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Is EMC stock a good investment?



EMC’s strategic acquisitions to enhance presence in hybrid cloud space

In 3Q14, EMC (EMC) strategically acquired three companies, Spanning, Maginatics and Cloudscaling, to extend its hybrid cloud capabilities across cloud infrastructure, storage, and data protection. EMC’s management has hinted that it would launch an offering based on the technology from these strategic acquisitions in 2015.

Acquisition of players like DSSD, a developer of rack scale flash storage architecture for I/O intensive and big data workloads, has given EMC exposure to the NAND side of the market. These acquisitions are expected to strengthen the footing of EMC in cloud and flash storage space, as well as cushion its growth from the shrinking storage space.

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Key offerings lead the market

A survey from IT Brand Pulse across IT end users ranked EMC’s all flash array, XtremIO, as the preferred product in this category. EMC offers network attached storage, VCE and VPE, for converged infrastructures. As the above chart shows, VCE, a joint venture of Cisco, EMC, VMware (VMW), and Intel (INTC), leads the market share with 51% in the converged infrastructure market. HP (HPQ) and IBM (IBM) hold 27% and 11% market share, respectively.

Leading player in storage space

In 2014, Gartner ranked EMC on top in its magic quadrant for general purpose disc array. An IDC storage user demand study also rated EMC as the top player in storage for major applications. Gartner has ranked EMC as top player in the network attached storage (or NAS) market.

FY14 expectations

EMC’s management expects FY14 revenues to be $24.5 billion and its non-GAAP operating margin to be around 24%.


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