Solution providers concerned about EMC's Dell relationship
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Dell Computer may not be acquiring EMC, as rumors have suggested for the past year or so. However, the closer relationship between the two IT industry giants is continuing to grow stronger as EMC gives Dell the tools it needs to make a play for the enterprise data center.
Dell is positioning the new Clariion CX600, which EMC unveiled this week, as its high-end array, and using it to enter the heterogeneous Unix/NT enterprise space, said Matt Brisse, Dell product manager for the new array, called the Dell/EMC CX600.
Dell will also target 100 percent Unix shops for the first time with this array, Brisse said.
"Dell has a commodity-based sales model," he said. "We can bring a value to those customers, where before they could only use proprietary or monolithic products. . . . Traditionally, Dell has a maniacal focus on costs. Now we can bring this to the Unix market."
While Dell currently offers NT and Linux servers, it does have the storage management software capabilities to leverage in mixed Unix/NT environments for a seamless user model, Brisse said.
Eighty percent of Dell's systems consultants are now Unix-certified, thanks to training and other support from partners such as EMC, Brisse said.
Consulting, planning, design and implementation services for the Clariion will be done by Dell-badged employees or, if customers prefer, personnel from third parties such as EMC, said Brisse. Dell employees are currently going through thousands of training sessions each day, including mandatory Unix training, leveraging EMC procedures, he said.
Further cementing the Dell bond with EMC is the first public acknowledgement of a manufacturing arrangement between the two. EMC executives this week said an entry-level version of the CX600 is planned to be introduced six to eight months later. The entry-level model will be manufactured by both EMC and Dell, but EMC's solution providers will be tapped to resell the EMC version.
Solution providers are concerned about Dell's low-cost push into the enterprise and how that will affect their EMC business.
The problem is not just that Dell comes in with lower numbers, said Hope Hayes, president of Alliance Technology Group, a Hanover, Md.-based EMC partner. It is more a case of how the vendor combines products and moves margins between various products to compete in the storage space.
"We see customers say they want to buy Dell servers or other products," Hayes said. "They say they also want disks. We can bring in the disks. But if Dell hears of the deal, they will come in and move things around to make the numbers. You can never beat Dell on price."
One solution provider who requested anonymity said the Dell model is driving prices down and putting pressure on margins.
"We focus on value, so Dell's model is contrary to ours. Yes, you can argue that you can make it up on value services. But we like to get margin on the hardware, too. When [Dell's in the picture, it becomes more of a price-driven scenario than a value-driven scenario. The lower end you get, the more formidable the competition with Dell.
At the lower end, deals are more margin-driven anyway, the solution provider said. "The trick to competing with Dell is know when to walk," he said. "If the price is the sole determining factor, it's hard to compete."
Short-term spiffs and special pricing to Dell from EMC shows that EMC's direct guys don't understand marketing, said another solution provider. "Sales people are coin-operated," the solution provider said. "But what about us? We are always trying to win the direct guys' hearts. We bring them into accounts. But they can make more money with Dell. Sure, EMC is saying it's moving into the channel. But the biggest beneficiary to that is their Dell relationship."
Not all solution providers agree that EMC's relationship with Dell hurts the channel.
James Kernan, president and CEO of Networks Plus Technology Group, a San Diego-based solution provider, said his company resells Dell products, including the EMC-made Clariion storage arrays, and even does subcontracting for Dell on services such as on-site consulting, design, installation and support. "This happens especially if we are in the account and create the opportunity for Dell," he said.
It helps Networks Plus that not many people resell Dell, said Kernan. "We actually make more margin on Dell than with many so-called channel-friendly vendors," he said. "If you sell Dell as a solution instead of as a single box, it works."