Big biz loved Dell servers and storage in Q2

Bespoke hyperscale server biz softens

By Timothy Prickett Morgan, 20th August 2010

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Large corporations are not buying servers, storage and PCs like it is 1999, and neither are their SMB counterparts, but if Dell's numbers for the second quarter of fiscal 2011 are any indication, they are acting a bit like it is early 2008 before the bottom dropped out of the global economy.

As El Reg reported yesterday, Dell posted a 22 per cent revenue increase to $15.5bn in the quarter ended July 30, and net income rose by 16 per cent to $545m.

Server and networking products accounted for $1.89bn in sales up 35 per cent, while storage sales hit $624m, up 13 per cent. Services, including those from Perot Systems, spiked by 57 per cent to $1.92bn. The interesting bit, in terms of mapping out Dell's recovery among IT shops, is that sales to large enterprises rose by 38 per cent, to $4.55bn, with servers, services, and mobile PCs all showing more than 50 per cent revenue growth. (Which begs the question about what was only growing in the 20s among Dell's products sold to large companies.)

Dell said that server and networking sales rose by 28 per cent among SMB customers, with overall SMB revenues rising 25 per cent, to $3.5bn. The public sector - state, local and federal governments, educational institutions, and healthcare providers - have been cutting back on their budgets across the board, and server and networking sales in Dell's public sector unit only rose by 12 per cent, dragging down the total public sector revenues for the company, which rose by 21 per cent to $4.6bn, driven

In a conference call with Wall Street analysts, Steve Schuckenbrock, president of Dell's Large Enterprise group, said that big biz sales for Dell were up by double-digits in all geographies, the fourth quarter of consecutive growth and almost reaching pre-meltdown revenues.

In Q2, Schuckenbrock said that server revenues among large enterprises were up 54 per cent, while storage revenues rose only 14 per cent (but sales and profitability in storage was helped by Dell's acquisition of EqualLogic).

Across all of Dell's groups, Schuckenbrock said that EqualLogic storage sales were up 64 per cent and PowerVault storage rose 14 per cent. Dell's chairman and CEO, Michael Dell, said that EqualLogic had posted $800m in sales in fiscal 2011 so far, and over $1bn since Dell acquired the storage maker last year. Dell is hoping that the acquisitions of Scalent, Ocarina Networks, and 3PAR help boost its enterprise business in the coming quarters.

Interestingly, Schuckenbrock said in the call that the bespoke server arm of Dell, Data Center Solutions, did not see as strong a level of sales as it had back in the first quarter and that the general purpose PowerEdge machines picked up the slack and tugged the rope harder.

He did not elaborate on why DCS didn't grow sales, and Dell doesn't typically reveal much about its custom server business, but it could be choppy all the time because of the nature of the 50 or so customers that the unit serves. ®

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