Would EMC ever split up its federation of EMC, VMware, RSA, Pivotal and now VCE? According to Jeremy Burton, president of products and marketing at EMC, no.
“We think we’re better together,” Burton told Network World on Thursday. “At a time when the tech industry is changing, I think the big guys are going to do better than the midsize guys. It’s difficult to make an argument that we’d be better as two smaller entities.”
But plenty of people have been making the argument that EMC should split up its storage business from its virtualization business, VMware or maybe even spin out its security division RSA into its own company too. VMware is its own publicly traded company but EMC owns about 80% of it as part of a “federated model” with its subsidiary companies.
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EMC has resisted a split despite activist investors Elliott Management buying a 2% stake in EMC’s stock and pushing for the federation to break up. Elliott and EMC reached what could be a compromise last week when two new members who have the backing of Elliott were appointed to EMC’s board. Burton said they will bring “fresh perspective” to the board, but splitting up is not in the cards. “Our belief, and the belief around the federation, is we’re better together,” he reiterated.
Jeremy Burton, president of products and marketing at EMC
It’s a very different approach compared to that taken by HP and Symantec, each of which split in two. HP broke off its enterprise group from its consumer products while Symantec split up its security and storage divisions. Burton said EMC has already split up - it spun off VMware as a publicly traded company in 2007 and spun out Pivotal - it’s next-generation application development platform company two years ago. They’re split up, but they’re united under the EMC federation. So was it a mistake for HP to split up? Burton says no. “Arguably they should have done it sooner.”
The other hot-button issue at EMC is when EMC’s Chairman and CEO Joe Tucci will retire. For years rumors have circulated that Tucci could step down in the near future. Burton admitted that the succession plan around Tucci has been “hazy” but he played down its importance. “Joe stepping down wouldn’t change much,” Burton said. “We have three CEOs (between VMware, Pivotal and EMC) and he’s kind of the CEO of CEOs.” Even if Tucci did leave, Burton said the federation strategy is one that’s here to stay for the company.