Information Infrastructure’s performance in fiscal 1Q15
As we saw previously in this series, only EMC’s (EMC) Information Infrastructure segment posted negative growth. Its revenue stood at $4.05 billion—a decline of 1% on a YoY (year-over-year) basis. The decline is primarily due to storage revenue that was $75 million short of the company’s expectations.
In its earnings release, the Information Infrastructure segment was impacted by the decline in revenue of high-end hardware and Backup or Recovery that posted a decline of 7% and 11%, respectively, on a YoY basis. According to a Wall Street Journal article on April 22, 2015, reduced buying of EMC’s flagship VMAX systems impacted its hardware segment.
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Emerging Storage is expected to boost revenue growth
In 1Q15, EMC’s Emerging Storage, a sub-segment of the Information Infrastructure segment, stood at $542 million—an increase of 14% on a YoY (year-over-year) basis. The growing relevance of Emerging Storage can be gauged from the fact that its contribution to EMC’s Information Infrastructure segment increased from 1% in 2010 to 18% in 2014. The growth of this sub-segment along with “Storage – Other & PS” that includes Pivotal, prevented EMC’s Information Infrastructure from reporting a further decline in its revenue.
Although EMC gradually changed its segment’s portfolio, increased preference by companies towards flash storage technology poses a threat to EMC’s high-end storage systems. SanDisk (SNDK) is a leading player in the flash storage space. Recently, Seagate (STX) announced a partnership with Micron Technology (MU) to develop flash storage solutions.
Emerging storage encompasses:
- XtremIO – a software-defined storage platform. EMC claims that XtremIO is the fastest growing offering in its history.
- ViPR – a scale-out network attached storage platform
- ScaleIO – a converged storage infrastructure
Due to growing demand of flash arrays, software-defined and cloud storage, and big data, analytics led the above mentioned emerging storage offerings to contribute to the growth in EMC’s hardware revenue in last few quarters.