business strategy
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- EMC Corporation
- Business model