Dell EMC President Goulden: SSD Shortage May Force Pricing Changes, But Won't Harm Red-Hot All-Flash Market

Top Dell Technologies execs say they don't expect ongoing component shortages in memory and SSDs to impact demand for the company's growing line of all-flash products.

Noting that rising memory prices and SSD shortages are "a bit of a headwind," David Goulden, president of Dell EMC's infrastructure division, said Thursday during a conference call to discuss Q4 results that the company's all-flash game plan won't necessarily change.

"The value proposition for all-flash still holds," Goulden said. "You get so much more additional performance, I don't see the market changing. It might slow down a little bit, but customers are buying for the next three or four years, and it's not impacting their buying decisions."

Dell Technologies stocked up ahead of time on the components that are now in short supply, a top Dell Technologies exec told CRN late last month. That allowed the company to get through last year without price increases. Also, Dell's size and scale allow it to get the best pricing and parts availability of any vendor.

[Related: Intel Warns Partners: Expect Tight SSD Supply Through 2017, With Shipment Priority On Data Center SSDs]

Now, however, the company is making pricing adjustments, and Dell EMC CFO Tom Sweet said he's using a variety of strategies to minimize the impact.

"There's ways to adjust pricing, whether it's a list price, whether it's how much discounting authority you're giving your sales organization, there's ways to sort of maneuver your way through these dynamics," Sweet said.

Sweet said the company has made such adjustments in both its PC business and in servers. "We've seen some pretty significant cost increases in memory, for instance, and you're just not going to be able to swallow those and not adjust pricing in the long run."

Mike Gluck, vice president and CTO at Sanity Solutions, a Denver, Colo.-based solution provider that works with Dell EMC, said SSD shortages are probably relatively short-term and aren't likely to have a significant impact on Sanity's margins.

"The perception is this is going to last for a couple of quarters," Gluck said. "Maybe by the second half, things will start to catch up, so from that aspect, it's short term. The problem it causes is you place an order for what you think is in-stock, but it's out-of-stock. It can be a logistics nightmare. The impact on customers and us is delivery is pushed out. A two- to three-week wait time is now a five- to six-week wait time."

Gluck said SSD prices might not fall quite so dramatically once the current shortage eases. "We'll be in this two or three quarters, and then it'll go back to, well, not normal, but the decreases in SSD prices won't be as severe," Gluck said.

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All-flash was the cornerstone of EMC's strategy before its $58 billion acquisition by Dell in early September. On Thursday, Goulden said the combined company saw "record-setting" demand and a $4 billion demand run rate for all-flash products. The company has brought all-flash from its top-of-the-line ExtremIO solutions to its bread-and-butter VMAX systems and into mid-market systems like its Unity hyper-convergence products and Dell's SC Compellent storage line.

The SSD shortage is the result of accelerating demand for SSDs, prompted by per-gigabyte prices that have fallen within the range of slower spinning hard disks. Another factor is the SSD manufacturers' transition from NAND memory, the key component in SSDs, to 3D NAND technology.

Intel recently warned its channel partners that it expects demand for its SSDs to exceed supply for the remainder of 2017. The SSD and NAND memory industry is seeing record demand across all markets, Intel said, adding that it would prioritize production of data center SSDs over lower-cost consumer SSDs.