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EMC + Documentum = War for Control of Unstructured Data

One of the most interesting recent acquisitions in the software space was EMC’s purchase of Documentum. Not because it was a particularly large acquisition in terms of dollar size or premium paid but because of the strategic implications it has for much of the software industry, especially for companies in the content management, storage software, and database markets.

Documentum isn’t the only acquisition EMC has made recently. It also acquired storage software maker Legato Systems and virtualization leader VmWare. However, both of these acquisitions can be seen as incremental expansions of EMC’s existing focus on storage and storage management (and probably a competitive response to some of the moves storage players like Veritas have been making) whereas the Documentum acquisition represents a major leap “up the stack” right into the midst of the classic enterprise software space.

By boldly jumping into the enterprise software space, EMC appears to be, as a fighter pilot might say, “going vertical”. They are making a bet that customers will want to buy the “whole enchilada” from one vendor including not just platters and storage management software, but high-level content management and work flow software as well. Indeed, one can reasonably expect that the logical extension of this strategy will be a series of vertical solutions targeted at specific applications such as claims processing, image management, content publishing, e-mail management, etc.

By providing the entire solution (no doubt delivered by its services division), EMC should theoretically be able to improve margins by focusing its customers on the value of the entire bundled solution as opposed to simply the cost/gigabyte of its storage products.

Even more important than this solutions focus though, is that fact that EMC is trying to stake a claim to the entire unstructured data management space. EMC’s drive to do this has no doubt been influenced by their customers who are increasingly buying additional storage not to supplement existing databases or information warehouses, but to store and manage unstructured data such as e-mails, PowerPoint presentations, and web pages.

That EMC can stake a claim to the unstructured data management space without alienating some of its biggest ISV partners (the database and warehouse vendors) has much to do with the fact that traditional RDBMS vendors have been surprisingly reluctant to make major commitments to the unstructured data management space. Many of these players, led by Oracle, continue to hold on to the outdated belief that all of an enterprise’s information will be managed by RDBMSs and therefore they have made few attempts to expand into unstructured data management. This abdication has in turn opened the door for EMC to make a move without causing massive near term channel problems.

That’s not to say that EMC’s move into the unstructured data management space won’t ruffle more than a few feathers. Those that will feel the brunt of this entry are the remaining content management players such as FileNet, Interwoven, Stellent and Vignette. These firms must now contend with a very large, aggressive competitor selling hardware/software bundles. In addition, EMC’s traditional storage software vendors must now consider whether or not they will respond by making their own forays into the unstructured data management space. Veritas in particular will now have some difficult decisions to make. Finally, by letting such a large, aggressive company as EMC into their back yard, the traditional RDBMS players are going to have to make a decision as to whether or not they continue to hold on to their anti-file system views or they respond by delivering their own unstructured data management solutions.

Caught in the crossfire between all of these behemoths will be the existing unstructured data players in content management, search, categorization, taxonomy, and work-flow. These relatively small players (many of them still start-ups) will have to decide if it is better to sell out to one of the big players moving into their space or to solider on and attempt to carve out a defensible niche. In this sense, EMC’s acquisition of Documentum represents just the first shot by a major player in what is likely to be a long conflict for control of the unstructured data management space.

January 29, 2004 in Content Managment, Database, Stocks | Permalink


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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.