Web hosting service said to be offered by EMC

EMC, the world’s top provider of corporate computer storage hardware, is in early-stage talks with Germany’s SAP AG to deliver computer programs over the Web, a senior SAP executive said on Wednesday.

The proposed tie-up comes as Massachusetts-based EMC makes a push into a much hyped new area of technology known as “cloud computing” that centralizes computing and storage functions at data centres, and allows people with PCs or laptop computers and Web access to tap vast stores of information from afar.

The companies would use virtualization technology to deliver that software to customers, Doug Merritt, president of SAP Labs North America and a member of the SAP Executive Board, told Reuters in an interview.

He did not discuss specifics of their proposed collaboration.

In a virtual environment, companies install software on machines at one data centre and workers use inexpensive computers equipped with software that allows them to run the software remotely.

Companies save money because technicians can perform maintenance from a single location, saving them the trouble of accessing equipment sprawled across the company. The technology makes it easier for companies to move operations in a natural disaster.

Merritt declined to comment on financial arrangements of any potential deal, saying it would be premature to do so. He would not say how quickly the products could be available.

An EMC spokesman would not comment on the proposed venture.

EMC has said it is betting hosting software and services will be a key to growth over the coming years. In November, Chief Executive Joseph Tucci said the company had developed hardware known as “Hulk” and software dubbed “Maui” for running these types of data centres.

This month he announced the formation of a new division to sell services and software over the Internet.

It is a new area for EMC with plenty of competition from some of the biggest names in technology.

IBM, Hewlett-Packard, Symantec and Microsoft are also exploring the area to diversify their sales. They are competing with younger, Internet-focused companies Google, Amazon.com and Salesforce.com.

Analysts say prospects for the sector are better than in the late 1990s when key players, including Exodus Communications, were among the Internet boom’s highest-flying stocks.

At that time, most major hardware and software companies did not go into the Web hosting business. Instead, they sold their equipment to companies such as Exodus and telephone carriers that built data centres. Exodus went broke in 2001 after the dot.com bubble burst.

“The big companies are investing in this seriously now. The technology is much different. This isn’t about dot.com companies looking for a place to get rich quick,” said Doug Chandler, an analyst who follows the industry for market researcher IDC.

The business did not live up to expectations at the time, partly because it was still early in the rise of the Internet as a business tool and companies were reluctant to trust the Web for accessing valuable software and data, Chandler said.

That is still the case with many large companies, but it’s changing among smaller businesses that do not have the expertise to run and secure their own data centres, he added, noting that outsourcing such operations can cut costs.

So far EMC has only announced one key services product, an upgraded version of an automated backup service known as Mozy that it purchased last year.

EMC said earlier this month it plans to sell Mozy’s services to large corporations. Mozy backs up computers over the Web, encrypting the data to keep it secure and storing identical copies at mirrored data centres. EMC provides those services via a recently upgraded infrastructure that it calls Fortress.