EMC, Dell Extend Agreement Despite Cracks In Relationship

Storage giants EMC and Dell on Tuesday restated their vows by signing a multiyear extension to their global reseller agreement and making EMC's Celerra NX4 storage system a part of Dell's storage portfolio.

The relationship between the two, under which Dell sells much of the EMC storage portfolio under the Dell | EMC brand, was originally signed in October 2001.

With Tuesday's agreement, it is now extended through 2013, despite cracks that have appeared between the two.

Under the relationship, which was extended several times, Dell has become EMC's largest reseller, accounting at times for up to one-third of EMC's indirect sales.

However, Dell acquired EqualLogic early this year, giving it a product line and an indirect channel that competes with EMC.

When asked by analysts during the Q&A session of EMC's third-quarter financial report about a 26 percent year-to-year and 10 percent quarter-to-quarter drop in EMC's Dell business, Joe Tucci, EMC's chairman, president, and CEO, began by saying that the strong growth of the Clariion business came from two factors: a robust channel build-out and an increase in EMC's commercial and SMB business. He then continued on the question concerning Dell.

"On the other hand, we are very quickly and very actively working with Dell, and—if you talk to [Dell Chairman and CEO] Michael Dell, he'll have the same statement—we believe there's a lot more we can and should be doing together," Tucci said. "We probably got a little bit off track, and we're working hard to include the Dell channel on top of everything else we're doing."

Tucci also said at the time that as Dell acquired EqualLogic, EMC and Dell diverged more than they should have.

"And in addition to the channel build-out and the sales force build-out that we've done, we're also putting plans in place, very cooperatively with Dell, to make this relationship even better," he said.

The biggest competitor for EMC's solution providers is still Dell, said Dan Carson, vice president of marketing and business development at Open Systems Solutions, a Willow Grove, Pa.-based EMC channel partner.

"The Dell relationship is a big deal from a reseller's point of view," Carson said. "When you are promoting EMC and Dell shows up, Dell almost always gets the deal. With Dell, it comes down to pricing."

While EMC may have experienced a drop in Dell sales of its products, that's easily explained by Dell's acquisition of EqualLogic, Carson said.

"There's overlap between the EqualLogic and EMC products," he said. "If you are Dell, and you have a product you purchased and a product you licensed you can sell, what do you do? In my opinion, Dell is cannibalizing its EMC business with its EqualLogic products."

Even so, Dell and EMC are still working closely in certain areas. Last month, for instance, Dell signed an OEM deal for deduplication technology with Quantum similar to the one that EMC signed in May.

The EMC Celerra NX4 that Dell is now reselling consolidates application storage with NAS, iSCSI and Fibre Channel connectivity and integrates EMC Clariion networked storage. It includes features such as virtual provisioning, automated volume management and snapshot capability.

"This relationship had its genesis during a challenging time in the economy and a desire by both companies to provide cost-effective solutions to customers who still had to manage ever-increasing amounts of information," Tucci said in a statement Tuesday. "The same is true today, and while Dell and EMC are both very different than they were in 2001, we are committed to our mutual customers and to delivering industry-leading technologies that can provide them maximum return on their investment."

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