Feeds

Dell's storage strategy has a hole to fill

EqualLogic's unequal status

The essential guide to IT transformation

Comment Dell's storage strategy is in a mess. While EqualLogic booms, its other products languish. The EMC-sourced CLARiiONs and Celerras are failing to deliver the revenue goods. This is the gloomy picture implied by Dell's results since the EqualLogic purchase closed in February 2008.

The latest results for Dell's third fiscal 2011 quarter show revenues of $15.4bn and net income of $822m, up 19 per cent and a massive 144 per cent from a year ago. Storage revenues were $543m, up 6.9 per cent on a year ago. But storage revenues represented just 3 per cent of total revenues in the latest quarter contrasting with the 4 per cent a year ago.

Also, Dell's latest results statement said EqualLogic revenues had grown at 66 per cent. So, hang on, storage segment revenues grew 6.9 percent, less than Dell as a whole, while EqualLogic revenues grew 66 percent. That means non-EqualLogic storage revenues fell, unless EqualLogic is a small part of the storage segment.

Stifel Nicolaus analyst Aaron Rakers said EqualLogic revenues were $163.9m in Dell's third quarter, 4 per cent lower than the second quarter ($170.5m). He also said non-EqualLogic Dell storage revenue (primarily Dell/EMC and PowerVault solutions) decreased approximately 7.4 per cent year-on-year and 16.4 per cent sequentially. Furthermore he said he believes that Dell's EMC storage contributes only 20 - 25 per cent of Dell's overall storage revenues.

This suggests EqualLogic revenues now account for 26.3 per cent – just over a quarter – of Dell's overall storage revenues, slightly more than EMC, and its growth contrasts with the implied poor performance of Dell's other storage products. Our suspicion is that the EMC-sourced storage arrays are simply not doing the storage business for Dell. Rakers is describing a fractured Dell/EMC relationship, and that is part of the reason Dell wanted 3PAR, to fix a hole in its storage product range above the EqualLogic iSCSI arrays.

Supportive evidence for this view comes from IDC's quarterly disk storage tracker published in September. It showed Dell in fifth place in the external disk storage sector by revenue – after EMC, IBM, HP and NetApp – with a 9.4 per cent share and a growth rate of 17 per cent, lagging the market as a whole which grew at 20.4 per cent. Dell is falling behind. Rakers characterised its latest, third quarter performance "as far below the overall storage peer group performance."

If this modelling is correct, then Dell's storage products are rescued from the doldrums by EqualLogic, whose growth has masked the relative poor performance elsewhere. Dell needs to fix this because EqualLogic revenues on their own can't make up the gap and the storage results will drag Dell's overall results down. EqualLogic is not equal to the task.

There is another implication: If Dell wanted to buy 3PAR to fix a hole in its storage product line-up, and failed, then it still has a hole in its product line-up and still needs to fix it. What is it going to do? ®

Boost IT visibility and business value

More from The Register

next story
Pay to play: The hidden cost of software defined everything
Enter credit card details if you want that system you bought to actually be useful
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
HP busts out new ProLiant Gen9 servers
Think those are cool? Wait till you get a load of our racks
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
VMware's high-wire balancing act: EVO might drag us ALL down
Get it right, EMC, or there'll be STORAGE CIVIL WAR. Mark my words
Forrester says it's time to give up on physical storage arrays
The physical/virtual storage tipping point may just have arrived
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.