Dell And EMC: An Alliance Worth Watching

Taking the issues seriously, however, doesn't include protecting EMC-certified partners from Dell's direct sales force. "The Dell factor would be a challenge for the VARs who are targeting the midmarket," says Diego Calderin, president of Anexinet, a Philadelphia-based EMC partner.

EMC launched a new three-level partner program this month, dubbed the EMC Velocity Partner Program, which is the centerpiece of the storage vendor's channel-friendly push. The Velocity Partner Program redefined the company's sales approach by identifying 1,800 customers as named accounts for EMC direct sales and approximately 51,000 potential customers, whose revenue is less than $500 million annually each, for partners. EMC officials said EMC's direct sales force will be penalized for selling to a partner account. In such cases, a partner could be rewarded with as much as 12 percent of any such deal.

The new Velocity Partner Program, however, doesn't protect EMC VARs from direct selling by Dell. EMC struck an alliance in 2001 with Dell to manufacture, co-brand and market midrange storage systems based on EMC's popular Clariion product family. The successful alliance, originally launched as a five-year agreement, was recently extended to 2008. No wonder: After just two years, sales have been staggering. For example, the Dell-EMC alliance represents about one-third of EMC's total Clariion revenue and about 4,100 joint customers worldwide.

While EMC has tackled channel conflict concerning its own sales force, it has taken a hands-off approach with Dell. In fact, EMC is warning solution providers to stay away from Dell instead of the other way around. "Dell is an aggressive competitor," says Terry Richardson, vice president of global reseller and OEM sales at EMC. "If a partner is trying to sell EMC in a typical Dell environment with Dell servers, then they're going to have a very tough time."

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EMC clearly isn't interested in reining in Dell, and the reasons are obvious. Not only has Dell brought home the bacon for EMC, but the storage company seems almost in awe of Dell and its direct- sales formula. Tucci calls Dell's value to his company "massive" and lauds the PC leader with praise. "Dell is supplementary to us. They bring us to markets where we've never been, such as education," he says. "Plus, Dell is so cost-conscious. They really aggressively attack the supply-chain costs, and they've got a great marketing force."

It's not just mere marketing and supply- chain efficiency that Dell is bringing to the table, either. The computer-maker has more than 2,000 professional-services personnel trained on EMC technology, making Dell one of the largest EMC integrators on the planet. Other vendors besides EMC have joined up with Dell, including Oracle. The database-software maker expanded its alliance with Dell, which now includes a services plan that offers a fix-priced migration for customers looking to move from Unix to Linux. The migration services are provided by none other than Dell.

Some of the vendors have actually been Dell competitors. After several years of working together, last year Cisco dropped Dell as one of its major VARs after the computer-maker began expanding its network switch line, competing more heavily with Cisco's own network equipment. Dell had been selling a wide range of Cisco products through Dell's direct sales force and online channel. And don't forget that Hewlett-Packard for many years was using Dell as a VARs for its printing and imaging products.

And while Dell's services unit has been scoffed at and disregarded at times, it is growing, which could make Dell an even more valuable reseller for other vendors.

Summit Strategies analyst John Madden recently wrote that Dell is making a major effort to change its image in the enterprise market and strengthen both its products and services for high-end customers. Partners see that, too. "They're definitely trying to bolster their enterprise services because they know that's where the money is," says Tyler Dikman, CEO of Cooltronics, a Dell solution provider based in Tampa, Fla.

As more and more vendors consider Dell a VAR partner, the more solution providers will find themselves going to battle against the world's biggest PC company.