EMC Reorgs, Forms New Cloud Business Unit

EMC has reorganized and formed a new business unit focused on its cloud management and orchestration product line.

The storage giant, which by many accounts was negotiating a merger deal with Hewlett-Packard that failed to come to fruition, has reorganized its core businesses into two new divisions: the Emerging Technology Division and the Core Technology Division.

The new cloud management and orchestration product organization is headed by Brian Gallagher, president of EMC's Enterprise and Mid-range Systems group. With the reorganization, Gallagher takes a new role as president of cloud management and orchestration, said Jeremy Burton, president of products and marketing for EMC Information Infrastructure.

[Related: VCE As Part Of EMC II To Be More Agile, Keep Cisco At Core: Execs]

Gallagher's focus will be on helping customers work in the cloud independently of whose technology underlies the cloud, Burton said.

"If you buy into the idea of hundreds and thousands of clouds, like we do, then you buy into the idea of a need for software to broker the movement of workloads between them," he said. "Analysts tell us this will be a $2 billion opportunity in two years."

The new cloud business will look at software that brokers workloads between different cloud environments, including OpenStack, Amazon Web Services and VMware, Burton said. "It will answer questions like, 'Can I guarantee the service level of the application?'" he said.

The business hopefully will grow up to become a third division within EMC, Burton said.

EMC earlier this month acquired Cloudscaling, an OpenStack startup, in a deal Bloomberg reported to be in the $50 million range. Cloudscaling was supposed to be part of the new cloud business unit, but it's not clear if that's going to happen, sources told CRN.

"The thinking was, if EMC was serious about forming its own cloud business unit, and was making deals to fill it, that would show they're serious about forging their own cloud path and parting ways with VMware," said one source

EMC is holding a cloud event on Oct. 28 in Boston where it is expected to talk more about its cloud strategy and the Cloudscaling acquisition. But sources said EMC doesn't plan to address the reorganization or its plans for a cloud business unit at the event.

Burton told CRN that EMC was not yet ready to discuss Cloudscaling.

NEXT: The New Emerging Technology Division

EMC's new Emerging Technology Division was actually formed about three months ago, Burton said. It brings together EMC's Isilon scale-out NAS technology, its ViPR software-defined storage technology and DSSD, a startup acquired in May by EMC focused on developing rack-scale, server-side flash storage technology.

The division is headed by C.J. Desai as president, focusing on object storage and Hadoop big data, Burton said.

"We have put all three together in a single division," he said. "Now if [EMC Federation member Pivotal CEO] Paul Maritz wants infrastructure for big data, he can go to one place, not three.

The Core Technology Division, which brings together the former Enterprise and Mid-range Systems Division with EMC's DPAV (data protection and availability) Division under the leadership of Guy Chuchward, who until the reorganization was president of the DPAV Division, Burton said.

One interesting move related to the reorganization is bringing EMC's XtremIO all-flash storage array from the Emerging Technology Division to the Core Technology Division, Burton said.

"XtremIO has been flying off the shelves," he said. "It's in the sweet spot for us. It's a block storage device we want to promote alongside every VMAX and VNX sale. For every VMAX or VNX we sell, we want to offer customers the option of purchasing an XtremIO. At the end of the day, however, we don't care which customers buy. We only care about getting the win."

Bringing Enterprise and Midrange Systems with DPAV into a single new division reflects the reality that all the related products have ties and integration points, Burton said.

"For example, EMC ProtectPoint backup software is now sold with VMAX and Data Domain," he said. "But there's no reason it can't be added to a VNX or XtremIO sale."

EMC, which owns 80 percent of VMware, is under pressure from activist investor Elliott Management to sell or spin off VMware, but EMC has said it has no intention of doing so.

NEXT: Partners Say New Unit WIll Help EMC Establish Cloud Credibility

EMC partners told CRN that forming a cloud business unit would help EMC establish some much-needed credibility in the cloud market and place the vendor on more equal footing with its rivals.

"If EMC is going to get serious about cloud, it's going to have to have its own M&A and R&D to get respect inside the company," one source told CRN.

"It's a great way to focus on customers," Jamie Shepard, regional and health systems senior vice president at Lumenate, a Dallas-based solution provider and longtime EMC partner told CRN. "It makes perfect sense. Before, it could be difficult for EMC's sales teams and channel teams to be on the same page. EMC does a good job of listening to customers and partners and making changes."

EMC has a lot of technology it is trying to sell, which can be a challenge both for EMC and its partners, Shepard said. "Segmentation helps alleviate that stress," he said.

The reorganization should speed the process for getting deals done, one EMC partner told CRN.

"The problem right now is that to sell a comprehensive solution takes a lot of people across all these lines," said the partner, who spoke on condition of anonymity. "It's inefficient and sometimes causes friction due to internal politics and competition. I expect to see more consolidation, so that we have fewer specialists and less overlap."

The reorganization should not mean a big change for the channel, said Aaron Cardenas, CEO and founder of P1 Technologies, a Hermosa Beach, Calif.-based solution provider and EMC channel partner.

EMC has over the past 20 years been through cycles of swelling, and then contracting, its solution set, primarily because of acquisitions, Cardenas told CRN. "The reality is, EMC's portfolio is so big now that their guys have to relearn their stuff."

PUBLISHED OCT. 27, 2014