What's more, EMC has already said its software appetite is not yet satisfied. On a conference call this morning, CEO Joe Tucci said he is already on the lookout for the next big software deal. While EMC refused to even hint at what kind of company it might be interested in buying, several industry analysts say that, as with Veritas, it may have set its sites beyond the storage software market (see Veritas Moves up the Stack).
Pursuing a software strategy is perhaps the company's only chance to prosper in the long term, industry observers say. "As storage becomes more of a commodity, what are these guys going to do?" asks Greenwich Technology Partners consultant Ron Lovell. "They're sort of a one-trick pony."
EMC has, of course, been working toward its storage software goal for some time. The Legato deal will be its tenth software buy in less than three years. But so far, sales of open software -- that is, software that doesn't reside on EMC's own hardware arrays -- have hovered around 7 percent of the company's overall revenues (see EMC Chews & Swallows BMC Unit and EMC Sucks Up Astrum).
With its $1.3 billion price tag, representing up a little less than 5 percent of the value of the combined company, this latest acquisition carries the promise of a more serious software commitment. The deal is expected to boost EMC's presence in the backup and recovery space, and especially in the growing area of information lifecycle management. "I think all their competitors are definitely watching this very closely," says Forrester Research Inc. analyst Anders Lofgren. "I'm sure Veritas is definitely taking notice of this."
Veritas refused to comment on the EMC/Legato deal [ed. note: too busy sweating bullets?], but several of EMC's other competitors were more than willing to come out to prove they're not afraid.
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