EMC prepares for shift in cloud revenue model

EMC has reconciled with the fact that it will probably be making more money from its cloud provider partners rather than from direct customers, according to EMC Australia managing director Alister Dias.
Written by Spandas Lui, Contributor

EMC has been busy befriending cloud-service providers, as they gradually become the storage vendor's main source of revenue in the cloud-computing segment, according to EMC Australia's managing director Alister Dias.

Through VCE, a joint venture with Cisco, EMC storage equipment forms part of a converged infrastructure offering for cloud computing.

As organisations embrace the cloud into their business, they are increasingly acquiring equipment and services from cloud service providers, rather than sourcing them directly from a vendor, Dias said.

"When we look at our own business, if you're a technology vendor, cloud is an opportunity and a threat," he said. "For example, there is a shift from customers buying technology from us in the way they traditionally did, and just turning to cloud providers.

"The cloud providers therefore become our customers."

Overall, 60 percent of EMC's business goes through channel partners — which includes these cloud-service providers — and, by 2015, the vendor expects that number to jump to 80 percent. This growth in indirect sales is mainly credited to cloud adoption through third-party service providers.

Companies see adopting cloud through service providers as an easier option, since they don't have to do the work themselves, nor do they have to seek out vendors individually for different parts of the IT infrastructure, according to Dias.

"We recognised a few years ago the market was heading in that direction," he said. In response to that change, EMC has doubled efforts into collecting cloud-service provider partners.

"We put a lot of energy into recruiting a large community of cloud providers that really has had to think very seriously about delivering enterprise-grade services."

EMC's cloud partners include Telstra, CSC, and Datacom NZ.

While the storage vendor is keen to expand its footprint in the cloud-computing space, it understands that it cannot have its finger in every pie, Dias said.

"What we are fundamentally seeing is a level of consolidation in the industry, where some vendors are setting themselves up to be a one-stop shop for everything IT, and then there are smaller point solutions," he said. "We're positioned in the middle — for us, we don't believe there's one company out there that can do everything well enough, nor do we believe customers should have to deal with hundreds of different point vendors either.

"We think it's an important time in the market for customers to carefully choose which cloud companies they are going to partner with."

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