"EMC remains squarely at the center of the most disruptive and opportunity-rich shift in IT history, propelled by the benefits of cloud computing, Big Data and trusted IT. These high-priority IT spending areas are core to our strategic focus and represent market segments where EMC has established leadership positions and competitive advantage."Essentially, while the market was discounting EMC's prospects, management showed strong confidence in its capabilities.
It recently launched ViPR, a "software-defined storage" platform designed to provide IT departments and enterprises with a cost-effective and simple way to manage large data centers via the Web without sacrificing features. With ViPR, EMC has responded to Amazon.com's ( AMZN) dominant cloud platform, known as Amazon Web Services, which had become the standard for IT departments looking for a low-cost way to shift their hardware and software data-center functions to the cloud. As more companies migrated from local storage, this diminished the importance of EMC and its strength in "Big Data." It also raised questions about VMware's profit potential and the overall direction of the virtualization market. But with ViPR, EMC becomes a formidable rival to Amazon, the Street understands why Tucci had spoken with such confidence a couple of months ago.
Given how widely regarded Amazon Web Services is, ViPR likely won't dethrone Amazon right way. But I don't believe it has to. And it doesn't seem as if that is what EMC's management cares about. ViPR's support of third-party hardware and software, even from NetApp and Microsoft ( MSFT), speaks to the level of self-belief that EMC has as a market leader.
By creating a separate entity, EMC appears to think that Pivotal can realize more value and can become another strong catalyst to EMC's long-term growth, especially since the total available market for Big Data is projected to grow by as much as $17 billion over the next three years. The challenge for investors is trying to figure out which companies are best-positioned to capitalize when IT spending resumes. Given the bearish tenor that permeates the storage/cloud market, we won't know how right EMC's management is for at least several more quarters. But given management's track record of strong performance, I wouldn't bet against them. Although EMC doesn't look like a stock that can ring sizable gains this year, current trends and fundamentals support a fair value of $30 per share over the course of the next 12 months, which is a 21% premium to current levels. I wouldn't wait to accumulate these shares, though. From the standpoint of its product cycles and growth capabilities, there is no company that is better positioned to capitalize on a recovery in IT spending. At the time of publication, the author held no positions in stocks mentioned. Follow @saintssense This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.