Dell wins EqualLogic - EMC loses
Dell’s $1.4 billion, all-cash acquisition of EqualLogic is the beginning of a stampede by big storage vendors to pick up appliance storage vendors.
Dell should know: they’ve been having support nightmares with the Clariion line for years. The stuff is just too complex for the SMB space. Dell has more important support headaches.
Dell accounts for 15% of EMC’s revenue. That won’t go away for some time, but the rest of the company will have to grow faster to make up for the eventual loss. Goldman lowered their EMC rating from buy to hold. Which is Wall Street for “sell!”
Why did Dell take so long?
Kevin Rollins, the unlamented former CEO of Dell, was a bigger disaster than Wall Street imagined. Dell’s accounting got screwed up and their results suffered, but he led two other fiascos: the decline of Dell service; and the failure to pursue storage.
As I noted 3 years ago:
A little context: remember a couple of years ago when Dell got tired of HP’s high printer margins? They cozied up to Lexmark and came up with a Dell-branded set of printers that has been growing rapidly.
EMC sees the writing on the wall: big storage margins equals big risk that Dell will snuggle up to some other commodity storage vendor and come up with a Dell-branded line of storage and oops! there goes a couple of billion in revenue. . . .
If Dell is smart they will dump EMC in 2005 and take all the margins for themselves.
Better late than never.
Who’s next?
Dell’s spin around the buy is:
Dell plans to grow EqualLogic’s successful channel-partner programs with current and future EqualLogic-branded products, and also plans to incorporate EqualLogic technology into future generations of its Dell PowerVault storage line available through the channel and direct from Dell.
EqualLogic has customers in 30 countries, so they do have some channel reach. But the real key to selling storage to SMBs isn’t channels, it is product. Product that is simple to use and easy to configure. iSCSI is the right interconnect and EqualLogic’s complete software portfolio means customers don’t have to think about what they may need because they’ve already got it.
10 years ago, storage management was #6 or 7 on the storage buyer’s list. Today, I believe it is #2, after availability, especially in smaller companies. Michael Dell gets that.
The StorageMojo take
Smart and long overdue move for Dell. Congrats to the EqualLogic team for an all cash deal without the headaches of an IPO. EMC, ouch! ExaGrid should talking to Dell about the SMB archive market. And all the other new storage companies - LeftHand, Isilon, iBrix, iStor and more - are all due for a thorough vetting by the rest of the players. HP in particular needs to get serious.
Comments welcome, of course. Who do you think is next?
on November 6th, 2007 at 9:19 pm
[...] http://storagemojo.com/2007/11/05/dell-wins-equallogic-emc-loses/ [...]
on November 7th, 2007 at 8:46 pm
And all the other new storage companies - LeftHand, Isilon, iBrix, iStor and more - are all due for a thorough vetting by the rest of the players. HP in particular needs to get serious.
…Robin, you’re joking right? Isilon is toast and HP bought PolyServe for scalabile NAS. I think HP got (past tense) serious.
on November 8th, 2007 at 9:41 am
I think the best description of what is happening with this purchase was done by the register.com, in a write up they did. The included a picture here: http://regmedia.co.uk/2007/11/07/dellandemc.jpg
on December 7th, 2007 at 7:48 pm
Robin, I think you are spot on here. Players like Cisco, EMC, NetApp, HP, SunTek, etc. are all looking at what the next technology money maker is going to be. I am riding the iSCSI train right to the bank right now, and there are no stops on this line.
If you look at Sun’s purchase of Lustre, NetApp’s purchse of Spinnaker, HP’s purchse of PolyServe, Rackable’s purchse of Terascale, etc. It looks like scalable storage architectures are the next wave. Now the questions that need to be answered:
1. Can any of those companies make a scalable storage architecture that doesn’t need a PHD in kernel development to deploy and support.
2. Can these technologies meet the needs of the masses?
3. Can these monstrous companies (Rackable not included clearly), get out of the way of process in order to help drive stability and functionality?
I hope you are having a great end of year.