One of the more disappointing areas of coverage at the 2008 EMC Analyst Event was consumer. Not because Joel Schwartz and Jay Krone were not engaging, interesting, and effective in describing Iomega and its products-- they were. The disappointment came because EMC didn't even come close to teasing the audience with the potential of its consumer strategy. In fact, there was very little discussion of the consumer vision in the same way EMC has provided a directional glimpse of cloud storage with ATMOS. The audience was left wanting more.
There were likely three primary reasons for this: 1) EMC is still figuring it out and doesn't want to tip its hand too early; 2) The consumer business is largely a separate entity similar to VMware; and 3) There was a lot of ground to cover at this meeting.
Here are the fundamentals. EMC is fond of citing IDC data that suggests 70% of new information will be created by individuals but much of that data will ultimately be stored in a secure online location (presumably enough to make a good business). This data is scattered, redundant, and persistent (often hanging around for many decades). It's interesting to note that few if any other storage vendors cite these statistics. Are they dubious? Not likely, they sound perfectly reasonable. Are there technical issues (e.g. speed of light)? Not likely with the type of unstructured information we're talking about. Are others just not paying attention? Perhaps.
EMC's consumer strategy is finally coming together and moving fast. In the fall of 2007, shortly after EMC's acquisition of Mozy, EMC put Tom Heiser, a long time EMC Type A overachiever, in charge of what was then referred to as the SaaS business (Software, or Storage as a Service)-- essentially comprised of Mozy and a vision of bringing SaaS to EMC's portfolio.EMC then acquired Pi, the company founded by Microsoft's Paul Maritz. Maritz was in, and Heiser moved over to help Art Coviello cream RSA's competition. Then Maritz was tapped to run VMware when Diane Greene was sent packing, leaving a void in what has become EMC's consumer services business.
Then in November 2008, EMC announced Decho, which stands for "digital echo", and the pieces of the puzzle started to come together. Funny how a good name can catalyze thought and action. Digital echo is an allusion to the bouncing of information between devices like cell phones, pda's, notebooks, and the cloud. Decho's goal is to bring information-centric computing to the cloud to address the exploding sea of digital information. The problem Decho addresses is to help individuals organize their digital lives, meaning photos, audios, financial records, personal documents, and so forth. These documents have increasing value to each individual and Decho hopes to store, protect, and provide services to exploit the value of this information.
Decho is made up of Mozy, Pi, and some homegrown EMC IP. When acquired by EMC, Pi, which stands for "personal information," was a stealth startup. It develops technology to search, tag, and index information with an understanding of where the information lives in the cloud. Pi's metadata platform will be combined with Mozy, presumably ATMOS and other cloud services geared to consumers wanting to organize their information stovepipes.
To be sure, Decho will be competing with the likes of Google, Flickr, Facebook, Xdrive, Yousendit and all the other zillions of places people store information, often for free. The challenge will be to offer a value proposition that organizes personal information (without the stovepipes) and monetizes Decho technology by offering services that extend existing services to places where these other stovepiped services aren't going. An example might be to offer Mozy customers a way to access or share some or all the information that's been backed up.
Where does Iomega, a device company, fit? Iomega has a brand and channel and sells truckloads of devices that store-- you guessed it -- personal information, the exact target of Decho. The ability to upsell Iomega customers is clearly an asset.
Today, Decho is an autonomous $10M+ company with 100 employees that gets virtually all its revenue from Mozy. It has facilities in Seattle, Utah, Canada, and India. It has numerous job openings and just hired a CEO to make the vision come to fruition.
Questions: 1) Will it work? Just maybe. 2) Can EMC compete effectively in Web 2.0 consumer services? Why not? 3) Can Decho execute? Probably. 4) Does it have the ecosystem and all the pieces? Doubtful.
One thing is clear-- EMC has the motivation, the vision, the technical skills, the cash, and execution ethos to make it happen.
Action Item: EMC's consumer strategy is to anticipate change and attempt to exploit opportunity rather than hang on to the high margin past and resist clear trends. The survival of companies with entrenched business models requires this type of anticipatory thinking, and the industry at large should take note.
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