EMC vs. Google: There Should be No Competition

Rob Enderle

I'm often fascinated by battles between mismatched companies. Either firms that are vastly different in size and power (Netscape-Microsoft for instance), or in this case, companies that are vastly different in capabilities.

 

EMC and Google are effectively at war over a concept. That concept is whether cloud computing, particularly as it relates to storage, should be public or private. The apparent mismatch is that EMC is a storage company, the top company selling traditional enterprise storage. Whatever Google is, it isn't a storage company, and while it appears to focus on the end user, it mostly gets paid by advertisers. EMC has as a core goal protecting customer's data; it is what its business is about. Google has as a core goal indexing and making all information available to everyone. There is a clear, and to me, alarming disconnect in these two goals.

 

Google largely leads on being really cheap, but I think there is a huge problem when you decouple revenue from the product. Companies tend to respond to financial pressures. For EMC, these come from IT customers, for Google, advertisers. EMC has no apparent conflicts of interest, has Google massive apparent conflicts between the privacy needs of its users and the information needs of its actual paying customers. Let's talk about that.

 

EMC Virtual Storage: A Strategic Dialog

Today I'm watching a presentation by Pat Gelsinger on EMC Virtual Storage, which follows the traditional rules of enterprise products. This means it's heavy on performance, flexibility and technology layered under a solid business-problem statement. Pat, whom I've known for years, is one of the few folks that can actually make technology sound interesting. Many of us thought of him as the heart of Intel, and he appears to have transitioned that passion to his new company, which he helps run.

 


The core of this piece was the flexible use of federated resources and the clear message was on agility gained through improvements to management, data-movement speeds, and more effective resource management. It's a solution that's robust, scalable, highly reliable and secure. EMC also tends to present things that are well cooked. In this case, it is more of a vision, but that vision ended with a request to go out and ask our customers what they think about the initiative and to seek feedback.

 

It is very clear who EMC's customer is, the enterprise IT manager. And EMC has one of the strongest quality-control organizations in the industry.

 

Price wasn't mentioned, though, partially because this is more of a vision then a product. This technology certainly isn't cheap, but for an enterprise vendor like EMC, the price tends to match the value and it leads with the value. Also, because solutions tend to be highly customized, price is different for each customer and not an easy topic to explain to a large audience.

 

Google Cloud Services

Thanks to Google's CEO, Google wants a piece of the enterprise. However, when Google presents a product, it tends to lead with the price (free or really cheap), present end user capabilities and products that appear to be works-in-progress. Google regularly gets pounded for privacy violations and is under investigation by a number of government agencies for actions that appear to put various groups at risk.

 

Google presentations tend to be done by the engineering groups that came up with the idea. These offerings, for the most part, are generally focused on consumers, but there is no apparent early dialog with those consumers. Instead, the ideas seem to percolate inside of Google as something that might be fun to do. Wave and Buzz are both perfect examples. The first is hard to understand and the latter easier to understand and through that understanding, privacy risks were quickly identified. Google does do beta tests, but it tends to respond more effectively to regulators. There is no evidence that Google actually knows what an industry analyst is or speaks regularly with CIOs.

 

In short, Google doesn't appear to be well coupled with its consumer audience, and there is no evidence that it engages with the enterprise market in any deep way. Google's CEO, who came from enterprise companies, helped develop Sun's failed strategy, and was unsuccessful at Novell. My biggest problem with Google, particularly in this space, is the sense that it is hypocritical with regard to security and privacy. When CNET showcased that Google was making personal information available on the Web by showcasing information on Eric Schmidt found by using Google, Google responded punitively in an effort to cover the problem up and didn't move to correct it.

 

It isn't really clear who Google's customer actually is. Advertisers pay the bills (look at this revenue chart), but most of the products are focused on providing services to others. I think there is a fundamental problem with this model, particularly for enterprises, and we'll get to this in a moment. There is no real evidence that Google even monitors customer satisfaction and likely views customer use as a similar metric. (It is, but it is a lagging metric).

 

Google generally leads on price and there appears to be a subtle implication that, given that its solution is very cheap or free, you should accept the offering. In short, if it is cheap or free, what are you complaining about? You are getting what you paid, or in most cases, didn't pay for.

 

The Problem with Decoupled Price

There is no magic product and Harry Potter doesn't fly in and create an enterprise offering. Someone is paying the bill to create it and that someone is going to want value. When you decouple revenue from the product, it becomes very difficult, and you can see this with Google, to stay focused on quality and customer satisfaction. We saw this with Microsoft and IE6. It was free and Microsoft didn't put much focus on it. As a result, IE6 became a massive security, reliability and management problem.

 

This suggests that the problem isn't Google, but the model of decoupling revenue and profit from the products being sold. Apple, in the consumer space, fully couples revenue with its products and maintains an extremely low level of complexity so that it doesn't get distracted. The results are the highest margins and customer satisfaction in the segment.

 

In the enterprise space, EMC maintains this same coupling and focus and also enjoys some of the highest financial success and customer satisfaction in the storage space.

 

Wrapping Up:

In watching EMC today, I was struck by the fundamental differences between a traditional vendor and a company that came out of the dot-com. I watched so many companies fail because they believed that advertising revenue could solve all problems, including the lack of a business plan. Google has successfully shown how to make the dot-com advertising model work, but the result has been relatively low-quality products with huge privacy and security problems -- not to mention an increasing level of government concerns and intervention. That just doesn't sound like the qualities we admire in an enterprise vendor.

 

In the end, while we can all be motivated by a good deal, free or cheap comes at a cost. For storage, that cost, in terms of data security and system reliability, appears to be too high. I do think there is a fix: likely a company-forced coupling of customer satisfaction and requirements to the product plan. But I know that revenue coupling works and that vendor focus on my needs remains a requirement when I make a product choice. I'm guessing that you feel the same way.



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Mar 11, 2010 6:52 AM a. asdf a. asdf  says:

"..Microsoft and IE6.  It was free and Microsoft didn't put much focus on it."

IE6 came out in August 27, 2001. At the time, IE almost had a complete monopoly in the browser market. (http://en.wikipedia.org/wiki/File:Internet-explorer-usage-data.svg) So from their point of view, they couldn't justify spending huge sums of money on something that was perfect, based on market share.

I don't know what the deal is with Google Buzz. Even the name is wrong. Yahoo has a service called Yahoo Buzz (http://buzz.yahoo.com/) and it was launched in 2008. I'm not a lawyer, but I would think stealing service names from your competitor is a no no.

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Mar 11, 2010 7:01 AM Rob Enderle Rob Enderle  says: in response to a. asdf

Yes but had they made money from it, they likely would have refreshed and improved it so they could cycle the base.  They have similar market share with Office and Windows but they cycle those, granted with Vista and ME, they didn't cycle well but that was a different problem.

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Mar 11, 2010 8:24 AM a. asdf a. asdf  says: in response to Rob Enderle

Well, cycling Office makes sense from a revenue point of view. They release a new version and end support for the old version. And they get a nice revenue stream from upgrades. Same with Windows.

I understand your logic. But even if IE was sold separately their improvement motivation and focus would be directly proportional to how well or bad the product was doing in market share. So, IE6 would probably have had the same issues even if it was sold separately.

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Mar 12, 2010 12:21 PM Rob Enderle Rob Enderle  says: in response to a. asdf

Certainly you could argue that making money didn't help Vista and even going back to MVS and VM if dominant, while products get cycled, the 'improvements' you got weren't really 'improvements'.  But as soon as you see the revenue stream at risk you move decisively.   You may recall it took awhile for Microsoft to fund a response to either Google or Firefox.    They still don't have the level of funding behind ie that would exist were it a profit center.   I think this free stuff really causes firms to lose focus on what is important in a product and may largely be a failed, or more accurately, a failing model. 

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