EMC Signs New Partnership - Analyst Blog

EMC Corp. (EMC) signed a new strategic partnership with Harris Corp. (HRS) and Virtual Computing Environment Company (VCE).

The alliance will focus on developing and marketing multi-tenant cloud solutions to further accelerate the adoption of cloud infrastructure as a service (IaaS) by commercial and government enterprises.

Multi-tenant cloud solutions have numerous benefits including optimization of resource sharing, thereby providing high levels of isolation to the tenants and high quality service throughout a shared environment.

As part of the strategic alliance, development teams from Harris, RSA (the security division of EMC) and VCE plan to integrate Harris’ trust enablement technologies with the Vblock Infrastructure Platforms to provide improved visibility into the security, performance and availability state of cloud environments hosted by Harris.

This is expected to reduce the security concerns over multi-tenancy. The integration will ensure that enterprises work in a secure environment, where they share resources but not data.

The alliance will also combine Harris’ enablement technology and EMC’s recently-announced RSA Cloud Trust Authority to introduce new levels of trust and control in the cloud-enabling commercial and government enterprises to realize the inherent benefits of the cloud.

The companies will also create migration tools and publish best practices in order to help customers migrate applications from VCE to Harris’ Enterprise Cloud and its underlying Vblock Infrastructure Platforms.

We believe the alliance will prove accretive for EMC, as it will increase its penetration in the commercial and government segment. With increasing adoption of cloud computing, we expect EMC’s security operations to gain significant top-line growth going forward.

Our Take

We believe the increasing adoption of cloud-based technology will be a key growth driver for EMC. According to IDC, storage is the fastest-growing cloud service, with revenue expected to grow from 9.0% or $1.6 billion in 2009 to 14.0% or over $6.0 billion in 2013. Spending on public IT cloud services will grow five times the IT industry rate in 2011, up 30% from 2010, as per IDC.

EMC, a leading developer and provider of information infrastructure technology and solutions, has invested $40.0 million in the cloud infrastructure business and expects to grow from its cloud-computing initiatives. New products and cloud-computing initiatives are expected to drive revenue growth in 2011 and beyond.

EMC is also expected to benefit from strategic alliances with Cisco Systems Inc. (CSCO), Microsoft Corp. (MSFT), Dell Inc. (DELL), VMware Inc. (VMW), International Business Machines Corp. (IBM), Oracle Corp. (ORCL) and SAP AG (SAP).

The strategic alliance with Cisco and VMware (81.0% ownership) that spans the data center and security segment and also caters to the enterprise market will enable EMC to drive new growth opportunities at large, virtualized next-generation data centers, boosting the company’s next generation virtualization efforts.

However, EMC continues to face aggressive competition in the storage, networking and virtualization space from system vendors such as IBM, NetApp Inc. (NTAP), Hewlett-Packard Co. (HPQ), Unisys Corp. (UIS) and Hitachi Data Systems.

Currently, EMC has a Zacks #3 Rank, which translates to a short-term Hold rating. We also maintain our long-term Neutral recommendation on the stock.

EMC Signs New Partnership – Analyst Blog

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