EMC’s radical SMB move with Vspex Blue aided by ‘revolutionary’ strategy

• Hyper-converged appliance combines storage, network, compute and software
• To keep costs low, has essentially cut itself off from the supply chain

FOR many years now, EMC Corp, one of the world's largest storage vendors, has been growing its business by selling to large enterprises – from banks and oil and gas companies, to manufacturers.
 
That strategy has been successful, allowing it to grow its market capitalisation by more than 70% over the past 10 years. EMC is now valued at US$54 billion, and registered US$24.4 billion in revenue in 2014.
 
While its enterprise strategy has been working, EMC believes that it can do more, especially in the small and medium business (SMB) segment.
 
A few weeks ago, it launched Vspex Blue, a ‘hyper-converged’ infrastructure product – where storage, network, compute and software are all built into one box – that is designed and developed with the SMB in mind.
 
“We believe this will be a game-changer for us,” EMC Malaysia managing director Cheam Tat Inn (pic above) told Digital News Asia (DNA) recently, citing various reasons.
 
The first is that demand for converged infrastructure products will increase. Cheam believes that the market, valued at about US$4 billion globally, is expected to “easily” double over the next few years. This demand would partly be driven by customers wanting to save more on operational costs.
 
The second reason, Cheam said, was that this converged infrastructure solution can help SMBs address their business needs.
 
“With Vspex Blue, users will be able to connect to the public or hybrid cloud seamlessly via our EMC cloud architecture, our cloud services. This helps when businesses are growing rapidly, and they require their IT to be secure, cloud-enabled and able to scale,” he said.
 
Each EMC Vspex appliance is a 2U/ 4 Node system that combines virtualisation, compute, network, storage, management and data protection. It has over 14 terabytes of storage space (a combination of both flash and conventional hard disk drives), at least 128GB of memory, and dual Intel Ivy Bridge E5-2620 V2 processors.
 
It comes with VMware EVO:Rail, EMC RecoverPoint for VMs, EMC CloudArray, and other software. For more on its specifications, click here.
 
“It also gives customers flexibility. If customers only want additional storage and not computing power, they don’t have to get another box, as they can get the additional storage capacity from the public cloud,” said Cheam.
 
‘Revolutionary’ way to maintain competitive pricing
 
Cheam knows that the SMB space is not easy to penetrate. Being the ‘new kid on the block’ in this market segment, EMC will be competing against the likes of PC makers like Dell and Hewlett-Packard, as well as storage specialists like NetApp and Nutanix.
 
“If you look at the SMB market, it is a segmented market. At the higher end, [with] the larger companies in the SMB segment, we are strong in it.
 
“But, as you move towards the lower-end segment, you have a variety of players. We believe that the Vspex Blue is the right product to establish leadership position in that market,” Cheam declared.
 
EMC knows that Vspex Blue needs to be able to attract SMB customers not just in terms of features, but also in terms of pricing. “This is a very price-sensitive segment,” he acknowledged.
 
As part of its efforts to keep prices competitive, EMC has changed its processes. For most products, whenever a customer wants to place an order, it will go through a reseller, and the order will be passed on to a distributor and subsequently, EMC, which will then liaise with the original equipment manufacturer.
 
However, for Vspex Blue, EMC’s distributor can deal with the manufacturer directly – in this case, Foxconn Technology Group.
 
“Everything, from the engineering to the shipment, is all done by the distributor (Avnet). The distributor will also decide on the pricing! EMC doesn’t really get involved in it,” said Cheam.
 
“Why are we doing it this way? To keep the cost low. The moment EMC comes in, it is no longer low- cost. This has to be driven by our partners," said Cheam.
 
“This is revolutionary. No one has done this. Even the most partner-centric organisation will still require the partner to buy the product from the principal before the principal goes to the manufacturer,” he added.
 
So, what is EMC’s role in the Vspex Blue chain?
 
“We provide the architecture specification, the software licences, the support and post-sales support,” said Cheam.
 
Cannibalisation and customer responses

Cheam admitted that the Vspex Blue (pic above) has the potential for cannibalisation, as customers may opt for the competitively-priced Vspex Blue instead of EMC’s pricier flagship products.
 
But because it is mainly being targeted at a segment that EMC previously did not really focus on, he said he believes the cannibalisation effect would be minimal.
 
“Overall, I believe it will benefit the company more than hurt it,” he said, claiming the response for Vspex Blue has been “very positive.”
 
“There is a lot of excitement, not just in Malaysia, but also in the region,” he declared.
 
Cheam also said that Avnet, EMC’s main distributor in South-East Asia, is ready to grow this market.
 
“Avnet is all geared up. Its people have been trained … and they are now targeting some customers already,” he said.
 
Cheam said that banks and financial institutions are also seeing the benefits of Vspex Blue in terms of security and the cloud. Buying storage from PC vendors means it would be difficult for them to manage security.
 
He also sees Vspex Blue as having synergies with EMC’s other products like Vblock, where Vblock can be installed in the headquarters, while Vspex Blue can be installed in various branch offices.
 
“Also, it is very simple to [deploy]. If you are using one Vspex Blue and want to add another one, all you need to do is just press a button and the network will be automatically connected, and the files will be evenly spread out automatically,” Cheam said.
 
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