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EMC prepares to enter another new market

A deal is in the works between EMC and BMC Software and it's got nothing to do with storage. What's Hopkinton up to now?

EMC Corp. is entering new markets like a Japanese bullet train these days, and the next stop on its whirlwind tour is systems management software, industry analysts say.

The partner EMC allegedly has in mind to help it get there is BMC Software Inc., already a close ally on the storage side of things. Last October, the two companies announced that EMC would tightly integrate its ControlCenter (ECC) storage management software with BMC's Patrol software for managing IT infrastructures. In addition, BMC began reselling ControlCenter and then sold its storage management software unit to EMC to avoid any conflict of interest. EMC promptly shut that group down.

Now it's EMC's turn to execute on its half of the bargain. According to Wall Street analysts close to both companies, EMC is hammering out the details of a contract to resell BMC's systems management software.

"The question was what credit would the EMC sales guys get for selling the BMC software -- credit for half a sale, the full sale … it looks like they are going to get the full quota of credit," said an analyst who tracks the company but wished to remain anonymous. "Now they are getting the EMC sales guys up to speed on this new area."

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Systems management software is basically administration software that companies use to run their internal networks including ERP (electronic resource planning) CRM (customer relationship management) and network management among many other applications. It's not clear at this stage what it has to do with storage or how users would benefit from buying this software from EMC.

But the corridors of power over in Hopkinton presumably have a plan, and we'll just have to wait and see what that is, as neither EMC nor BMC officials would comment on this story. An announcement is expected within two months, people close to the deal say.

Analysts speculate that EMC's intention is to gain more account control with larger customers to better compete with IBM and Hewlett Packard Co., and for this it needs more ammunition in its arsenal than simply storage.

"The Documentum and VMWare acquisitions are great examples of EMC's wish to broaden its reach into new markets … They are so aggressive right now they want a piece of everything," said Arun Taneja, founder and analyst with the Taneja Group.

He and other industry watchers question whether EMC might be biting off more than it can chew? "All these acquisitions will take years of integration. In the meantime, it's a hell of a lot of confusion for customers," said Steve Berg, analyst with Punk, Ziegel & Co.

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