Why acquisitions are important in EMC’s business strategy

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Importance of acquisitions

The arrival of “big data” and open source software has dramatically changed the storage business. New forms of storage are emerging. EMC Corp. (EMC) is a market leader. It doesn’t want to be left behind. Like the majority of the market leaders in the IT arena—IBM (IBM) and Microsoft (MSFT)—EMC also followed the route of acquisitions to grow its products, services portfolio, revenues, and market share.

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EMC has completed and integrated more than 70 acquisitions since 2003. Through VMware (VMW), it entered the virtualization software market. Legato led to the storage management software market. Documentum led to content management. Finally, RSA and Greenplum let EMC venture into the data security and “big data” space, respectively.

EMC's acquisitions
The previous chart shows the number of acquisitions, EMC have done in the last couple of years.

Latest acquisitions

In 2Q14, EMC acquired DSSD—a company that develops a flash storage tier to augment its flash based systems and software portfolio.

In 2015, EMC plans to launch new products based on the DSSD architecture including:

  • Memory databases like SAP HANA, Gemfire, etc.
  • Real time analytics including risk management, fraud detection, and high frequency applications
  • High performance applications like facial recognition and climate analysis as used by research and government agencies

In July, 2014 EMC acquired Twinstrata. Through “cloud array,” Twinstrata offers physical storage appliances that are used by organizations to pool all of their storage resources that can be treated as a single fabric and used at their own will. Cimply, “cloud array” allows data to be copied, desired, or moved in public cloud. It supports Amazon web services, Google (GOOGL), Rackspace, and IBM’s Softlayer.

The “Twinstrata” acquisition is in line to position VMAX storage platform as the large enterprises took to cloud adoption. EMC expects to integrate Twinstrata with its own VMAX3 solutions by providing “embedded cloud access capabilities.”

Ablility to unlock value in acquisitions

EMC has invested more than $17 billion in acquisitions to adopt new technologies, capture the business momentum, and accumulate skilled resources. EMC acquired VMware in 2004. It became a publicly traded company in 2007 with EMC’s share holding 80% in it. VMware was acquired for $625 million. Today, it commands a market value of ~$40 billion.

Apart from its highly successful VMware acquisition, RSA Security, Data Domain, Isilon, Aveska, Pivotal Labs, and XtremeIO are the other acquisitions, whose success and profit generated over the years has contributed to EMC’s success. It has become a market leader in the industry.

EMC—through its ability to allocate an optimal pool of resources both for organic growth initiatives through research and development and inorganic growth initiatives through acquisitions—has been able to successfully integrate acquired companies under the “EMC” umbrella and harness the synergies.

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