Posted by: Dave Raffo
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For years, Dell has made noise about pushing deeper into storage outside of its partnership with EMC – all the while maintaining that partnership.
The deal tells us Dell is clearly interested in becoming a bona fide storage vendor, and it took the best route possible to making that happen. It also tells us it is a matter of time until its partnership with EMC falls apart, despite an agreement that runs through 2011.
Nobody from Dell or EMC will say that. Their party line is the EqualLogic products fall into Dell’s SMB PowerVault platform, and Dell and EMC will continue to co-market mid-range Clariion systems.
That argument doesn’t hold up for several reasons. First, EqualLogic’s higher end systems are not SMB plays. The PS3000 it launched a year ago has a starting list price of $65,000 – more than twice that of most PowerVault products. EqualLogic has always considered midrange storage titans EMC, Hewlett-Packard and Network Appliance its main competition. And EMC people privately consider EqualLogic a genuine midrange competitor. EqualLogic can help Dell sell to SMBs, but it has also been adding features such as thin provisioning and virtualization capabilities to make its SANs more enterprise friendly. Is Dell going to scrap those technologies? That’s unlikely.
Then there is the iSCSI factor. By buying EqualLogic, Dell is betting most of its storage chips on Ethernet-based iSCSI. That’s no surprise. Dell’s business is built on Ethernet. But EMC’s is built on Fibre Channel. While Fibre Channel vendors have come to sell iSCSI and accept that it has benefits, they’re not betting their business on it. The major Fibre Channel vendors have even created a new protocol – Fibre Channel over Ethernet (FCoE) — aimed at stunting iSCSI’s adoption. Down the road, the paths of Dell and EMC will diverge over iSCSI and Fibre Channel.
Finally, there is the personal relationship factor. The EMC-Dell partnership benefitted from a close relationship between their respective CEOs, Joe Tucci and Kevin Rollins. Tucci even showed up unannounced at a Dell Technology Day last year to show support when angry investors were calling for Rollins’ head. Now Rollins is gone, and founder Michael Dell is back at the helm. Nobody’s saying Tucci and Dell don’t get along, but it’s not the same as Tucci and Rollins. And there’s no guarantee that EMC fits in Dell’s plans to turn around his company.
The EMC-Dell marriage made great sense when it began in 2001. Both companies were staunch competitors with Hewlett-Packard and IBM, who sold servers and storage. So instead of EMC making its own servers and Dell manufacturing storage, they partnered. And the relationship worked out until now — Dell is responsible for about 16 percent of EMC’s storage systems revenue and around one-third of its Clariion sales. But the landscape has changed, accelerated by Dell’s purchase of EqualLogic. The main question is: how long it will take for divorce papers to be filed.