EMC made a surprise announcement today that it is spinning out the Syncplicity division to private equity firm Skyview Capital. EMC will retain a stake in the new company (which will be called Syncplicity), and Skyview exec Jon Huberman will lead the company as the new CEO. Most of the Syncplicity team will move to the new company – though existing leader Jeetu Patel will move on to bigger and better things outside of Syncplicity. The good news is that Jeetu built a strong team and the new company will benefit from his legacy.
There are a few obvious questions here.
Why did EMC spin out Syncplicity?
Misalignment in go-to-market. No matter how much you invest in a technology, if it does not fit your go-to-market model it does not make sense. EMC can’t really leverage the existing sales channels to drive Syncplicity adoption. The buying center for Synclicity is not storage or infrastructure, and it never shifted that way, despite the fact that many consider enterprise file sync and share (EFSS) a storage technology. In fact, the EFSS buying center is a bit all over the place right now and it becomes quite complex because the solution largely lives outside of the corporate firewall. Lots of teams could get into the mix when an enterprise license is involved: security, legal, governance, line-of-business managers, knowledge management, content management, and individual knowledge workers. It gets complex. So the core issue is that the EMC salesforce and channels do not sell to the mobility types that buy Syncplicity. So if you don't have go-to-market alignment, technology investment payback will be limited. Syncplicity as a standalone can now align sales channels with the customer buying centers.
If that’s the case, why did they buy them in the first place?
EFSS is both an opportunity and a threat for EMC. When deploying EFSS, suddenly all that data that used to live only in employee PCs and laptops is centralized into a content repository. Given the higher resolution photos, videos, and graphics that organizations are producing today (how big are your corporate overview PPTs today compared to yesterday?), this represents a lot of data to be stored, and they don’t want that to go to the likes of Box and Dropbox. That’s the opportunity. The threat is that, once those files do go to Box and Dropbox, what other data could follow? User home directories? Data that lives on departmental servers? In other words, the data that lives on EMC storage today. In fact, when we did our EFSS deployment model research last year, more than a quarter of the current EFSS users said they plan to reduce the usage of NAS because of EFSS, 46% are reducing e-mail file attachments, and 42% are reducing SharePoint. EFSS will not replace any of these completely, but it will eat into them. And EMC wants to retain that storage footprint. So playing in EFSS made sense.
But…even though EFSS is largely thought of as storage, and hybrid EFSS is really complementary to EMC's storage portfolio, the decision making process still hasn't landed with the storage team. I think there was a feeling that the storage team would have more influence, and that never materialized. Which is why EMC can’t get the salesforce leverage it needs.
That’s not to say EMC won’t go after infrastructure deals that involve EFSS! There is now more opportunity than ever for EMC to partner with on-premises and hybrid vendors like Citrix, Accellion, OwnCloud, Egnyte, and others to make sure EMC technology is qualified with their solutions, so it can still work on retaining storage footprint.
What are the opportunities for the new company?
Certainly sales and channel alignment with market opportunity is one big area for focus and opportunity. Syncplicity can now recruit sales teams and channel partners that are aligned to the mobility buying cycle and can have those security, legal, and compliance discussions.
And they can better target technology investments. As a part of EMC, Syncpliciity had to be a good corporate citizen and make technology investments that align with the greater EMC good. But that doesn’t necessarily align with broader mobility market trends nor does it help Syncplicity drive adoption against the likes of Citrix ShareFile, Box, and Dropbox. Now Syncplicity can focus on partnering with those mobility vendors that focus on areas like workspace delivery and EMM. Because Syncplicity really needs to play in these areas to be successful. For a look at how Syncplicity (actually EFSS in general) ties into the broader workspace delivery ecosystem, take a look at the workplace delivery market summary report that Mark Bowker and I wrote on the topic. In some cases EFSS is a point solution buy, but as enterprises mature and really focus on mobility, they will look at how they are delivering desktops and applications to users across multiple devices with mixed ownership models, and Syncplicity needs to be in those environments.
And there is a lot of market potential for Syncplicity as a hybrid cloud EFSS platform. While the cloud is probably the endgame, hybrid is the near term solution that end-users are looking for. Again, in our EFSS deployment model research, we saw that 90% of organizations surveyed have some data that they forbid to be stored in the cloud. In Europe – the issue is different, given data sovereignty requirements, so its hybrid model should help drive traction abroad.
What are their big challenges?
Challenges are multi-fold. Certainly the new team needs to execute – build the sales teams and channel partners. It is now in startup mode in a crowded market, and will be competing for sales talent and partner mindshare. Basic EFSS functionality will commoditize. So there are challenges around getting the visibility with the right buyers to get the sales at-bats, and to add feature sets around collaboration and workflow – because EFSS is not just about storage. It can be a valuable productivity tool. It has some differentiation with its hybrid model that give it a potential leg up against Box and Dropbox, but it will need to differentiate against other hybrid vendors like Citrix ShareFile and Egnyte.
Does this have anything to do with the HP/EMC merger rumors?
These rumors were around last year and recently surfaced again in a CRN article. And this certainly could be a part of the portfolio streamlining process. If you think about it, the EMC federation has 2 EFSS products - Syncplicity and Airwatch Secure Content Locker. Secure Content Locker is tightly entwined with the Airwatch EMM products.
They each have their advantages. Syncplicity is much slicker and user friendly from an end-user standpoint, but Content Locker has some sleek content security and control features that Syncplicity does not. It is much easier to streamline the portfolio by spinning out Syncplicity than trying to untie Content Locker, plus the Airwatch salesforce is talking to the mobility buyers while the Syncplicity product is going through the main salesforce and overlays – how many times can I say this: the EMC salesforce talks to storage guys, not the buyers for EFSS. We’ll post more thoughts on the HP/EMC potential in coming days.
There are some rumors that EMC is dumping Syncplicity because it isn’t getting its money’s worth. Who knows? EMC does but they are certainly not telling. Syncplicity is solid but gets a little lost in the EMC machine. It doesn’t get the sales at-bats that Box and Dropbox do because it does not have the EFSS brand cache that they do and it doesn’t touch the mobility buyers that Citrix Sharefile does. But at the same time Syncplicity has closed some big deals. Think hundreds of thousands of seats deals.
It will be interesting to watch the new Syncplicity team and see if it can take advantage of the market opportunity presented by EFSS. The good news is that they have a solid product, though they’ll need to keep investing in collaboration, lightweight workflow, and workspace delivery partnerships to be successful. And they will need to align go-to-market. The opportunity is there; it is up to the new leadership team to take advantage.