The Win-Win-Win Scenario Of A Compellent And Dell Merger

On Dec. 9, Compellent and Dell announced that they "are engaged in advanced discussions regarding a possible business combination involving the two companies." I blogged about Compellent here on Oct. 8 and one day before the joint Compellent-Dell announcement.  Some voices in the industry, not associated with Network Computing, have raised thinly veiled arguments that question the sense, and value, of an acquisition of Compellent by Dell. In my opinion, Compellent will be a strong addition to both the Dell Virtual Information System (VIS) architecture and Data Center Solutions (DCS) capabilities. Should it come to fruition, this potential acquisition is a win-win-win for customers, Compellent and Dell. 

Before I cut to the chase and we take a look at the win-win-win scenario, let's talk a little bit about Dell's VIS architecture and DCS capabilities. While Dell does a great job at brand-building and clearly articulating its consumer oriented products, the company is still very much a late-stage adolescent with regard to powerfully delivering its strong message for the data center and cloud environments.

The VIS and DCS naming conventions can be confusing, so I'll take a minute and explain them. VIS is targeted at the data center, or what is now commonly referred to as the private cloud. DCS is geared toward building and tailoring custom cloud architectures. I've suggested to Dell that it rename DCS to something more akin to the actual customer cloud architectures it is building.

During the past few months I have had multiple opportunities to meet with Dell in the company's San Francisco offices and gain a full understanding of both the VIS and DCS approaches. Dell has been clear on how its compute, networking, storage and partner programs fit within VIS and DCS. From the storage perspective, an acquisition of 3PAR could have been a good fit within both approaches. Now that the 3PAR opportunity is behind them, and a Compellent opportunity stands at the forefront, we can see clearly that Dell is focused on bringing the value of storage software to its VIS and DCS solutions. Why? Because both 3PAR and Compellent have delivered exceptionally strong storage platform software capabilities and Dell has signaled the recognition of this achievement via its acquisition undertakings.  

There is no doubt that 3PAR and Compellent bring good hardware solutions to the table--3PAR, with its unique custom ASIC hardware approach, and Compellent, with its commodity approach. However, the real big-bang impact for IT is in what the storage platform software functionality can deliver by way of value to a customer's business. In my opinion, storage has always been a software problem with highly creative and valuable platform software solutions being brought to market by 3PAR, Compellent, EMC, IBM, HDS and others.  Now, let's talk about why this is a win-win-win. From my vantage point, both the VIS and DCS solutions can highly leverage Compellent's StorageCenter and its flagship software offerings of Data Progression and Live Volume. Enterprise data centers and cloud solutions proved the functionality and value of the StorageCenter product long before Dell stepped into the picture. More than likely, this why Dell kept Compellent on its acquisition short list.  

During the past few days, some voices in the industry have opined that Compellent is merely a second choice since Dell couldn't win the bidding over 3PAR. Perhaps some always see a glass as half-empty and thus they naturally gravitate toward a negative opinion. As for me, I am naturally prone to see a glass as half-full. So, I see the pending acquisition of Compellent as a win-win-win, and here's why: It's a clear win for both Compellent and Dell customers because the platform software of Dell's storage offerings will increase in overall delivery capability within a customer's IT organization; it's a win for Compellent because its distribution channel and unit volumes will soar; and it's a win for Dell because it will acquire a storage platform that can be developed even further than where it scales to and performs today, thus providing the ability to capitalize on its investment in the long term.

Is Dell a natural at storage system design and development? Certainly, Dell has not demonstrated this capability until the acquisition of EqualLogic. I believe Dell has done a good job of keeping the development engineering activity going with EqualLogic, rather than just letting the product languish and exist solely from a continuation engineering perspective. Dell has learned much with the integration of EqualLogic, its culture and its contribution to process within Dell.

The education Dell has received as a result of the EqualLogic acquisition has positioned the company to better manage disparate development efforts. One classic successful example to look at is EMC. Just a few short years ago, no one could have predicted that EMC would be able to manage multiple storage systems development engineering resources and successfully manage in-house and acquired software portfolio products such as Documentum, RSA and VMware. Clearly, EMC has done exceptionally well with its approach to handling its acquisitions. Is Dell capable of achieving the same kinds of success over time? There's no doubt the company can do it. However, it must continue to exercise patience and attention to customer requirements as it manages the roadmaps of its acquired technologies.

So, what about EMC and the business impact to storage sales via Dell once the acquisition is final and a Dell StorageCenter is alive and well on the Dell sales line card? To me, it's crystal clear that Dell has been indicating to EMC, and the market, that it was highly interested in competing with more powerful, enterprise-class storage systems priced at what the company believes is a profitable transfer cost target. Unfortunately, EMC has not been able to produce such a product for Dell, and Dell has chosen a path of acquisition rather than wait for EMC. I don't see any of this precluding Dell from continuing to position Symmetrix sales where that kind of enterprise storage is required. So, from the Symmetrix perspective, the relationship may stay very much as it is today. In fact, I expect that Dell will not immediately stop selling the CLARiiON product, but that it will position all of its storage offerings and assist its customers and partners in making the correct storage choice for the requirement at hand.I believe that should the acquisition finalize and Compellent's StorageCenter join the Dell storage products lineup, happy Compellent and Dell customers will continue to be just as happy. They possibly will be elated if Dell executes well and quickly provides customer and sales training and product positioning. I see Dell's biggest challenge as getting the bigger and broader message of VIS and DCS out to its customers and prospects, as well as the positioning of all of its offerings within these constructs. Cisco, Hewlett-Packard, IBM, Oracle and others in the cloud services world will be competing heavily with Dell, and clearly articulated messages with value propositions will be key for Dell to develop and deliver in short order.

What say you?  What is your opinion on the Dell acquisition of Compellent?

At the time this blog was written, none of the vendors mentioned were clients of Tom Trainer or Analytico.