EMC, Veritas continue acquisition sprees

Common goal is extended virtualization

By Lisa Coleman

In a bid to expand their product lines and strengthen their positions in the emerging virtual data-center market, both EMC and Veritas finalized acquisitions last month of virtualization technology companies.

EMC acquired server virtualization specialist VMware for $635 million, and Veritas announced its $59 million acquisition of Ejasent, an application virtualization vendor. Ejasent will become part of the high-availability/clustering group at Veritas, while EMC will keep VMware as a subsidiary with current VMware president Diane Greene at the helm.

"Both companies recognize how important a virtual environment is. They're starting to write checks to gather an enhanced portfolio, increased expertise, and a broader set of relationships and alliances, and to strengthen their position in a market that's emerging rapidly," says Dan Kusnetzky, vice president of system software research at International Data Corp., a market research firm in Framingham, MA.

VMware's and Ejasent's virtualization technologies are in the same broad category of data-center virtualization, but their approaches differ. Analysts say that VMware focuses on processing and Ejasent focuses primarily on applications. According to IDC, several layers of software—progressing from virtual storage up into virtual processing, applications, and access—will allow organizations to create a "virtual environment."

Analysts claim that one differentiator between VMware and Ejasent is VMware's market traction. "VMware has more traction right now because it's been out there longer. It solves the problem of dividing up Intel processors for higher utilization," says Carl Greiner, an analyst with the META Group consulting firm.

VMware's technology enables multiple operating systems—Windows, Linux, and NetWare—to run simultaneously and independently on the same Intel-based server or workstation. These "virtual machines" integrate seamlessly into existing physical infrastructures and management frameworks, allowing users to see resources as if they were dedicated to them, while administrators manage and optimize those resources across the enterprise.

"Acquiring VMware allows EMC to stretch out its footprint into a broader area and makes it possible for them to talk more completely about a virtualized environment," says IDC's Kusnetzky.

Meanwhile, Ejasent offers Veritas another move up into applications and builds on its strength in virtual storage and processing, according to Kusnetzky.

Ejasent's UpScale technology enables application movement from one server to another without disrupting or terminating the application. The software takes a snapshot of an application and its state, preserving all current settings and data, and transfers it to a different server in near real-time.

Also, Ejasent has software called MicroMeasure that enables usage-based metering and billing of physical and logical data-center assets, including servers, storage, and application transactions by specific users and departments.

"What Veritas needed was a way to link storage management, storage networks, and server assets to the requirements of applications and to make applications portable. That's one of the pieces that Ejasent brings to the party. The software has the ability to virtualize applications so they can be made portable," says Bill North, research director for storage systems at IDC.

Like EMC's acquisition, Veritas' move broadens its product footprint and gives the company a stronger story when discussing its utility computing strategy, according to IDC's Kusnetzky.

At the end of 2002, Veritas defined its utility computing strategy during its acquisitions of Precise Software and Jareva, and company officials claim that the Ejasent products are a good fit with its current Cluster Server and CommandCentral software.

Meanwhile, EMC claims that the VMware acquisition is another step in its open software strategy that will eventually lead to the virtualization of storage, network, and server resources, according to Joe Tucci, EMC president and CEO.

Expanding their virtualization technologies will allow both EMC and Veritas to better compete with other vendors, according to IDC's Kusnetzky. "These acquisitions indicate how important virtualized environments are—or will be. They also indicate that EMC and Veritas are not going to allow vendors such as Microsoft, Hewlett-Packard, IBM, and Oracle to define the rules of the game," says Kusnetzky.

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Early last year, Microsoft acquired the virtual server technology of Connectix—a distant competitor to VMware. Microsoft renamed the technology Microsoft Virtual Server 2004 and is currently adding features (including security functions). The software is expected to be released later this year. Virtual Server 2004 will be the "virtual machine" for Windows Server 2003, according to Microsoft officials.

The reasons Microsoft pursued the virtualization technology were to address users' goals of lowering the costs associated with software distribution and to increase security and user/administrator productivity, according to IDC's Kusnetzky. He says that users will buy VMware's software for similar reasons.

EMC's VMware product plans are not yet written in stone, but EMC officials have identified a number of complementary technologies. For example, EMC's Symmetrix Remote Data Facility (SRDF) duplicates data between Symmetrix disk arrays. If the application, operating system, or register backup needs to move to a second array, there may be some downtime. VMware's VMotion software will move an exact copy of the virtual server to the remote site without downtime.

"This means that business transactions in process could also continue uninterrupted. The combined capability greatly simplifies...business continuity," claims EMC's Tucci.

Linking together VMotion with SRDF may result in one of the first products to come to market as a result of the VMware acquisition, according to Tucci.

In the next quarter, Veritas plans to deliver both UpScale and MicroMeasure as Veritas-branded stand-alone products until sometime in 2005 when both products will be integrated with Cluster Server and CommandCentral, respectively. UpScale will be available initially on Solaris, with a Linux version set for release in early 2005.

Analyst view

EMC + VMware: One step too far?

By John Webster and James Governor

First Legato, then Documentum, and now VMware—quite possibly one acquisition too many. EMC wants to virtualize from the layer just below the operating system on down the I/O stack. VMware was in play, and EMC had been viewing the company as a strategic fit with its virtualization vision for a while. There was a good chance that Veritas would grab VMware, putting EMC in a difficult spot. So EMC acted quickly.

Here's the conundrum: The Hopkinton brain trust thinks that they can convince their customers that EMC deserves a place in their server worlds. We would argue that VMware is in fact an operating system in the same way that IBM's mainframe VM and MVS are operating systems: All three partition server resources and share them among operating-system instances and associated applications. So, the $635M question now is: Does EMC's user base trust EMC in their server environments? We honestly don't know, which is one reason why we think that this time EMC may have bitten off more than it can chew.

Legato was a small stretch—an ISV, but still in the storage space. Documentum was a bigger stretch. VMware is an even bigger stretch. And the problem is that each of these acquisitions puts EMC in competition with a widening circle of both present and would-be partners that now includes Microsoft.

One issue that may create management problems for EMC is that Microsoft has so far refused to support VMware for Windows deployment. This decision makes life difficult for customers that want to use software from vendors such as BMC, Computer Associates, Hewlett-Packard, IBM, and Oracle in their managed, virtualized Windows environments. Microsoft would prefer customers to use its own technology (based on its acquisition of Connectix) and it is unlikely to be any happier to cede an advantage to EMC than it was to VMware.

EMC put more than $3 billion at risk in 2003. Vegas must love Joe Tucci because he plays a very high-stakes game.

John Webster is founder and senior analyst at the Data Mobility Group (www.datamobili tygroup.com) in Nashua, NH. James Governor is principal analyst and founder of RedMonk (www.redmonk.com) in Bath, ME.

This article was originally published on February 01, 2004