EMC Corp. (EMC) announced that it will be providing its expertise on virtualized environment to Safe Systems Inc., a service provider for financial institutions, in an attempt to better serve the latter’s clients. The financial institution will be using the private cloud computing model through the virtualization of its IT infrastructure.
EMC was chosen ahead of the likes of NetApp Inc. (NTAP) and Hewlett Packard Co. (HPQ) for the total virtualization of Safe Systems’ managed and network-based services.
Safe Systems is using EMC VNX and EMC VNXe unified storage and VMware Inc.’s (VMW) vSphere virtualization solution for providing an efficient storage facility with increased speed and consolidated IT infrastructure.
Very recently, VMware Inc. and EMC Corp. have announced a collaboration to develop the new VMware vShield 5 family products, using RSA’s (security division of EMC) Data Loss Prevention (DLP) classification technology and policies.
The partnership enables VMware to embed Data Loss Prevention (DLP) classification technology and policies into the new VMware vShield App with Data Security, which will be available as a part of the VMware cloud infrastructure suite in the third quarter of 2011.
With rapid adoption of cloud computing, security and prevention of data loss has emerged as a major concern for enterprises in recent times. According to research firm IDC, enterprises cite data security and regulatory compliance as major impediments in adopting cloud computing services.
We maintain our Neutral rating on EMC Corp. over the long term (6-12 months). We believe EMC will benefit from its dominant position in the storage market going forward. Moreover, the increasing adoption of cloud computing technology will boost demand for EMC’s virtual infrastructure product, which is in turn expected to drive top-line growth going forward.
We also believe that increasing spending from government and large enterprises on cyber security will bolster EMC’s top line over the long term. We also expect EMC to witness strong revenue growth from its broad portfolio of products.
However, EMC faces stiff competition in its key storage market from companies like International Business Machines Corp. (IBM), Hewlett Packard Co., NetApp Inc., Hitachi Data Systems and Dell Inc. (DELL). This may hurt its profitability going forward.
EMC has a Zacks #3 Rank, which implies a Hold rating in the near term (1-3 months).
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