NEW YORK--It was a lovefest Tuesday here at the Plaza Hotel where Microsoft and storage company EMC announced that they are extending their strategic partnership another three years.
The software giant and information management company have been working closely together for years, but they did not formalize their relationship until 2006. Now things are going so well for the companies, they have decided to extend the formal relationship. As part of the extended partnership, the companies say they will be focusing more on storage and virtualized environments. They will also concentrate on productivity and security solutions to prevent data breaches.
ZDNet Asia's sister site, CNET News.com caught up with Microsoft CEO Steve Ballmer and EMC CEO Joe Tucci here at an event they hosted for their enterprise customers where the two executives talked about balancing their cooperative and sometimes competitive relationship. They also discussed how the current economic environment is affecting how their large corporate customers are spending money, and how they hope their continued partnership will help them each drive more business.
Below is an edited version of the conversation. News.com's Marguerite Reardon interviewed the CEOs in person in New York and Ina Fried joined the interview via phone from San Francisco.
Q: Who do each of you see as your biggest competitor today in the corporate technology world?
Ballmer: I think if you look on the enterprise side today, there's two primary forces. I would say certainly Oracle is on the list of primary competition and then primarily Linux-based alternatives.
Now, IBM shows up for sure. In certain spots we overlap with Cisco. Google is starting to show up a little bit. But certainly Oracle is a primary competitor as is Linux. But Linux as sponsored by IBM, but it's Linux more than it is any IBM product. That's the big competitive dynamic for us in the enterprise.
What would you say, Joe?Tucci: It's a little bit harder to answer. We have four business units that address the enterprise: virtualization, storage, security, and content management archiving. And for each one, different competitors pop up. On the virtualization side, we have co-opetition with Microsoft a little bit. On the security side, you'll see companies like Symantec. On the storage side, there's no shortage. You'll see IBM, HP, Network Appliance. On the content management side, you'll see IBM.
How does your partnership improve how you each compete against these companies?
Tucci: I'll start with content management. One of the things we've been working on for a while is working closer on integration with SharePoint and Documentum, which we think brings together two important aspects of content management--user experience and real, back-end repository experience--and puts them together.
We also think we can have the best end-to-end solution out there in security. We are taking Microsoft with their rights management software to more end points, which we think will make us stronger against Symantec and others.
Ballmer: And the partnership makes us stronger versus our Linux-based alternatives on the desktop. Part of the way we compete with open source desktop stuff is by having stronger total value-add. We can't beat Linux on initial price. So, the notion of being able to go and say, here's a solution that you can really use to do fantastic security, fantastic data loss prevention from the client through the back-end, that's a powerful part of our proposition. And that's an example of how you get these things to dovetail.
Tucci: Microsoft is making huge forays in the overall operations management space, and we partner together with some technologies there. So, I think together Steve and I both feel we can be more competitive in the marketplace and provide real value for our joint customers.
In the agreement, one of the areas you talked about working more closely in is virtualization. VMware is affiliated with EMC, which is probably Microsoft's biggest competitor in virtualization. So how credible is the notion that your companies can work together? And where do you draw the lines of cooperation? And how does that benefit customers?
Ballmer: We're not sitting here pretending we're partnering with VMware. That's more competition.
With EMC, which is a large majority owner in VMware, but is also independent, there's a lot that rides on virtualization. The fact of the matter is the storage business is being transformed also by virtualization. And virtualization is transforming the storage business. We want to do very well in virtualization. While Joe may own 80 percent of VMware, he still thinks it's a good idea to sell storage in places where perhaps we'll win as opposed to VMware.
Despite the fact that there's a level of competition with EMC's majority-owned division or entity, there's also a lot of cooperation around how virtualization affects the rest of our product line and the rest of EMC's product line. Let me just say, we're happy with the state of affairs. Of course, there's going to be competition in the virtualization space. I think EMC is as good as you're going to get in terms of being able to both--I won't say compete, but own a competing entity, if you will--and partner with us where we want to. We really respect Joe and the EMC team for that.
Tucci: I agree with everything Steve said. I think I'd add a point that says to really serve our customers, you need to form partnerships and alliances. And if you look for that alliance or partnership to be perfect where there's zero areas of overlap, I'm not sure that's physically possible with two powerful companies. So, what you have is this co-opetition.
As long as, like Steve said, you define the rules, you both know what you're doing, and have respect and understanding. For sure there will be many Microsoft applications running under VMware, and that's fine, because it's a win-win. There will be many times where a customer will pick Hyper-V and want to use EMC storage. And that's fine. We'll work together there.
I think it's an acknowledgment by two people that have great respect for each other, and two companies that are powerful, that this is a very good way to go.
Ballmer: There's enough shared interest for this to work. If it's 90 percent-95 percent competition, it's hard to get the little bit of cooperation. We're nowhere like that. We're 80 percent-85 percent cooperation, something like that. So, that makes it easier to do the whole thing.
Tucci: Good point.
Ballmer: I can't tell you we're "co-opetiting" or whatever you call it very well, for example, with Oracle. So, I'm not pretending you can do it with everybody in the business.
That leads to my next question. Partnerships in general are very tricky to manage, because, as you mentioned, you're cooperating but you're also competing in some areas. What are your companies doing to ensure that this partnership benefits each of your interests?
Tucci: Well, you're right. It's just like anything else in life. Whether it's a marriage or two people working together, it just takes time. Nobody is going to have exactly the same identical views, and it just takes time. You've got to work through them.
Steve and I dedicate time to having reviews very regularly. We have two people, very qualified people in the back of the room here, that work this alliance as a full time job. And we talk all the time. When things aren't right or something goes wrong--let's put it this way--we fix it. And when things are good, we celebrate it and do more of it.
That's what we're doing today, we're saying, "Okay, it's been so good, to Steve's point, the 85 percent total cooperation is a really good number, we're going to extend this thing for three years." Steve and I are going to raise the bar. We want more success, and we're going to hold our teams accountable.
Ballmer: These things tend to go into one of three buckets. One, they break down, there's just too many problems, and sometimes that does happen to partnerships.
Number two, they're really largely irrelevant. That is, we kind of work together, but the partnership never really gets any energy. And we've had some of those, I would say.
And then the third case is where they really work. In the case with EMC, it definitely falls into the third category.
The thing that I wasn't sure about when we started--Joe was, I wasn't, and I give Joe credit for this--was would it really be important enough to the EMC salesperson and the Microsoft salesperson to matter? Because if it's important enough to matter, it's important enough to the customer. Then it also stays important enough to the R&D guy, and it is important enough.
When we go into sell an Exchange solution, we get to talk about storage, content management, and services along with the EMC people. So we're talking about things which are really important to both companies, and really important to the customer. The customer cares about what the deployment is going to look like; how highly available will that Exchange implementation be; what's the storage configuration going to look like. That's an important part of the overall decision-making process. And because it's important enough to the customer, I think that really helps.
I didn't know going in, I'm not a storage expert. Joe said, trust me. Joe and I have worked together 25 years now basically, in a co-opetition arrangement, pretty much the whole time. And I would say it has really worked.
I want to shift gears a little bit here, and talk about what's happening in the economy. How is the downturn affecting spending? Where are your customers spending and where are they not?
Tucci: I think there are several things that I've seen, and I'm sure Steve will have a bunch. Most of our customers are dealing with some restructuring. They're trying to cut costs. They
Play video
There are currently no comments for this post.