EMC's turbulent trifecta temporarily ties Tucci to top table

Hand me the scissors, Joe

Rowe also said the federation was lowering its costs: “We are initiating a new cost-reduction programme to accelerate our efforts to optimise our business. As the largest part of the federation, the majority of this programme will be focussed upon EMC ii."

He identified the federation’s investment focusses: ”It is around digital transformation, it is around security analytics, it is around hybrid cloud... So if you look at those broad areas, we're going to invest more there, and again, things that are not strategic in helping us with that, we will look at how we can monetise [them] and get better return and utilisation.”

Hint: that means sell-offs like Syncplicity.

EMC Branding

Tucci thinks EMC’s branding is poor. "The problem we have – one of the problems we have and one of the problems we talk about – is there are two EMCs," he said. "There is my EMC and there's David's EMC... I understand the branding is terrible and it is one of the things we've got to take a look at.”

A guess is that either EMC II will go away or the overall EMC brand will go away and be replaced by something else, with EMC II being the EMC-centric brand.

Succession

Tucci answered a question about the timing of his departure in the call: "I really don't want to comment on time. I used the word smartly, actively, navigating the process and I have said point-blank I am very committed, love this company and will give the board the time they need to properly make sure that navigation and succession process works terrifically. I do not want to put a deadline on the board. But they are actively engaged, let's maybe put it that way.”

The succession starts with Tucci retiring, leaving a board chairman’s role and and overall EMC Federation CEO role up for grabs.

El Reg thinks the potential successors will be EMC insiders, primarily the line of business CEOs, meaning EMC ii’s David Goulden and VMware’s Pat Gelsinger. Pivotal’s Paul Maritz has ruled himself out of the overall EMC CEO role already and Virtustream’s Rodney Rogers is new to EMC, so he still has to prove himself.

We’d put Goulden in the front-runner spot. He’s running a quasi-federation of businesses already, with Gelsinger at number two. Goulden could get the federation CEO role, with Gelsinger moving across to run EMC ii and one of his or Goulden’s direct reports – such as BRS boss Guy Churchward – moving up to run VMware.

Maritz could stay with Pivotal, taking it public next year or in 2017, and then retire. Rogers could turn Virtustream into a billion-dollar-plus annual business, then be eligible for the top job next time around.

All that looks a neat-enough transition, but the HP-acquisition possibility could upset things drastically. Would Tucci's direct reports enjoy reporting to Antonio Neri?

Overall, the EMC Federation transformation and succession balls are still high up in the air and being pushed around more by the customer-buying pattern changes. We don’t know where they will land once the trifecta of issues assaulting EMC is dealt with. Neither does anyone else, unless EMC board members are talking to them.

William Blair analyst Jason Ader writes: "As we have noted in the past, we give credit to EMC's willingness to embrace change and cannibalise, but there remains a long road ahead as declines in traditional storage continue to outweigh new growth vectors. While the probability of a transformational event rises with further deterioration in the business, we feel that there is limited upside to share."

Despite the trifectral turmoil, Tucci thinks EMC is generally okay: “Basically, we are in a good position. We're one of the few companies of our age, and born when we were born, mostly in the client/server era, that is producing quarter after quarter of top-line growth. Be it not as fast as it was. This quarter, it was 3 per cent year-on-year. When you compare us to our peers, we're going through this inflection point, and... I do believe that 2015 is the trough and that you will see improvement as we go through.”

Ader was doubtful: "We are sceptical of management's assertion that 2015 is the trough year — there are simply too many moving parts to make this assertion and EMC is still heavily tied to the performance of legacy storage platforms." ®