Data privacy a concern for EU economy

European plans to strengthen data privacy protection after revelations about the US National Security Agency (NSA) accessing data hosted by US tech companies could damage the EU economy, according to Jeremy Burton, EMC executive vice president of product operations and marketing. "If there are huge privacy concerns in Europe, then it's not only going to skew investments by big companies like EMC, but also the start-up world," he warns.

Europe is a tried-and-tested route to market for new tech companies that might unravel if a tighter regulatory environment is imposed, according to Burton. "If you can't buy an online service in Germany, then no start-up is going to hire people to work in Germany. They will put their resources in parts of the world where it's less contentious. It could have big implications, particularly for the tech sector which has been one of the growth drivers."

He makes it clear that EMC will carry out the same kind of evaluation. “We are obviously going to hire more salespeople more quickly in the areas of the world where there is less resistance. At the end of the day, we go where we can get the most dollars back per dollar invested.”

There are privacy concerns worldwide but the Europeans are more vocal, adds Burton, who believes it is time to rethink regulations and adopt a more open approach. “Governments have to be very careful that they don’t create legislation for old people that will be very restrictive on a younger generation coming into the workplace who don’t have the same attitudes towards privacy that we do. You don’t want to be falling behind the rest of the world because of overbearing privacy concerns that very few people care about.”

On the American side of the debate, Google and Microsoft are suing the US government for the right to reveal more about the NSA activity that is damaging the image of the IT industry and cloud computing in particular. The cloud is a business model predicated on service providers like Google and Microsoft hosting customer data – a service that may be compromised by the NSA accessing the data as part of its surveillance programmes.

The EU data-protection directive calls for data to be processed according to European rules even when it resides in data centres run by US companies. The NSA revelations have fuelled concern that this is not happening, particularly in Germany where local cloud providers have reported a spike in business as firms shun US companies. EMC is chiefly focused on selling storage into private clouds, where the customer controls its own data centre space and avoids the regulatory minefield of public clouds run by Microsoft, Google and Amazon. "Our research data shows that most applications will still be deployed inside a private cloud or some kind of hosted cloud from a secure service provider over the next four years," Burton says.

Bucking the trend
At a time when many IT vendors are reinventing themselves to deliver cloud services that require decreasing capital investment from their customers, EMC is going the other way, launching a new range of superfast storage systems that will give IT departments the speed and simplicity of public cloud models in their own data centres.

At a product launch in Milan last week, Burton argued that the sums added up and would ensure companies kept buying kit.

With the average storage price falling 22 per cent each year, he says total cost of ownership works out cheaper than paying for public hosted infrastructure. Enrich products with cloud benefits like simplicity of service and the ability to scale quickly and he believes EMC makes a compelling case for keeping storage in private clouds.

Paul Stemmler, managing director of the Citi Infrastructure Group, illustrated the business case for "for public agility in a private cloud". Citibank's IT division has been using new EMC systems that deliver between 74 and 124 per cent performance improvements. Stemmler could not envisage putting any infrastructure in a public cloud in the foreseeable future because of the bank's regulatory requirements.

With up to half of its revenue coming from a couple of hundred high-end customers, EMC is focused on giving them all the benefits of the cloud in their own data centres. It claims its new VNX product family is a revolution in mid-tier storage, achieving new levels of price and performance.

Built from the ground up, EMC says it took product revolution, not incremental improvements, to keep up with storage demands in the enterprise sectors.

President and chief operating officer David Goulden says the company is responding to "waves of change that are faster than we've seen before". To illustrate, he describes how EMC recently sold 85 petabytes of data storage to a single customer, the equivalent of 20,000 hard drives, eight delivery trucks and 300 pallets.

Goulden says it took EMC 25 years and until 2005 to ship one exabyte (1,000 petabytes) of data storage. In 2010 it shipped the same volume in a single year; in June this year, it did it in a month.