Tucci eyes MS attack on VMware 'gem'

Virtualisation technology may mean customers buy less hardware, according to chief executive of storage giant EMC, Joe Tucci, but he believes he must continue to grow his VMware "gem" before competitors, such as Microsoft, take over the market.

In Australia for meetings with customers and staff, Tucci told media on Friday that while little competition existed for "the gem inside EMC", its market-leading VMware virtualisation technology business, the present situation would not last.

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"Any market that's this big is going to get competition," he said. "Certainly Microsoft will be vocal and try to slow this down and put some competition in the marketplace."

"We're headed towards version four [of VMware] when the competition hasn't even grabbed one yet."

Despite Tucci's comments, Microsoft already has desktop and virtualisation server software, although it trails VMware in market share. According to recent figures from industry analyst Forrester, VMware is the market leader with 53 percent and Microsoft is third with nine percent.

VMware has been heralded by customers and analysts as an efficient way of utilising existing server resources. The software lets a computer run multiple operating systems at the same time, which is useful for consolidating tasks onto less servers.

In its most recent financial quarter, VMware reported an 83 percent full-year revenue increase to US$709 million. In Australia, VMware has found favour with a range of IT departments including those of Centrelink, the Department of Veterans' Affairs and the University of Western Sydney.

While VMware has found success through conserving data and hardware, Tucci was aware this wasn't a natural fit with EMC. "Why the hell am I leading the charge with EMC to tell a customer you've got too much data?

"I can eliminate that redundant data. Yes, you've got to pay for that software. Yes, you've got to pay for some services, but now you can buy less storage.

"Why am I doing that? It's simple. It's the way the world's going and if I don't lead somebody else will do it then we'll get trampled."

Despite fears that virtualisation hurt hardware sales, Tucci believes it's the server vendors who are leading the charge. "It's the server guys pushing it cause they're saying 'OK, it gives me the opportunity to sell bigger servers, more robust servers', you've just got to go with it," he said.

EMC announced last month it will sell 10 percent of VMware stock later this year to progress the virtualisation company. Tucci said then that he expected the IPO to strengthen VMware's ability to "retain and attract the software industry's top talent".

Acquisition strategy
EMC has been active in the market in recent years with notable acquisitions of Documentum, VMware and RSA Security.

However, similar sized deals were not on Tucci's agenda this year. "I don't intend to do another big one," he said.

"You never say never, right? [But our intention] is not to buy another RSA or another VMware or another Documentum. But will I buy numerous technology companies and a couple of smaller service companies that tuck in, right? Sure. Could it be local here in Australia? Sure."

Tucci did not name possible targets for fear that share prices would rise amid takeover speculation.