EMC and VMware are facing a pivotal year in more than one way writes Wikibon Analyst Stuart Miniman in “The Pivotal Move for EMC and VMware”. In one sense, of course, they are literally approaching a “pivot point” with the impending April 1 opening of their joint venture, Pivotal Inc. This will involve strategic realignment as both companies contribute significant parts of their businesses to the startup. In a wider sense they also both face a need to redefine their strategic direction in the face of new technologies and opportunities and a real danger of stagnation as they maximize their market share in their traditional markets. Joe Tucci, chairman of both EMC and VMware and CEO of EMC, and other key exectives outlined their plans for this year and beyond and provided “additional details” on Pivotal Inc. at a joint strategic summit in NYC for Wall Street, occasioning Miniman’s Professional Alert.

EMC dominates the storage server market, although not to the extent that VMware dominates the server virtualization arena. While both companies face challenges in these markets that they need to counter, clearly their future growth must come from other areas. Simultaneously they are putting several of their advanced acquisitions and subsidiaries into Pivotal, to be run by EMC executive Paul Maritz. Specifically EMC is contributing Greenplum, Pivotal Labs, and about $400M over two years. VMware, the minority owner, is contributing Cloud Foundry, Spring, Gemfire, and Cetas. Pivotal will combine these into a platform for Cloud and Big/Fast Data Applications.

In the new scheme, VMware, under Pat Gelsinger, will focus on the software-defined data center, hybrid cloud, and support for the post-PC mobile end-user computing environment, specifically virtualization. It will push network virtualization starting with very large Internet-based companies that can get the greatest advantage out of the increased flexibility these technologies will provide. It will introduce its vCloud Hybrid Service this summer to make it easy for VMware customers to extend their private clouds into a public service.

EMC will focus on Information Infrastructure, which will include more than hardware for the software-defined data center. EMC will also bring security, in the form of RSA’s Trust, and software-defined storage. It also intends to lead the market in flash storage, both in the storage array and server, although it faces stiff competition in both areas from both established vendors and startups with advanced technologies and no legacy anchors slowing them down. In the software-defined storage area, EMC expects to ship its “Project Bourne” by 2H13.

One major issue in these plans are the twin-companies’ strong partner environments. EMC and VMware remain committed to being the best companies to partner with, Gelsinger promised, and see their partners as a strategic asset who will sell a large percentage of the companies’ new products. At the same time it will be hard for them to avoid competing with those partners, particularly in the area of data center virtualization. Another is that VMware’s strategy still leaves it open to erosion from below, particularly by Microsoft, whose Hyper-V pricing is hard to beat.

Overall, this is a dangerous time for both EMC and VMware. They cannot afford complacency and must  continue to innovate in their traditional areas to maintain their dominant positions while seeking growth in other arenas.

Like all Wikibon research, Stuart Miniman’s full report is available free of charge on the Wikibon Web Site. IT professionals are invited to register for free membership in the WIkibon community. Members can add comments to research and contribute their own questions, Wikitips, Professional Alerts, and white papers. Members also receive invitations to the periodic Peer Incite Meetings, at which their peers discuss how they use advanced technologies to solve important IT and business problems.