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EMC is the king of storage. And it wants to stay that way

The world is generating phenomenal amounts of data. IDC projects that the “digital universe” will grow 44 times from 2010 to 2020, with the converging trends of cloud computing and big data driving enterprises to store and exploit vast seas of information. It’s a good time to be in the storage business. And it’s a good time to be storage industry leader EMC.

EMC’s revenues have more than tripled since 2002. The Massachusetts company has been shoulder-to-shoulder with its larger rivals in snapping up smaller storage technology companies. EMC has also continued to invest heavily in research and development. The company’s technology strategy is more aggressive than its rivals’ strategies, but by no means out of place in a rapidly growing market where the players strive to have an offering for every buzzword-laden customer query.

Last month, EMC CEO Joe Tucci told a University of Washington audience that between 2003 and 2010 his company spent $10.5 billion on R&D and $14 billion on acquisitions. EMC spends 11 to 12 percent of its revenue on R&D, and company officials have said that it will continue to be opportunistic in acquisitions. “The companies that have done well are the companies that have played an offensive game,” Tucci told the audience. “We’re spending almost $5 billion a year on technology.”

EMC is playing offense in three games these days. EMC is the data-storage market leader attempting to fend off strong advances from its competitors. It’s also a company with “only” $17 billion in revenues battling 12-figure behemoths IBM, HP, and Hitachi. And it’s the crusty 32-year veteran facing off against nimble younger competitors like NetApp and a host of niche players.

“There is a healthy degree of paranoia inside EMC,” said Jeremy Burton, EMC Executive Vice President & Chief Marketing Officer, the company’s storyteller-in-chief. Burton held up HP as a cautionary tale of what happens when a company scales back its technology investments. “You cut that to a certain point, and you end up stealing from the future, and it’s very, very difficult — once you’ve stolen from the future for a few years — to catch up.”

The competition is certainly heating up. Last month, Dell decided to stop selling EMC gear in favor of its own storage hardware. And just last week, venerable supercomputer maker Cray joined the party with an integrated storage system that can scale up to 50 petabytes.

As the big guys jockey for position, they’ve gobbled up all sorts of smaller players. HP paid $2.4 billion for cloud storage vendor 3Par. IBM bought data warehousing vendor Netezza for $1.7 billion. NetApp bought storage array maker Engenio for $480 million. And Dell bought storage area network vendor Compellent for $960 million. Not to be left behind, EMC paid an estimated $350 million for data warehousing vendor Greenplum, and $2.2 billion for big data storage cluster maker Isilon.

Map of recent storage industry acquisitions from Forrester Research.

“Most of these vendors are checking boxes in their portfolio and making sure that they don’t lose ground to competitors by lacking a play in a hot new area,” said Andrew Reichman, a principal analyst at Forrester Research. “They tend to wait to buy them until they are pretty well proven sellers, rather than taking early chances.”

EMC’s purchase of Isilon shores them up in large-scale file storage, a market segment that took time to emerge but is now a high-growth category, said Reichman. HP had already bought in with its Polyserve and IBRIX acquisitions, and NetApp bought the technology eight years ago with its purchase of Spinnaker, he said.

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