CRN Interview: EMC's Joe Tucci

This week, Senior Editor Joseph F. Kovar met with EMC President and CEO Joe Tucci at the company's fourth annual EMC Technical Symposium, held in Orlando, Fla. The symposium, which attracted nearly 2,500 partners and customers looking for information about EMC's hardware and software, was aimed at IT administrators, not CIOs. Tucci discussed the symposium and EMC's information life-cycle management (ILM) strategy.

CRN: Can you first tell us a little bit about the conference and your involvement?

Tucci: The history is, we really felt we needed to reach out and touch what I call the "doers," the [people] in the trenches that make storage work everyday. We really didn't have a good forum for that. We came up with this [symposium]. And from the onset, it was owned by the engineering departments--not marketing, not sales, engineering. Which is pretty unique, I think.

CRN: Even today, it's still owned by engineering?

Tucci: Yep. It's their conference. There are very few exceptions where salespeople are here. I don't know of any. I know I'm wrong, right? I'm sure somebody made it here.

We use this to do several things. One is to say, OK, you have made a major investment or are considering making a major investment in EMC hardware and software. And here are some ways that you can get more mileage out of that investment.

The second purpose, and this is in no order, is to get feedback from customers. Here's our road map. Here's where we're taking the products. What do you think? The 'What do you think?' part says our engineers' ears all the time are open to get feedback from our valued customers, the technicians that use these products, [who might say] 'You know, you guys, if you made this one little tweak this way, it'd be this much easier for me to use, or it would be just this much more useful, or productive, or save me this kind of money.' Those kind of comments are what we're looking for.

CRN: The main focus of this event is ILM. As you mentioned earlier, there's no such thing as ILM version 1.0 yet. I was wondering if you could...

Tucci: I don't think there'll ever be a 1.0. What we're trying to do is say, these are the things that we can do in ILM as it exists today. Tiered storage is in place today, right? We have multiple protection and recovery vehicles. We have a lot of ways to migrate data as the value of that information changes over time.

We have a way to centrally manage most of the things. That doesn't tie everything together. We're stating the obvious that most information is content-based--fixed content--and doesn't change. And some of the things that we can do with Documentum and managing it.

And then we're talking about things we're working on that are a little bit out there and not going to give us a dime's worth of revenue in 2004. Obviously, we have good products on the server virtualization side, and of course, there are visions on how to bring some of that together.

CRN: How important is ILM to EMC's strategy going forward? In the list of critical priorities for EMC, where does ILM stand?

Tucci: No. 1. Basically, it acts like a guideline for everything I do. You always get issues. You say, wow, he's spending 12 percent of revenue, almost a billion dollars, on R&D. That's a lot of money. More than anyone else spends on storage and information management. But believe it or not, we have far more great ideas than we do money. So you have to make decisions. ILM guides those decisions, which gets the money? How strategic is this to our future, our vision and our strategy, this particular project engineer A wants to make? I assure you, every single engineer thinks he or she deserves all the funding, which is good, because you don't want the engineer thinking the thing I just made isn't any good.

On the other hand, the allocation of scare resources, which is called "budget," capital dollars, expense dollars that you're going to put against [a certain] number of projects, and you have to make decisions. And ILM guides those decisions. As we put our go-to-market plans on how we're going to sell to and give value to customers, we use our ILM strategy to guide that. And when we service customers, the service offerings, the solutions, the packages we put together, are all around ILM.

CRN: So is there anything you guys do that is not related to this ILM strategy?

Tucci: Hopefully not. Hopefully everything that we're doing fits in. And if it doesn't fit in, we'd probably look to shed that asset.

Now, [EMC's acquisition of] VMware is an interesting example because it probably doesn't lead much to ILM today. But it's certainly going to help us for our mission tomorrow. And it's a great, great market unto itself today.

CRN: Why VMware? What was the rationale behind the acquisition of VMware?

Tucci: I think, basically, and everybody uses this word, utility computing. A lot of [utility computing is] around how you virtualize your storage, your network, and your server assets. Over time, it's clear to me that, at least for storage and servers, that these decisions have to be very coordinated. This technology has to work together. And when you look around at who had the best virtualization software out there, it was clear to me for servers it was VMware. For storage, it was EMC.

This is tricky now, but I'm dedicated to it, and it's important to your reader base, in the case of VMware I'm absolutely dedicated to let our server partners use that same technology, even if it competes against me.

So IBM is free to take VMware server virtualization technology and combine it with their storage virtualization technology and have a competing offering. That's part of the rules of being open. But I will certainly look for offerings to do that myself, also.

CRN: If that's the case, then why acquire VMware? If it's something that's going to be completely open, what's the advantage to EMC?

Tucci: We'll make money on it. We told the world that VMware did slightly less than $100 million last year, and we said that we could double that. In the first quarter, it did $39 million in revenue, which led everybody to say, 'Yeah, I guess they can do that.' A $200 million software business is a pretty valuable commodity. It broadens our horizons.

CRN: Going forward, earlier you mentioned that you do have the balance sheet and the financial ability to make other acquisitions. What are some of the things you are looking at in terms of acquisitions?

Tucci: Two things. The first thing I want to make sure [you understand is] we just bought three companies in a row. Two of the three companies have been going [under EMC] for two quarters and one for one quarter. So far, we have met and actually exceeded expectations for those three companies. But there's more work to do to make sure they're properly integrated and the value gets to our shareholders.

I don't want to leave the impression that I'm out there actively hunting for the next acquisition. What I did say is, I believe this is a consolidating market. Don't expect EMC to invent all of the great technology that we'll need to go into the future. You can expect us to use our balance sheet and our cash and market cap to acquire technology and, in some cases, the entire company and its technology. And I will do that.

As far as where I will hunt, that's information I will never give out. It always works against you. If I had said a few months back that I'm interested in an enterprise content management company, I would have driven the price of Documentum and three other companies up, because there's probably only two or three companies I would consider. If a few months prior to that I had said I was after a backup company, I would have driven Legato and three other prices up, right? And if I said two months ago I was after a server virtualization software company, there's not a lot out there. You just keep driving the prices up. You do it to yourself.

Since that is the case going forward, I see no upside, and only downside, for me if I even hint about where we're thinking about expanding next.

CRN: Then let me ask you this question: What are some areas you think need further consolidation in the storage industry?

Tucci: It's a very good try, Joe. It's the same question, and I really don't want to answer that. It's not that we don't know.