Dell Sees Growth in Storage

By Chris Preimesberger  |  Posted 2007-11-13 Print this article Print

$1.4B EqualLogic deal underscores the company's growth plans and iSCSI momentum.

Dell CEO Michael Dell, during a tour of Japan last month to promote the companys Simplify IT initiative, brokered the idea that the OEM might be ready to grow through a series of acquisitions, a sharp departure from its past reluctance to buy other companies. Just a few weeks later, Dell snapped up independent storage vendor EqualLogic for $1.4 billion, a move that looks to strengthen not only Dells storage offerings but also its channel program after it begins incorporating EqualLogics technology into its PowerVault storage portfolio. In addition, Dell sees the acquisition as a way to complement its growing virtualization offerings.
The deal, announced Nov. 5, and the amount of money Dell will pay for EqualLogic, also seem to be clear indicators that iSCSI is poised to claim a bigger part of the storage market from the older and more expensive Fibre Channel. EqualLogic, which earlier this year announced plans to pursue an initial public offering in the wake of VMwares successful stock announcement, incorporates the iSCSI storage protocol into its products.
Storage remains one of the most talked-about areas of IT management, and Dell is jumping into the market as more storage capacity is being shifted to IP SANs (storage area networks). The iSCSI SAN market is expected to grow from about $600 million in 2006 to $6 billion in the next five years, according to IDC. "This [news], more than anything else, is a strong validation of iSCSI as the wave of the future," Tony Asaro, an analyst at Enterprise Strategy Group, told eWeek. "Now, I wouldnt go so far as to say this signals the end of Fibre Channel, no way. Well have FC in systems for a long, long time. But when a company like Dell invests that much money into a company like this, its a very strong vote for iSCSI, no question." Praveen Asthana, director of storage for Dells Product Group, said the acquisition of EqualLogic will help Dell customers better deploy virtualization throughout the data center, since the technology complements iSCSI storage. In a way, virtualization will help businesses, whether large enterprises or smaller companies, scale their storage arrays, while iSCSI is becoming the preferred way to address storage issues compared with Fibre Channel. "We are expecting that our customers are going to want a broad set of offerings to choose from, whether that is Fibre or ISCSI," As­thana told eWeek. "Whether we are talking about SMBs [small and midsize businesses] or the corporate space, the customer wants a choice whether its entry-level arrays or high-end arrays, and we are trying to offer them a better set of choices." Dell understands the SMB and home-user market like no other large computer company, Enterprise Strategy Groups Asaro said. "Think about it—most small businesses and home users havent heard of EMC and [Network Appliance]," Asaro said. "But they have heard of Dell, and Dell has a generally good rep. If Dell can make it stupid easy for a small-business person to set up a data storage system—and it will do it—then Id have to say that Dell isnt just jumping into a market controlled by others; it will be creating its own market." How EqualLogics technology will be incorporated into Dells products, such as its PowerVault storage offerings, is still being discussed, and neither Asthana nor Tim Yeaton, chief marketing officer for EqualLogic, wanted to comment on specific plans. Its also not known if EqualLogic will remain a separate division within Dell or if it will be absorbed into Dells storage division. Yeaton did note that EqualLogics channel model, which emphasizes working with a number of solution providers, will work well with Dell efforts to expand its own channel as it moves away from its strict direct-sales model. "Our channel program is very inclusive, and it makes it much simpler when it comes to deploying these types of storage solutions," Yeaton said. Greg Davis, head of North American channels at Dell, said the move will allow Dell to take advantage of the work EqualLogic has done with its channel partners and build up relationships with EqualLogics channel partners and customers. While Dell has no specific channel growth targets yet, Davis said he will focus on taking the best of what EqualLogic offers its partners and integrating those strategies with Dells own channel plans. "We really want to understand EqualLogics programs and partners and then collectively take advantage of its experience to grow both of our businesses," Davis said. One of EqualLogics products is PS Series SANs, a combination of storage disk arrays and storage management software that uses iSCSI, or storage over IP, which is designed to be more cost-effective than traditional Fibre Channel storage systems. EqualLogic employs a virtualized architecture that lifts stored data from disks and allows the storage arrays to share resources and balance workloads. In addition, the Nashua, N.H., company has added thin provisioning, which allows administrators to limit the allocation of physical storage to what applications immediately need. Dells Simplify IT program is aimed at giving its corporate users a complete package of hardware and services. As part of that program, Dell has struck deals with VMware and XenSource to allow virtualization technology to be embedded in the hardware.
Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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