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EMC Plans Storage Products to Compete With Cloud

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EMC storageEMC Corp. believes it can compete with cloud storage providers by offering simplified and easy-to-deploy on-premises equipment supported by a lightning-fast supply chain. Early next year, the storage giant plans to roll out its new program, Project Nile, that will give a more equal choice in cloud or on-premises storage.

Project Nile seems like the antithesis to the prevailing trend away from on-premises equipment deployments. Businesses are increasingly opting for cloud-based file, application, database and Web storage solutions for their scalability, flexibility and predictable costs. On-premises equipment is reliable and comes with more control, but doesn’t scale quickly or cost-effectively.

Through Project Nile, EMC will offer customers — presumably through partners — products that can be on-site and deployed within 48 hours. Specifics around how the products will deliver this near “plug-n-play” performance is unclear. Equally unclear is how EMC will manage “just-in-time” fulfillment.

Analysts say EMC isn’t losing out to cloud migration. EMC is a storage equipment supplier to many cloud and service providers, and cloud storage growth is current benefit to the company.

Over time, businesses choosing to adopt cloud storage over traditional on-premises simply out of the need for faster deployments could erode EMC’s revenue stream and dampen growth. In this regard, EMC’s Project Nile is looking to protect the vestiges of its legacy storage business.

While seemingly counter to the cloud trend, Project Nile does have merit. EMC and other storage vendors, including NetApp, Hitachi and Hewlett-Packard Co., have approach cloud services with what is best described as the “Intel Inside” strategy. Rather than trying to sell storage directly to the end customer, storage vendors have worked to get cloud providers to standardize on their equipment.

The idea of working with cloud and service providers in this fashion is more about creating aggregated customer points in the market. Instead of selling to thousands of customers, storage vendors can sell to service providers. This strategy makes sales more predictable and lowers costs.

Working against storage vendors, though, is saturation. Cloud providers scale their infrastructure with far greater efficiency than end customers, which means they consume less product, thus lowering total sales volume. For this reason, cloud computer could ultimately work against companies like EMC.

EMC is also betting many businesses will go to the cloud for economic reasons. If they’re given a choice between cloud and a more efficient and economic on-premises storage infrastructure, customers may stick with keeping their IT investments in-house.

EMC’s strategy is one to watch. For the past year, vendors have chattered about a growing cloud backlash, as some grimace at the inflexibility of cloud capabilities and pricing structures. Project Nile could prove an interesting test in the crucible of cloud computing.