Energy = mass x constant acquisition
Last week corporate data storage giant EMC announced an agreement to acquire data storage pioneer Iomega for $213 million. Iomega will apparently become the core of a new Consumer/Small Business Products Division within EMC.
Gartner has published a short analysis of the move. Here is its summary of how it thinks things will proceed.
EMC will provide Iomega with fiscal security and strategic support, but the new consumer division will face a merciless market with razor-thin margins and tough competition from diverse global vendors such as Buffalo Technology, Dell, HP, LaCie, Netgear, Seagate Technology and Western Digital. Seagate and Western Digital, which design and manufacture their own HDDs, will have some cost advantages.
Iomega's high-volume/low-margin business differs greatly from EMC's current businesses. EMC must demonstrate that it has the courage of its apparent strategic convictions and that it is willing to become a serious player in widespread distribution and consumer channels.
Iomega began selling EMC Retrospect backup software with its external disk drives in 2004. Last January EMC launched LifeLine SOHO storage software and Iomega announced it would embed LifeLine in its StorCenter multi-drive network storage products, due out this summer.
Gartner reported a total of 22 million consumer/SOHO external hard disk drives shipped in 2007, an estimated $3.9 billion market, estimated to grow to 43 million units and $7.3 billion in 2012.
Enterprise Content Management strategy
Actually, the Iomega acquisition is the latest step in EMC’s move into the high volume/low margin SMB market. Previous acquisitions include Berkeley Data Systems (Mozy online backup) in October 2007, and document output management leader Document Sciences last December.
In February, EMC bought Pi Corporation, a private developer of software and service provider for personal information management, to form the core of a new Cloud Infrastructure and Services Division, to include EMC Fortress SaaS infrastructure and Mozy.
In March, EMC acquired privately-held Infra Corporation, a provider of IT Service Management software, as part of a strategy designed to automate data centre operations and return visibility and control to IT management.
In early April, EMC announced the launch of low-end StorageCredenza (using Lifeline) in China.
Press release: EMC To Acquire Iomega
