The History (So Far) Of The EMC Federation

Looking To Reap The Rewards Of The EMC Federation

The seeds of the EMC Federation were planted with a series of acquisitions starting in 2003, but it has only been in the past year or so that EMC and its investors have pushed hard to reap the rewards.

Some investors, led by Elliott Management, want EMC to sell off parts of itself, especially its most valuable part, VMware, as a way to generate value beyond what is offered by EMC as a whole. EMC, while admitting that its business model would make it relatively easy to sell off parts of the Federation, prefers instead to keep it intact as a way to generate long-term value from solutions combining components from its various companies.

While the two sides are now in a truce, it is anyone's guess how the disagreement will end. But for a look at how it started, travel back in time with CRN.

October 2003: EMC Acquires Documentum

To understand the EMC Federation, it is necessary to go back to the days before it was founded.

The seeds of the EMC Federation were planted in October 2003 when EMC revealed a $1.7 billion deal to acquire Documentum, a document management pioneer.

"Information is one of the most strategic assets in any organization and EMC technology has helped store, manage and protect vast amounts of information for our customers. Software is central to our strategy for delivering comprehensive information life-cycle management solutions that allow customers to select the appropriate levels of availability, protection and speed of access at every point in the information life cycle," said Joe Tucci, then president and CEO of EMC, in a statement at the time.

December 2003: EMC Acquires VMware

The second seed to what eventually became the EMC Federation was planted soon after the Documentum acquisition when EMC revealed the $635 million acquisition of VMware, which at the time was focused on virtualizing servers. Cloud computing was still a thing of mystery for most businesses.

That acquisition was widely criticized at the time for diluting the focus of EMC, which was, and still is, the largest storage vendor that is not part of a server vendor. However, EMC continues to get the last laugh. VMware, which is still 80-plus-percent owned by EMC, generated $6.0 billion in revenue and $1.0 billion in earnings in 2014.

September 2006: EMC Acquires RSA Security

EMC continued its string of non-storage acquisitions with its $2.1 billion acquisition of RSA Security, at the time one of the top developers of security technology.

EMC may have thought it a good idea at the time, given that Symantec the year before had acquired Veritas to create a company spanning both the security and storage industries. However, unlike EMC and RSA, Symantec has had enough and is in the process of splitting back up into separate security and storage software companies.

June 2009: V+C+E, Not Quite Yet VCE

EMC's first move to federate solutions based on disparate technologies was to bring together its storage technology and VMware's virtualization technology, together with Cisco's UCS servers, into a new consortium unveiled at a joint press meeting at EMC World 2009.

The partnership initially was called the VMware-Cisco-EMC alliance. Later, it would be called VCE, supposedly short for "Virtual Computing Environment." Eventually, it was just VCE, and it developed and sold Vblock converged infrastructure solutions based on technology from its three partners.

August 2009: VMware Acquires SpringSource

VMware acquired privately held SpringSource, a leader in enterprise and Web application development and management, as a way to jointly deliver solutions to help customers efficiently build, run and manage applications within both internal and external cloud architectures.

SpringSource drove some of the most popular and fastest-growing open-source developer communities, application frameworks, runtimes and management tools, and had a presence in a majority of the Global 2000 companies. VMware and SpringSource planned to further innovate and develop integrated PaaS solutions that can be hosted at customer data centers or at cloud service providers.

July 2010: EMC Acquires Greenplum

EMC's July 2010 acquisition of data warehouse technology provider Greenplum gave EMC a top developer of what was termed "Enterprise Data Cloud" solutions for large-scale data warehousing and analytics. Those solutions, based on a massively parallel processing system, support the requirements of companies managing terabytes or petabytes of data.

Essentially, the acquisition gave EMC a big data play, although at the time the term "big data" was not yet in vogue.

It also gave EMC yet another technology that, while it touched on storage, seemed to be outside EMC's normal business.

April 2011: EMC First Unifies Channel Program Including EMC, VCE

Despite the fact that VCE's Vblock systems by 2011 were sold to customers as a packaged solution, solution providers were still dealing with placing separate orders with VMware, Cisco and EMC, as well as dealing with their separate channel programs and discount programs.

That changed in April 2011 when VCE said that all orders from solution providers, including those received via distributors, will go through VCE, which is providing the solutions with VCE part numbers and warranties.

VCE also unified its deal registration process and discount structure so that partners could deal with just one vendor, and introduced its first MDF program aimed at helping fund partners' demand generation activities.

However, the three parent vendors continued to offer extra discounts above what was offered by VCE as a whole.

April 2011: VMware Launches Cloud Foundry

VMware Cloud Foundry is a Platform-as-a-Service that puts developer freedom of choice at the forefront and seeks to break the shackles of proprietary cloud computing offerings. VMware at the time felt that current PaaS offerings were hamstrung by limited framework support, a lack of variety in application services, and an inability to be deployed in both public and private clouds, factors that crimped cloud development.

VMware offered developers an invitation-only beta CloudFoundry, a multitenant public cloud PaaS service run by VMware as a test bed for applications. It also launched, an open-source project under the Apache 2 license.

Cloud Foundry included the Spring Framework, an enterprise Java programming model that VMware picked up in acquisition of SpringSource.

March 2012: EMC Acquires Pivotal Labs

EMC acquired Pivotal Labs, the developer of Pivotal Tracker, a software application that allows multiple developers to collaborate from remote locations to accelerate the development process.

The company also develops software for enterprise, mobile and Web businesses. Its client list included some of the hottest software and social media companies including Twitter,, Groupon and Gowalla, which late last year was acquired by Facebook.

With the acquisition of Pivotal Labs, EMC had all the parts in place to build what would become the EMC Federation.

December 2012: EMC Unveils The Pivotal Initiative

VMware in late 2012 decided to roll over its non-core technology for building PaaS offerings to a new virtual organization to be combined with EMC big data technology and called the Pivotal Initiative. This included GemStone, SpringSource Cloud Foundry, and Cetas from VMware, as well as Greenplum and Pivotal Labs from EMC.

The move resulted in a separate organization focused on developing the infrastructure for transforming applications built on and using cloud, mobility and big data technology, while allowing VMware to focus on developing cloud and software-defined data center technology.

The Pivotal Initiative was placed under the direction of EMC Chief Strategy Officer Paul Maritz (pictured). Maritz was CEO of VMware until his sudden departure the previous July, when he moved to EMC, where he was said to be involved in a new initiative.

May 2014: EMC Unifies New Business Partner Program Across The Federation

EMC’s renovated channel program rewards partners selling solutions across the wide range of EMC technologies. The program, dubbed the EMC Business Partner Program, by the following January replaced EMC's prior Velocity program and several other programs based on individual product lines with a single program that provides partner benefits across the full EMC solution spectrum.

The key change was to unify a variety of EMC partner programs that currently either have a product line focus, such as programs for EMC infrastructure, VMware or RSA, or are differentiated by partner type including solution providers or cloud providers.

The highest level, Platinum, was reserved for expert partners who can implement solutions across the EMC Federation.

July 2014: Elliott Management Calls For EMC Breakup

EMC's fifth-largest investor started pushing EMC to spin off VMware as an independent company. New York-based investor Elliott Management had acquired a stake of more than $1 billion in EMC, giving it the clout needed to try to convince the storage giant to spin off the cloud and virtualization developer.

Elliott Management argued that the "EMC Federation" hampers the performance of EMC's stock. The EMC Information Infrastructure legacy storage solutions form the largest part of the company's business while VMware and Pivotal are growing much faster.

October 2014: EMC Acquires Majority VCE Stake

EMC and Cisco nearly parted ways on VCE when EMC acquired nearly all of Cisco's stake in the joint venture. As a result of the acquisition, for which no dollar figure was provided, EMC now owns about 90 percent of VCE while Cisco retains a 10 percent stake.

EMC said VCE will be part of the EMC Federation for the first time.

October 2014 Reported Merger Talks Between HP, EMC End

Hewlett-Packard unofficially ended speculation about its possible interest in merging with EMC when it revealed that it is no longer in possession of "material nonpublic information."

HP did not confirm the merger discussions with EMC, but sources have confirmed that the two companies held talks.

October 2014: EMC Federation Intros First Cross-Company Solutions

EMC unveiled the first of five planned integrated solutions based on technology sourced from multiple parts of the EMC Federation. That initial solution, the Federation Software-Defined Data Center, combines EMC and VMware technology into a flexible platform upon which further EMC Federation technologies can be built.

Those future solutions include PaaS, which combines technology from EMC, VMware and Pivotal; a virtualized data lake featuring Pivotal technology; end-user computing with VMware and EMC technology; and security analytics, which will add RSA to the virtualized data lake.

November 2014: Tucci Says EMC Could Easily Spin Out VMware

Tucci told investors at the Wells Fargo Securities Tech, Media & Telecom Conference that while EMC could easily spin out VMware as a separate company, EMC staying together as a whole is better positioned for growth.

EMC's board of directors is very focused on shareholder value and would make a decision about the future of VMware based on what is best for shareholders and the company, Tucci told investors. However, he said, EMC still sees its current structure, which includes a majority equity stake in VMware, as a key competitive advantage whether in fierce competition against rivals such as IBM or in co-opetition with Cisco.

"[EMC and VMware] go together around Vblocks and we know where we compete," he said. "You have competition from Oracle. You have competition from Microsoft. You have competition from Amazon Web Services. These are big, big companies. So, the thing we have to understand, and I have an underlying belief, is that either you’ve got to be very niched or you better be big and have scale."

November 2014: Tucci Admits Internal Friction In EMC Federation

Tucci at that investors conference also said that EMC has, perhaps, allowed too much friction between different parts of the multiple businesses that comprise the EMC Federation. The company, however, continues to pin its future on the unusual organization that is trying to bring together multiple different technologies into a larger solution, he said.

Tucci said that the EMC Federation, by bringing together some overlapping technologies being developed under the overall EMC umbrella, has caused some friction between the various parts of the company.

"I think some friction is good," he said. "And, to be honest, there is more friction than we should have today."

January 2015: EMC Combines VCE With VSPEX

EMC followed up its acquisition of most of Cisco's share of VCE by combining its VCE and VSPEX businesses into a single $1-billion-plus converged infrastructure organization within the storage vendor.

The creation of the new business unit, which also includes EMC Enterprise Hybrid Cloud, effectively cements EMC's control over VCE.

January 2015: EMC, Elliott Management Declare Truce

EMC and Elliott Management agreed on a truce under which EMC approved the addition of two new members to its board of directors, one of who was newly promoted by Elliott Management and the other of whom was already in talks with EMC about joining the board.

With the deal, Elliott Management also agreed to certain limited standstill and voting provisions through September 2015. This includes having Elliott Management vote in favor of EMC's proposed slate of directors at EMC’s 2015 annual shareholder meeting.

More importantly, however, the appointment seems for now to satisfy demands from Elliott Management for changes at EMC that are favorable to investors.