Network Computing is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Dell Accelerates Transformation; Back To Its Storage Roots?

ORLANDO, Fla.--As this week's inaugural Dell Storage Forum winds down, the gathering of analysts, customers, channel partners and executives offered compelling evidence that the company, once known for its direct sales focus and miniscule R&D budgets, really is changing. Only time will tell if the transformation takes, but if it doesn't, it appears it won't be for lack of effort.

During his keynote on Wednesday, Michael Dell said he actually started off as a storage vendor from his University of Texas dorm room, making disk subsystems for IBM PCs. It was only when Marin Marietta ordered 150 systems, Dell's biggest order at that time, and asked about buying the home-made PC he was using to configure the disk subsystems, that the company made its first transformation.

Fast forward to 2008 and Dell reportedly accounted for $1.29 billion (11.5%) of EMC's $14.9 billion in storage revenues. During its stint as a storage reseller, the company sold billions of dollars worth of EMC equipment. However, for its most recent quarter, Dell attributed the huge shortfall in storage revenues, a 13% year-over-year drop, to its declining reseller relationship with EMC.

On the other hand, that same quarter also saw Dell grow its fiscal 2012 first quarter earnings 177% year-over-year on a 1% increase in revenue. Dell-owned storage revenue, including that of recently added Compellent, was up 11% from a year ago, says analyst Greg Richardson, Technology Business Research.

In a recent report, Richardson wrote that, through the purchases of Compellent, SecureWorks, Boomi and KACE, Dell has inorganically positioned itself to take on competitors such as IBM and HP, which can address large-scale buildouts of integrated hardware and software with their services and software portfolios: “As a vendor that traditionally preferred to work alone, Dell has done an about-face with its use of channel and service partners, and is designing solutions that enable partners to add high-margin revenue by attaching services to Dell offerings.”

  • 1