The IT industry is always adapting to new trends, from client-server and the PC revolution of the '80s and '90s to cloud computing and big data today. These trends inspire successful new vendor entrants, but they can also be problematic for established IT vendors. Over time, some leaders don't adapt and die (see Digital Equipment Corporation), while others swoon and survive in a reduced state by being acquired by larger saviors (see Sun Microsystems).
But some adapt to not only survive, but thrive. One of the latter is Dell, which seems to be successfully navigating numerous transformational challenges. An example: Dell's evolving storage efforts include a recent forum in London where the company articulated the new Fluid Data architecture, which Dell believes will help it become an increasingly important presence in the storage market.
Dell's Fluid Data architecture, which is designed to enable customers to effectively manage growing volumes of information, finds the company appearing to heed the advice of the classic Fleetwood Mac song "Don't Stop Thinking About Tomorrow." But at the same time, at least so far as storage goes, Dell appears to be following another of the band's hits: "Go Your Own Way."
Dell has long had its own PowerVault line of entry-level disk storage systems, and while those solutions meet the basic needs of business customers, the company long ago recognized that the line was not functionally rich enough to attract the enterprise customers it was pursuing. As a result, Dell turned to EMC as a primary storage partner, OEMing or reselling the company's CLARiiON, Celerra and Symmetrix platforms. While the relationship has been beneficial for both, it seemed unlikely to last forever, especially considering Dell's strategic focus on developing a broader set of end-to-end systems solutions.
Now, for years Dell's business model eschewed a large investment in R&D in contrast to competitors such as EMC, HP, and IBM. That made economic sense given the company's focus on commodity components and systems, but the approach made it more difficult to differentiate Dell solutions from competitors' offerings. That issue is even more pronounced in complex areas like storage which are particularly sensitive to rapidly evolving features and functionalities.
However, Michael Dell's return to the company in 2007 resulted in a marked change in attitude toward corporate acquisitions that, along with a plethora of innovative start-ups, has allowed Dell to successfully buy its way into storage success. The company's first major storage splash was the acquisition of EqualLogic in November 2007, which resulted in it becoming a leading player in the burgeoning iSCSI SAN, an increasingly important technology for many of Dell's target customers. Then in July 2010 came an under-the-radar (for the most part) move with Dell acquiring Ocarina Networks which provided some sexy new technologies, including compression and deduplication.
The company's biggest storage deal was the acquisition of Compellent Technologies in December 2010 for $820 million. A few months earlier, Dell was outbid by HP in a highly public pursuit of 3PAR (which HP eventually won for $2.35 billion), leading some to suggest that Compellent was a second choice. Dell would argue that point, as well it should, because Compellent brought a lot to the table, both in its portfolio of highly scalable enterprise solutions and as an early pioneer in thin provisioning and volume management, both keys to enhanced storage efficiency (and efficiency has always been a must-have value at Dell).
Overall, the EqualLogic, Ocarina and Compellent deals all demonstrate how a vendor with a clear vision of where it wants to go and a willingness to spend its cash carefully can acquire the assets required to compete effectively against players with larger R&D investments.