Marketing

On paper, EMC has been successful in transitioning from its core storage hardware business, which is becoming more of a commodity, into faster-growing and higher-margin software and services.

"In 2001, up to three of every four dollars in revenue were from hardware sales,'' says Brian Freed, an analyst at Morgan Keegan & Co. In 2006, software and services accounted for about 52 percent of EMC's business, compared with 48 percent for hardware.

Ultimately, however, success involves more than just adding new software revenue streams from acquired companies. EMC has to sell its vision of information management and demonstrate how the recently acquired software technology fits into the company's existing product lineup.

Since 2003, EMC has led the industry in promoting the concept of information life-cycle management (ILM). These days the term ILM is taking a back seat to the concept of information management, a broader concept that encompasses not only managing data through its life cycle, but also protecting and securing it.

For some customers, the message remains murky. "Their new marketing strategy is not clear to me," says Chris Carter, director of enterprise technology services at PPL Corp., an electricity-generation company in Allentown, Pa. "They have the IT mind-share in storage hardware, but the big question is can they gain mind-share in the virtualization market, with VMware and other markets."

Carter says he wonders where Documentum, Smarts, RSA and other recently acquired technologies fit into EMC's overall product plans. "EMC has a credible story, and when they do articulate it, they're successful. If they can say, 'Storage is about infrastructure, but information is about business,' as a way to break out of the core storage view that people have of them, they'll be successful,'' Carter says.

But Carter says he isn't ready to entrust EMC with all of his information-infrastructure needs. "It would be a leap of faith -- one that I don't have yet -- to say that EMC has done so well with storage that they'll be equally good with information security. Just because they've been good at spinning disks doesn't imply that they can also be our only infrastructure-management vendor," he says.