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Dell's Compellent Deal Should Hurt, Not Kill, EMC Relationship: Page 2 of 2

The EMC relationship has soured, and Mark Peters, senior analyst at the Enterprise Strategy Group, expects it to continue to fade if the deal goes through. "Dell has been selling mid-range Clariion and high-end Symmetrix from EMC for some time, a relationship that was de facto scarred after Dell's run at 3Par just a few months ago," says Peters. "[If it had won the bidding war,] 3Par would have pretty obviously been Dell's high-end storage system to balance its lower-end EqualLogic products. Compellent is not such a clean fit, inasmuch as one can make overlap cases at both the high and low end for Compellent. Clearly, in line with Compellent's own recent efforts to bulk up on its 'enterprise' features, one would expect Dell [assuming it wins on this bid] to invest further to take Compellent, or at least some variant thereof, 'upmarket.'"

Unlike the bitter bidding wars for both Data Domain and 3Par, analysts agree that Dell should have a clean field for Compellent. With Compellent off the block, there are a number of smaller storage companies that can make sense as acquisition targets.

"The next layer--Xiotech, Nexsan, Pillar, DotHill, for instance--all have attributes and abilities that could help round out one of the big system player's converged stacks," says Peters. "That said, the market is shifting and becoming one focused on scalability, with a strong element of commoditized value (meaning bang for buck, not just low price) so that a range of other new players (such as Coraid, Pivot3, a range of SSD-based entrants and even the lower-targeted players like Drobo) could all come into the picture."

Marks says the remaining attractive players include BlueArc (HDS is the obvious buyer), Xiotech (don't know who the suitor would be) and dedupe specialists Exagrid (could be attractive to Dell) and Sepaton (could be attractive to HP). Dell has yet to offer deduplication or enterprise-size NAS storage, says Connor. Her possible acquisition targets include BlueArc and FalconStor.