This Management's Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements and should also be read in conjunction with the risk factors set forth in Item 1A of Part II. The forward-looking statements do not include the potential impact of any mergers, acquisitions, divestitures, securities offerings or business combinations that may be announced or closed after the date hereof.

All dollar amounts expressed numerically in this MD&A are in millions, except per share amounts.

Certain tables may not add due to rounding.

INTRODUCTION

We manage our business in two broad categories: EMC Information Infrastructure and VMware Virtual Infrastructure.

EMC Information Infrastructure

Our EMC Information Infrastructure business consists of three of our segments:
Information Storage, Content Management and Archiving and RSA Information Security. Our objective for our EMC Information Infrastructure business is to grow faster than the markets we serve by investing in the business for sustainable advantage.

To further improve the competitiveness and efficiency of our global business in response to a challenging global economy, in the fourth quarter of 2008, we implemented a restructuring program to further streamline the costs related to our Information Infrastructure business. We expected the program to reduce costs from our 2008 rate by approximately $350 in 2009, increasing to approximately $500 in 2010. The program's focus is to consolidate back office functions, field and campus offices, rebalance investments towards higher-growth products and markets, reduce management layers, and further reduce indirect spend on contractors, third-party services and travel. The restructuring program will reduce our global Information Infrastructure workforce by approximately 2,400 positions. As part of our ongoing focus on costs, we have identified some additional near-term cost reduction actions that will save approximately another $100 in the second half of 2009 yielding total expected savings in 2009 of approximately $450. These actions consist of temporary reductions in salaries and employee benefits. Given the shorter-term nature of some of these new initiatives, we still expect total cost reductions to be approximately $500 in 2010.

These programs will favorably impact our cost of sales, selling, general & administrative ("SG&A") and research & development ("R&D") expenses. For 2009, we estimate that approximately one-third of these reductions will be to our cost of sales and the remaining two-thirds will be to our other operating expenses.

The programs' expected savings will come from both cost reductions and the transformation of several areas of our operational cost structure. As part of these efforts, we are undertaking several initiatives to transform the structural efficiency of our worldwide operations. These initiatives which began in 2009 include the consolidation and movement of various facilities and processes which are expected to be completed by the end of 2010. As part of these transformation efforts, we expect to incur additional non-recurring transition costs of approximately $75 to $100 over this period. These investments are necessary to implement the new, more efficient capabilities ahead of transitioning from the existing cost structure. Through the end of the second quarter of 2009, we have incurred approximately $18.6 of these incremental transition costs.

VMware Virtual Infrastructure

VMware's current financial focus is on long-term revenue growth to generate cash flows to fund its expansion of industry segment share and development of virtualization-based products for data centers, desktops and cloud computing. VMware expects to grow its business by broadening virtualization infrastructure software solutions technology and product portfolio, increasing product awareness, promoting the adoption of virtualization, and building long-term relationships with its customers through the adoption of enterprise license agreements ("ELAs"). In the second quarter of 2009, VMware vSphere 4, the next generation of VMware Infrastructure which is VMware's flagship virtual data center operating system ("VDC-OS") product, became generally available. VMware expects to continue to introduce products that build on the vSphere foundation through 2009 and 2010.

Since mid-2008, VMware has observed that customers are reducing their IT spending in order to preserve cash. As a result, customers are subjecting larger orders, such as ELAs, to a longer review process and in certain cases are purchasing products to meet their immediate needs, foregoing larger discounts offered under ELAs. VMware believes this trend primarily correlates to the global economic uncertainty and expects this to continue throughout the remainder of 2009 and perhaps longer.

Although VMware is currently the leading provider of virtualization infrastructure software solutions, they face competitive threats to their leadership position from a number of companies, some of which have significantly greater resources than VMware, which could result in increased pressure to reduce prices on its offerings. As a result, VMware believes it is important to continue to invest in strategic initiatives related to product research and development, market expansion and associated support functions to expand its industry leadership. These investments could result in contracting operating margins as VMware invests in its future. VMware believes that it will be able to continue to meet its product development objectives through continued investment in VMware, supplemented with strategic hires and acquisitions, funded through the operating cash flows generated from the sale of existing products and services. VMware believes this is the appropriate priority for the long-term health of its business.

RESULTS OF OPERATIONS

Revenues

The following table presents revenue by our segments:



                                        For the Three Months
                                               Ended
                                        June 30,     June 30,       $            %
                                          2009         2008       Change       Change
   Information Storage                $    2,474.9   $ 2,873.2   $ (398.3 )     (13.9 )%
   Content Management and Archiving          180.2       204.0      (23.8 )     (11.7 )
   RSA Information Security                  147.1       144.0        3.1         2.2
   VMware Virtual Infrastructure             455.1       452.6        2.5         0.6

   Total revenues                     $    3,257.4   $ 3,673.9   $ (416.5 )     (11.3 )%

                                         For the Six Months
                                               Ended
                                        June 30,    June 30,       $            %
                                          2009        2008       Change       Change
    Information Storage                $  4,838.2   $ 5,585.1   $ (746.9 )     (13.4 )%
    Content Management and Archiving        354.6       389.2      (34.6 )      (8.9 )
    RSA Information Security                289.8       278.9       10.9         3.9
    VMware Virtual Infrastructure           925.5       890.7       34.8         3.9

    Total revenues                     $  6,408.1   $ 7,143.9   $ (735.8 )     (10.3 )%

The Information Storage segment's product revenues declined 19.1% to $1,632.3 for the three months ended June 30, 2009 and 18.3% to $3,204.7 for the six months ended June 30, 2009. The Information Storage segment's services revenues declined 1.5% to $842.6 for the three months ended June 30, 2009 and 1.8% to $1,633.5 for the six months ended June 30, 2009. The declines in both product and services revenues were primarily attributable to lower demand resulting from the challenging global economic environment and resulting negative impact in our customers' IT purchases. Partially offsetting these declines was an increase in maintenance revenues due to continued demand for support from our installed base.

The Content Management and Archiving segment's product revenues declined 17.2% to $60.8 for the three months ended June 30, 2009 and 11.2% to $119.5 for the six months ended June 30, 2009. The Content Management and Archiving segment services revenues declined 8.5% to $119.4 for the three months ended June 30, 2009 and 7.7% to $235.1 for the six months ended June 30, 2009. The declines in both product and services revenues were primarily attributable to lower demand for our product offerings and professional services attributable to the challenging global economic environment and resulting negative impact in our customers' IT purchases. Partially offsetting these declines was an increase in maintenance revenues due to continued demand for support from our installed base.

The RSA Information Security segment's product revenues declined 5.6% to $84.1 for the three months ended June 30, 2009 and 3.5% to $164.8 for the six months ended June 30, 2009. The decrease was primarily attributable to the challenging global economic environment and resulting negative impact in our customers' IT purchases. The RSA Information Security segment's services revenue increased 14.7% to $63.1 for the three months ended June 30, 2009 and 15.7% to $125.1 for the six months ended June 30, 2009. Services revenues primarily increased due to an increase in maintenance revenues resulting from continued demand for support from our installed base.

The VMware Virtual Infrastructure segment's product revenues declined 18.9% to $228.1 for the three months ended June 30, 2009 and 15.6% to $485.4 for the six months ended June 30, 2009. The decline in product revenue for both the three and six months ended June 30, 2009 when compared to the prior comparable period was primarily attributable to the challenging global economic environment and resulting negative impact in VMware customers' IT purchases. The VMware Virtual Infrastructure segment's services revenues increased 32.4% to $227.0 for the three months ended June 30, 2009 and increased 39.4% to $440.1 for the six months ended June 30, 2009. Services revenues increased as a result of strong renewal, multi-year software maintenance contracts sold in previous periods, and additional maintenance contracts sold in conjunction with software licenses. Given the reasons discussed above, we expect that license revenues will decline during the remainder of 2009 as compared to the same periods in 2008.

Consolidated revenues by geography were as follows:

                                             For the Three Months
                                                    Ended
                                             June 30,     June 30,      %
                                               2009         2008      Change
        United States                      $    1,680.6   $ 1,927.1    (12.8 )%
        Europe, Middle East and Africa            998.7     1,147.1    (12.9 )
        Asia Pacific                              407.3       440.8     (7.6 )
        Latin America, Mexico and Canada          170.8       158.8      7.6




                                              For the Six Months
                                                    Ended
                                             June 30,    June 30,      %
                                               2009        2008      Change
         United States                      $  3,319.5   $ 3,812.5    (12.9 )%
         Europe, Middle East and Africa        1,985.3     2,199.7     (9.7 )
         Asia Pacific                            781.6       820.6     (4.8 )
         Latin America, Mexico and Canada        321.7       311.1      3.4

Revenues decreased for the three and six months ended June 30, 2009 compared to the same periods in 2008 in all of our markets with the exception of Latin America, Mexico and Canada due to the challenging global economic environment and resulting negative impact in customers' IT purchases. Revenues improved in Latin America, Mexico and Canada primarily due to increased services revenues. Changes in exchange rates contributed 3.7% and 3.6% to the overall revenue decrease for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008. Changes in exchange rates favorably impacted revenue growth by 2.7% and 2.5% for the three and six months ended June 30, 2008, respectively. The impact of the change in rates was most significant in the European market, primarily Germany, France, Italy and the United Kingdom.

Costs and Expenses

The following tables present our costs and expenses, other income and net income
attributable to EMC Corporation.



                                                   For the Three Months
                                                          Ended
                                                 June 30,        June 30,           $             %
                                                   2009            2008           Change        Change
Cost of revenue:
Information Storage                             $  1,274.3       $ 1,395.6       $ (121.3 )       (8.7 )%
Content Management and Archiving                      68.5            76.7           (8.2 )      (10.7 )
RSA Information Security                              45.4            43.1            2.3          5.3
VMware Virtual Infrastructure                         71.2            71.6           (0.4 )       (0.6 )
Corporate reconciling items                           54.1            58.3           (4.2 )       (7.2 )

Total cost of revenue                              1,513.6         1,645.3         (131.7 )       (8.0 )

Gross margins:
Information Storage                                1,200.5         1,477.7         (277.2 )      (18.8 )
Content Management and Archiving                     111.8           127.3          (15.5 )      (12.2 )
RSA Information Security                             101.7           100.9            0.8          0.8
VMware Virtual Infrastructure                        383.9           381.0            2.9          0.8
Corporate reconciling items                          (54.1 )         (58.3 )          4.2          7.2

Total gross margin                                 1,743.8         2,028.6         (284.8 )      (14.0 )

Operating expenses:
Research and development (1)                         397.9           442.5          (44.6 )      (10.1 )
Selling, general and administrative (2)            1,051.2         1,135.7          (84.5 )       (7.4 )
Restructuring charge                                  33.2               -           33.2           NM

Total operating expenses                           1,482.3         1,578.2          (95.9 )       (6.1 )

Operating income                                     261.5           450.4         (188.9 )      (41.9 )
Investment income, interest expense and
other
expense, net                                         (12.8 )          11.9          (24.7 )         NM

Income before income taxes                           248.7           462.3         (213.6 )      (46.2 )
Income tax provision                                  38.0            94.4          (56.4 )      (59.7 )

Net income                                           210.6           367.8         (157.2 )      (42.7 )
Less: Net income attributable to the
non-controlling interest
in VMware, Inc.                                       (5.4 )          (7.7 )          2.3         29.9

Net income attributable to EMC Corporation      $    205.2       $   360.1       $ (154.9 )      (43.0 )%

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

                      RESULTS OF OPERATIONS - (Continued)



                                                     For the Six Months
                                                           Ended
                                                  June 30,       June 30,          $            %
                                                    2009           2008          Change       Change
Cost of revenue:
Information Storage                               $ 2,508.8      $ 2,716.5      $ (207.7 )      (7.6 )%
Content Management and Archiving                      140.2          151.0         (10.8 )      (7.2 )
RSA Information Security                               89.1           83.5           5.6         6.7
VMware Virtual Infrastructure                         137.5          140.2          (2.7 )      (1.9 )
Corporate reconciling items                           105.5          114.8          (9.3 )      (8.1 )

Total cost of revenue                               2,981.1        3,206.0        (224.9 )      (7.0 )

Gross margins:
Information Storage                                 2,329.4        2,868.6        (539.2 )     (18.8 )
Content Management and Archiving                      214.4          238.2         (23.8 )     (10.0 )
RSA Information Security                              200.8          195.5           5.3         2.7
VMware Virtual Infrastructure                         788.0          750.6          37.4         5.0
Corporate reconciling items                          (105.5 )       (114.8 )         9.3         8.1

Total gross margin                                  3,427.0        3,938.0        (511.0 )     (13.0 )

Operating expenses:
Research and development (3)                          781.2          876.0         (94.8 )     (10.8 )
Selling, general and administrative (4)             2,076.0        2,217.9        (141.9 )      (6.4 )
In-process research and development                       -           79.2         (79.2 )    (100.0 )
Restructuring charge (credit)                          48.8           (0.4 )        49.2          NM

Total operating expenses                            2,906.0        3,172.8        (266.8 )      (8.4 )

Operating income                                      521.1          765.2        (244.1 )     (31.9 )
Investment income, interest expense and other
expense, net                                          (29.3 )         41.2         (70.5 )        NM

Income before income taxes                            491.8          806.4        (314.6 )     (39.0 )
Income tax provision                                   75.9          180.8        (104.9 )     (58.0 )

Net income                                            416.0          625.6        (209.6 )     (33.5 )
Less: Net income attributable to the
non-controlling interest
in VMware, Inc.                                       (16.7 )        (13.9 )        (2.8 )     (20.1 )

Net income attributable to EMC Corporation        $   399.3      $   611.8      $ (212.5 )     (34.7 )%

(1) Amount includes corporate reconciling items of $48.6 and $42.3 for the three months ended June 30, 2009 and 2008, respectively.

(2) Amount includes corporate reconciling items of $87.5 and $88.6 for the three months ended June 30, 2009 and 2008, respectively.

(3) Amount includes corporate reconciling items of $93.4 and $84.1 for the six months ended June 30, 2009 and 2008, respectively.

(4) Amount includes corporate reconciling items of $172.8 and $175.3 for the six months ended June 30, 2009 and 2008, respectively.

NM - not measurable

Gross Margins

For the three months ended June 30, 2009 and 2008, our gross margin percentages were 53.5% and 55.2%, respectively. The decline in the gross margin percentage in the second quarter of 2009 compared to 2008 was primarily attributable to the Information Storage segment, which decreased overall gross margins by 174 basis points, the Content Management and Archiving segment, which decreased overall gross margins by 8 basis points and the RSA Information Security segment, which decreased overall gross margins by 2 basis points. These declines were partially offset by a 4 basis point gross margin contribution from the

VMware Virtual Infrastructure segment. The decrease in corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization and transition costs, increased the consolidated gross margin percentage by 10 basis points.

For the six months ended June 30, 2009 and 2008, our gross margin percentages were 53.5% and 55.1%, respectively. The decline in the gross margin percentage in the six months ended June 30, 2009 compared to 2008 was primarily attributable to the Information Storage segment, which decreased overall gross margins by 195 basis points, the Content Management and Archiving segment, which decreased overall gross margins by 7 basis points and the RSA Information Security segment, which decreased overall gross margins by 1 basis point. These declines were partially offset by gross margin improvements in the VMware Virtual Infrastructure segment, which contributed 27 basis points. The decrease in corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization and transition costs, increased the consolidated gross margin percentage by 16 basis points.

For segment reporting purposes, stock-based compensation, acquisition-related intangible asset amortization and transition costs are recognized as corporate expenses and are not allocated among our various operating segments. The decrease of $4.2 in the corporate reconciling items for the three months ended June 30, 2009 was attributable to a $8.7 decrease in intangible asset amortization expense associated with acquisitions consummated in prior years, partially offset by an $3.2 increase in stock-based compensation expense and $1.3 in transition costs. The transition costs represent the incremental costs incurred to transform our current cost structure to a more streamlined cost structure. The decrease of $9.3 in the corporate reconciling items for the six months ended June 30, 2009 was attributable to a $16.3 decrease in intangible asset amortization expense associated with acquisitions consummated in prior years, partially offset by a $4.8 increase in stock-based compensation expense and $2.2 in transition costs.

The gross margin percentages for the Information Storage segment were 48.5% and 51.4% for the second quarters of 2009 and 2008, respectively, and 48.1% and 51.4% for the six months ended June 30, 2009 and 2008, respectively. The decrease in gross margin percentage for both the three and six months ended June 30, 2009 compared to the same periods in 2008 were primarily attributable to lower sales volume and the acquisition of Iomega in June 2008. Iomega operates within the consumer and small business marketplace which historically has had lower gross margins than marketplaces typically served by our Information Storage segment.

The gross margin percentages for the Content Management and Archiving segment were 62.0% and 62.4% for the second quarters of 2009 and 2008, respectively, and 60.5% and 61.2% for the six months ended June 30, 2009 and 2008, respectively. The decrease in gross margin percentage for the three months ended June 30, 2009 compared to the same period in 2008 was primarily attributable to the reduction in the mix of software license revenues as a percentage of total segment revenues. The decrease in gross margin percentage for the six months ended June 30, 2009 compared to the same period in 2008 was primarily attributable to a decline in the professional services margin. Software license revenues as a percentage of total revenues decreased to 33.7% for both the three and six months ended June 30, 2009 from 35.9% and 33.9% for the three and six months ended June 30, 2008, respectively.

The gross margin percentages for the RSA Information Security segment were 69.1% and 70.1% for the second quarters of 2009 and 2008, respectively, and 69.3% and 70.1% for the six months ended June 30, 2009 and 2008, respectively. The decrease in gross margin percentage for both the three and six months ended June 30, 2009 compared to the same periods in 2008 were primarily attributable to the reduction in the mix of software license revenues as a percentage of total segment revenues. Software license revenues as a percentage of total revenues decreased to 53.0% and 52.7% for the three and six months ended June 30, 2009, respectively, from 58.9% and 58.1% for the three and six months ended June 30, 2008, respectively.

The gross margin percentages for VMware Virtual Infrastructure were 84.4% and 84.2% for the second quarters of 2009 and 2008, respectively, and 85.1% and 84.3% for the six months ended June 30, 2009 and 2008, respectively. The increase in gross margin percentage for both the three and six months ended June 30, 2009 compared to the same periods in 2008 were primarily attributable to improved margins earned on both professional services and maintenance services.

Research and Development

As a percentage of revenues, R&D expenses were 12.2% and 12.0% for the three months ended June 30, 2009 and 2008, respectively, and 12.2% and 12.3% for the six months ended June 30, 2009 and 2008, respectively. R&D expenses decreased $44.6 and $94.8 for the three and six months ended June 30, 2009, respectively, compared to the same periods in 2008 primarily due to a reduction in personnel-related costs, including salaries, benefits, recruiting, contract labor and consulting, facilities costs and materials costs. Personnel-related costs decreased by $26.8 and $66.6, the cost of facilities decreased by $10.4 and $16.0 and the cost of materials to support new product development decreased by $6.7 and $9.4 for the three and six months ended June 30, 2009, respectively, when compared to the same periods in 2008. For the three and six months ended June 30, 2009, personnel-related and facilities costs declined primarily due to savings achieved as a result of our 2008 restructuring programs and our cost savings initiatives. Capitalized software development costs, which reduce R&D expense, decreased $0.4 for the three months ended June 30, 2009 and increased $32.9 for the six months ended June 30, 2009 compared to the same periods in 2008.

Corporate reconciling items within R&D, which consist of stock-based . . .