EMC Unloads Syncplicity, New CEO Sets More Aggressive Partner Course

Calling its Syncplicity unit "a step away" from its core infrastructure business, EMC Tuesday said it would sell the file-sync-and-sharing business to private equity firm Skyview Capital for an undisclosed sum.

The transaction is expected to close this month, Los Angeles-based Skyview said in a statement. EMC, Hopkinton, Mass., will maintain a financial stake in Syncplicity, which it acquired about three years ago.

By pulling Syncplicity out of EMC, Skyview is essentially making the same point activist investor Elliott Management is making: EMC's business units are more valuable on their own than they are as part of the larger EMC.

"Syncplicity is a really valuable asset, but it's somewhat hampered by being within EMC," Syncplicity CEO Jonathan Huberman told CRN.

Huberman is an EMC veteran who was CEO of Iomega when it was purchased by EMC, and ran EMC's small-business storage unit. Currently, Huberman is an executive at Skyview, and in February he became CEO of another Skyview portfolio company, NewNet Communication Technologies.

After the sale, Syncplicity will operate as a subsidiary of NewNet.

Related: Analysts: Why An HP Acquisition Of EMC Would Work

"We have one of the best products on the market, but we're someone constrained by being a subsidiary and being treated that way on the go-to-market side," Huberman told CRN. "We have to go through the EMC sales channel, and that person has a lot of stuff he's responsible for, and we may not be top of mind. By being independent, we can find other channels, partner with folks in a more aggressive fashion. EMC has really grown this business in three years, but there's so much more it could grow."

EMC is under considerable pressure from Elliott Management to boost earnings by breaking up or consolidating its five-company EMC Federation. Elliott Management has pushed specifically for the spin-off of VMware, an option EMC has so far resisted. EMC and Elliott Management are now observing a truce of sorts, which is set to expire in September.

The discussion around a possible merger between EMC and Hewlett-Packard also heated up recently when Raymond James analystssaid an acquisition of EMC by HP "is more than a distinct possibility."

Syncplicity's technology allows businesses the flexibility to access, share and store files either in the cloud or on-premise. It competes on the enterprise end of the same market as Box, which went public in January.

Syncplicity experienced great momentum as an EMC business in a highly dynamic hyper-competitive landscape," EMC President of Products and Marketing Jeremy Burton said in a statement. "However, the stand-alone EFSS [enterprise file-sync-and-sharing] market is evolving rapidly; customers are continually looking for new end-user features and functionality to enable their increasingly mobile workforce. This is a step away from EMC's core infrastructure strength."

Andres Rodriguez, co-founder and CEO of cloud storage firm Nasuni, Natick, Mass., said EMC misunderstood what businesses want from services like Syncplicity.

"What EMC failed to realize was that the only way to simplify things for customers is to simplify the number of systems of storage they need to provide," Rodriguez said.

"Mobility is a use case for storage, not its own separate platform," Rodriguez said. "For the classic EMC customer, they would come in and offer Syncplicity as a separate island of storage run as a service by EMC," Rodriguez said. "It's mobile, it can do sync and share, but it's an island with respect to your traditional storage, and storage is about less. Less is more."

Arnold Bennett, U.S. regional sales director for Northern, an EMC partner based in Wakefield, Mass., said Syncplicity was often tossed aside if it disrupted the sales process for core EMC offerings.

"It is a long way from the core business and puts the EMC reps and support teams in an unfamiliar place," Bennett told CRN via email. "EMC could support things like this if they would let the SMEs and vendors have more autonomy with their customers and not have a core rep watching over every deal that they believe could take away potential VNX, Isilon or VMAX revenue."

PUBLISHED JULY 7, 2015