Storage Soup

Nov 5 2007   12:52PM GMT

Dell-EqualLogic-EMC: three’s a crowd

Dave Raffo Dave Raffo Profile: Dave Raffo

For years, Dell has made noise about pushing deeper into storage outside of its partnership with EMC – all the while maintaining that partnership.

Until now, that strategy consisted of baby steps with its PowerVault SMB storage platform. But today, Dell took a $1.4 billion leap into storage with its acquisition of EqualLogic.

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.

2  Comments on this Post

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    Hey Dave Great points - living in the Round Rock, TX area I feel the ebb and flow of Dell in the housing market and roads :-) Lately the flow of cars is predicated by international business on the NAFTA highway. After reading your comments about EqualLogic, it reminded me of the group quietly running storage at Dell, ex-Zambeel folks Darren Thomas and Praveen Asthana. As for FCoE and iSCSI those are convergent not divergent :-) My thoughts on FCoE is to save money on cards. Overall, the networks stay separate due to cultural issues between storage and IP data management in organizations. Great points and it'll be interesting to see how the quietly successful ex-Zambeel folks work with the incoming EqualLogic teams. JK
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  • Joe
    I'm always amazed at how LSI is always overlooked. Dell sells the MD3000i which is an LSI product. LSI is the biggest threat to EMC today at Dell. Their products compete with every Dell sells from EMC. They have their foot in the door and can offer much better pricing that EMC. EqualLogic is no threat to EMC; niche player at best.
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