Which companies will EMC’s Project Lightning strike?

With its Project Lightning server-side flash cache, EMC(s emc) hopes to show itself as a forward-looking storage provider. EMC’s problem is that it, unlike newer competitors such as Fusion-IO, it is not focusing exclusively on the types of storage that sell into webscale data centers because it must protect sales of its legacy products. The bad news for EMC is webscale is where the growth is.
Massive webscale data centers use commodity hardware.  The Open Compute Project, born of Facebook, but embraced by Rackspace(s rax), Intel(s intc), even Goldman-Sachs(s gs), specifies standard architectures for servers and eventually storage, targeting these huge, webscale data centers. Companies like EMC with a lot of proprietary IP to protect, do not fit into that vision very well.
As more workloads move into these big Amazon- or Rackspace-style public cloud platforms, they are lost to these old-line IT powers — the ranks of which also include Cisco(s csco), Hewlett-Packard(s hpq) and Oracle(s orcl).
These legacy hardware companies are pursuing a scale-up strategy–vertically integrating more of their own compute power, storage, networking into single, pricey boxes, as opposed to the scale-out boxes underlying public clouds. In scale-out mode, huge numbers of inexpensive server are strung together to divvy up tasks. Adding more boxes, adds more scale.

Legacy vendors on wrong side of scale-out divide

The pitch from the likes of EMC or Oracle is that vendor integration holds value that customers will pay more for. Oracle even characterized Exadata at its launch a few years ago as a “cloud in a box” and Oracle CEO Larry Ellison claimed that a pair of Exadata machines could run all of Facebook. The problem is that there’s only one Facebook and it’s not running Exadatas. There is a market for those boxes, it’s just not growing as fast as the webscale world.
GigaOM Pro analyst George Gilbert summed it up: “The big disruption for EMC is that they’ve built their business around being the mainframe of the storage market. If you look at the webscale data centers, they’re all about scaling out vs. scaling up.”
EMC — like Oracle — is also hamstrung by a business model predicated on the sale of very profitable big boxes. The company fields an aggressive sales force that gets paid commission on these things. Needless to say that model won’t fly in the webscale world where Amazon or Rackspace buy thousands of servers at a time and can pretty much dictate their terms because their buying power is so huge.
Both Amazon and Rackspace wring every extra cent of cost out of their infrastructure which they then rent to high-priced software developers who build software and services for business users. Oracle and EMC, on the other hand,  sell high-priced gear to companies that then use lower-priced developers to tweak software and services. The difference to tech buyers is they are trading capital expenditure (capex) spent on Oracle and EMC for operating expenditure (opex) that flows to Amazon or Rackspace.
No one thinks EMC is going the way of the dodo bird, but until it and others in the scale-up world get the memo, their growth in these new data centers will be stunted, to say the least.
Photo courtesy of Flickr user redjar