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Dell Ends Partnership with EMC, To Push Its Own Storage Tech

Biswajit.HD

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Dell on Monday said that it has officially ended its reseller relationship with EMC storage products two years earlier than initially planned, and will instead focus on selling storage products based on its own intellectual property.



The move brings to a close a long-term, mutually-profitable reseller relationship that in its last couple years gradually fractured as Dell and EMC both began expanding their storage product lines with products that competed against each other.

Dell also announced it will continue to provide support for customers of its EMC products. However, the company in June had said at its Dell Storage Forum that its sales focus into its Dell-EMC customer base will be on Dell-branded products, and that it was committed to building its own solution provider channel.

Dell had been selling EMC's Clariion midrange SAN, VNX SMB SAN, Celerra NAS, and Data Domain deduplication storage products.

Dell and EMC signed their first five-year reseller contract 10 years ago this month, a move which worried EMC's other channel partners because of the preferred pricing Dell received by virtue of being EMC's largest reseller partner.

At its height, Dell accounted for about 10 percent of EMC's total sales revenue, and about one-fourth of EMC's Clariion product line revenue.

The two in 2008 signed a five-year extension of their relationship, which would have taken them through 2013.

However, the relationship between them had already begun to unravel.

Dell in early 2008 acquired storage vendor EqualLogic, and as a result became one of the top storage vendors in the industry. However, EqualLogic gave Dell its first product line which competed strongly with that of EMC.

Dell in August of 2010 made a surprise $1.15 billion bid for 3PAR, a developer of storage arrays featuring such services as clustering, tiered storage, and thin provisioning, which allows applications to be configured with more storage capacity than is physically available.

In September, Dell eventually lost that bid after a short but intense bidding war with Hewlett-Packard which saw the price for 3PAR eventually soar to $2.35 billion. However, by bidding on 3PAR, Dell signaled it was not afraid to compete against EMC.

Dell further strained its EMC relationship with its late 2010 move to acquire Compellent, a storage vendor which had long identified EMC as its primary competitor.

The final break between the two former partners seemed to have been put in place in January, when EMC introduced its VNX and VNXe SMB storage lines and made it clear that those products were not being sold through Dell.

EMC Chairman, CEO, and President Joe Tucci at the time was blunt when asked by CRN about how EMC plans to work with Dell in terms of the new product family.

"In this product line there is no Dell partnership," Tucci said. "In any conversations we have had with Dell, Dell will not take up this partnership. They will not resell this product."

Actually, there was still some room for Dell, which did sell the VNX, but it did not become a major reseller of the EMC line.

By this past Summer, the break-up was felt in a very significant way. When Dell in August reported its second quarter 2011 finances, it said its storage revenue fell 20 percent over last year to $502 million. That included a 62-percent drop in revenue from Dell's sales of EMC storage products. That drop exceeded a 15-percent increase in sales of storage products based on Dell's own intellectual property, including its EqualLogic and Compellent lines.

"Most of the remaining EMC storage business has transitioned over to Dell technologies," said Dell CFO Brian Gladden at the time.

Dell has also acquired such companies as Ocarina, which gives it a strong deduplication technology, and Exadata, a developer of scalable NAS technology. The company is in the process of integrating the two technologies across much of its storage line.

Dell has done well with its acquisitions. Since it acquired EqualLogic in 2008, EqualLogic's customer base has grown 700 percent, the company said. Meanwhile, sales of the Compellent line in the first half of 2011 exceeded those of all of 2010, Dell said.

While Dell declined to further discuss its decision to end its EMC relationship, Darren Thomas, vice president and general manager of Dell storage, said in a prepared statement that his company is committed to providing quality service and support to existing Dell/EMC customers, will focus its sales on storage products built with its own intellectual property.

"Dell is making serious investments in both acquisition and internal development to assemble a competitive storage portfolio that provides customers with superior technology, such as automated tiering, virtualization and content aware deduplication and compression. Our customers are seeing the benefits of Dell’s storage portfolio and the context within a broader data center strategy as compared to storage products built around costly and old architectures," Thomas said in his statement.

EMC, which on Tuesday reported strong third-quarter 2011 growth in storage revenue and earnings, declined to comment on the official end of its Dell reseller relationship.

source : crn
 
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