Dell Storage Forum Kicks Off: Can Dell Compete in Enterprise Storage?

EqualLogic and Compellent are strong performers in the SMB space, but can Dell gain a foothold in the enterprise storage market? Analysts assess the situation as Dell Storage Forum starts today.

June 11, 2012

4 Min Read
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BOSTON--During the next three days, Dell's customers and partners will get updates on the company's storage portfolio, training and networking opportunities with builders, sellers and buyers at Dell Storage Forum 2012. There will be much to catch up on, as Dell pushes forward in its goal of evolving from EMC reseller into the third-largest storage vendor.

That transition wasn't much of a stretch, according to Mark Peters, senior analyst at Enterprise Strategy Group. Where it gets interesting is Dell's desire to be a real enterprise storage player, which requires two things, he explains. "First is the need for a genuine high-end platform--Compellent can get close, and is thoroughly capable, but it isn't fully there--certainly in terms of market perception. Second is that we live in a converging IT age, and I'd like to hear more from Dell in terms of not only its integrated IT platforms generally, but more specifically on storage I'd like to know more about its plans regarding the overall management and orchestration of storage platforms."

Peters said Dell's success in the small and midsize business (SMB) space with its EqualLogic and Compellent lines could be a barrier to selling into the enterprise. He said the company's options are embark on a joint venture/OEM deal, make an acquisition or build an enterprise version of Compellent.

Both Gartner and IDC report increases in external controller-based (ECB) disk revenues--the market grew 8% according to Gartner, and 7.1% per IDC. EMC, NetApp, IBM, HP and Hitachi comprise 74% of the ECB market. However, Dell claimed the No. 4 spot for the total disk market--including ECB--with 11.5%, or $922 million. The company's performance grew 7.9% year over year, which mirrored the overall market growth, but was barely half the revenue growth turned in by EMC (14.4%).

David Vellante, founder and consulting analyst at Wikibon, says that while he believes Dell is concentrating on SMBs, it can do some serious damage in the enterprise storage space. "I see Dell as the Ross Perot of storage [thinking back to the 1994 election. Perot entered the race and sucked the air out of George Bush the elder's campaign, allowing Bill Clinton to secure the nomination," he explains. "People ignored Perot to their peril. Even though he didn't win the election, he changed the outcome. I see Dell as potentially having that type of impact. The difference is it's a long-term play, not a one-shot deal."

In particular, he cites the company's emphasis on integration via acquisitions. "Dell learned much about storage from the EMC relationship and perfected its sales execution model," he says, adding that it is an ongoing process for the vendor.

And that's a concern for Mike Karp, VP and principal analyst at Ptak Noel Associates. "Dell's overall approach has formerly been similar to that of a bicycle builder, which is to say that they did not build much at all but, rather, assembled parts," he says. "Now they are assembling companies, and while they seem to have a reasonably good hit rate regarding successful acquisitions, the trick is to make them all work well together. Managing storage in an integrated fashion--which is to say, managing enterprise IT as a system--has not proven to be a strength with them so far. And also, of course, they lack a really high-end solution."

Karp says Dell can be most successful in delivering cloud-based storage services and likely less successful in delivering enterprise storage products for the data center. "In their own managed data centers, they can hide their relatively limited management capabilities while still delivering a complete solution that uses other vendors' software," he says. "In order to be a success in on-premises environments, however, they need more robust management offerings and higher-performing storage hardware."

He says Dell needs to keep working as closely as possible with Symantec and CommVault for storage management, and to keep adding instrumentation to servers so it can provide a constant flow of data to established industry monitoring and management platforms. "Dell has done more than pretty well in SMB, but that is an entirely different kettle of fish," he says. "At a time when IBM and EMC are making definite steps toward integrating management top-to-bottom, Dell has no play when it comes to system-wide management. Their low-end stuff must be managed separately from any midrange and high-end offerings in the data center."

Like Peters, Karp says Compellent is a fine solution in its own segment, "but it is hard to see that as a legitimate offering for the enterprise high end."

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