Dell, EMC Talk Turkey

Two years into their partnership, Dell Computer Corp. (Nasdaq: DELL) and EMC Corp. (NYSE: EMC) both say they are thankful to have each other.

And why shouldnt they be? Since forming their alliance in October 2001, both have gained financially. EMC has climbed back into the black as Dell accounted for 10 percent of its sales in the last quarter. And Dell's storage revenue from last quarter grew 68 percent over the previous year.

The Dell/EMC alliance consists primarily of cobranding SAN arrays. The companies say that to date, customers have deployed more than 7,000 of their cobranded storage systems. The partnership has been extended through 2008 (see EMC, Dell Feel the Love).

"This is arguably the most successful alliance of its kind," Darren Thomas, general manager of Dell's storage unit, said on a conference call this week. "The relationship keeps getting stronger." Thomas joined Dell earlier this summer after an unfruitful stint at now-defunct startup Zambeel (see Zambeelian Refugee Heads to Dell).

Chuck Hollis, platforms marketing VP at EMC, adds: "The progress report is: so far, so good, and it keeps getting better. We’re shaping the market together."If that’s the case, then how will they shape it in the near future? The executives were short on details beyond identifying information lifecycle management (ILM), iSCSI, and Serial ATA disks as technologies they hope to exploit. And that puts them in the same big boat as the rest of the networking storage world.

But Dell and EMC could help steer that ship. A report written by Kevin Hunt, an analyst with Thomas Weisel Partners, identifies EMC as a leader in the ILM space because of its success with ATA storage in Clariion SAN arrays and Centera content addressed storage systems.

"We believe that EMC has successfully delivered a clear ILM message and strategy for implementation," Hunt writes. "While the pieces of managing this [ILM] process are still coming together, we believe that EMC has taken the lead. Customers are using ATA-based storage more than we had initially anticipated."

EMC and Dell have benefited from using Serial ATA storage in the low-end Clariion CX200 SAN array as companies look to implement disk-to-disk nearline storage.

"I think you’ll see more from us in this area," Hollis says.Dell and EMC also say they will have an ILM announcement in the first quarter of 2004.

Dell's Thomas says Serial ATA and iSCSI will help Dell and EMC in the lower end of the market. So far, the bulk of their sales have been with midrange Clariion and high-end Symmetrix arrays.

"Expect much more on these two technologies from Dell and EMC," Thomas promises. "We believe iSCSI will have its place in the industry. Initially it will be in the lower end of the market, because that’s where it fits price-wise and feature-wise."

The same goes for Serial ATA. "We’re looking at bringing the feature set down all the way to very low end, replacing tapes," says Thomas.

In the low end, Dell and EMC will have to fight off Hewlett-Packard Co. (NYSE: HPQ), which Monday announced an entry-level SAN aimed at undercutting Dell/EMC and IBM on price. HP’s StorageWorks Modular Smart Array (MSA) 1000, bundled with a ProLiant DL3380 Packaged Cluster, has a list price of $19,999 -- substantially below a low-end SAN offering from Dell/EMC. HP is banking on price and the popularity of the ProLiant to drive sales (see HP Underprices IBM, EMC on Low End).“We have a huge advantage over Dell and others in the market because the ProLiant is the No. 1 seller,” says HP's VP of server marketing, Paul Miller.

Thomas and Hollis, however, counter that customers will get what they pay for.

"We believe HP is resorting to the weapon of choice, which is price, because of a difficulty in offering value," Hollis says. [Ed. note: Ouch!]

So while Dell and EMC aren’t thankful for the competition, they don’t seem too worried about HP gobbling up their SAN business, either.

— Dave Raffo, Senior Editor, Byte and Switch