EMC has its head in the cloud … and rightly so for a company that's helping businesses build Web-based computing systems with its data storage products and services. Its hardware and software platforms enable enterprises to store, manage, protect, and analyze massive volumes of data. EMC also offers data security products through its RSA Security business and virtualization software through majority-owned VMware. The company serves both large, FORTUNE 500 organizations and smaller businesses across many industries. Banks, government agencies, ISPs, and manufacturers are among its customers. EMC serves a global client base from facilities and partners worldwide; it generates nearly half its sales outside the US.
EMC divides its business into three segments: EMC Information Infrastructure, VMware Virtual Infrastructure, and Pivotal.
EMC Information Infrastructure, which generates more than 75% of total sales, includes information storage (enterprise data management devices and software, from entry-level to data center-class, that support storage, back-up, and recovery), global services (strategic consulting and managed services), and information security (access control, identity assurance, data loss prevention, encryption, and other services designed to protect data).
The VMware Virtual Infrastructure segment includes EMC's about 80% stake in VMware, a leading provider of virtualization and cloud infrastructure products and services that are designed to help customers aggregate multiple servers and networks together into shared pools of capacity in the search for improved efficiency and manageability, particularly for data center purposes.
The company's newest segment -- Pivotal -- accounts for about 1% of total revenue and is focused on next-generation platforms to support cloud computing and big data applications; the first platform, Pivotal One, was launched at the end of 2013.
The US is the company's largest market, accounting for nearly 55% of sales. The EMEA (Europe, Middle East, and Africa) and Asia-Pacific regions contributed about 25% and about 15%, respectively. EMC saw growth across all geographic markets in 2013.
Sales and Marketing
EMC markets its products directly, as well as through a network of distributors, systems integrators, resellers, and OEMs. Participants in the company's selling partner program generate more than half of sales.
EMC had experienced strong revenue and net income growth over the past decade. In 2013 sales jumped 7% to $23.2 billion and net income grew about 6% to $2.9 billion. Sales of the data storage and VMware products and services have been driving EMC's revenue growth due to increasing demand for IT infrastructure, as well as software maintenance-related services, as data center providers expand and many company's build out their own facilities to handle growing cloud-based systems. Storage products, its largest product segment, grew 5% year-over-year while VMware products grew 15% year-over-year.
Just like revenue and net income, cash flow from operations has been on an upward trajectory. In 2013 it was up 10% to $6.9 billion.
The growing trends of cloud computing and big data are transforming information technology, requiring companies to find new partners and invest in new products. EMC sees this as a huge growth opportunity and is focused on creating a product and services portfolio to meet these emerging needs. Research and development expenses in 2013 were about 12% of revenue, on par with spending from the prior year.
EMC maintains a number of strategic alliances, including one with Cisco, with whom EMC (along with VMware and Intel) created and funds Virtual Computing Environment Company (VCE). VCE develops and markets new cloud products to push to the adoption of multi-tenant cloud infrastructure by commercial and government enterprises. Multi-tenant cloud infrastructure allows for sharing of resources while still maintaining secure levels of isolation.
Mergers and Acquisitions
In order to expand into new markets, EMC invested about $14 billion in acquisitions from 2003 to 2010. The company has since maintained an acquisitive strategy. In 2012 it bought Israel-based XtremIO to extend its flash storage capabilities, and it bought analytics software maker Pivotal Labs and its Pivotal Tracker software development tool. The Pivotal purchase supported the efforts of EMC's Greenplum division to speed development of data analytics applications for enterprise clients. Pivotal's clients included Groupon and Twitter. Also that year EMC purchased cloud-based file management firm Synplicity.
EMC spent some $770 million on acquisitions in 2013, including five of its own, two by VMware, and one by Pivotal. The purchases include Adaptivity (cloud migration), ScaleIO (server-side storage), Sitrof Technologies (document management), Aveksa (cloud security), and PassBan (mobile and cloud security).