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November 07, 2007

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Marc Farley

Excellent post Chuck. I expect there will be some amount of consolidation too. Once these cycles start in this industry they tend to play out fairly quickly. One reason is that none of the smaller companies want to be left without a viable exit. Do you think this will become a buyers or sellers market?

Steve

The bigger question is why didn't EMC offer Dell part of the VMware IPO. And, is it too late for EMC convince Dell to back out of their purchase and re-write and extend their agreements with Dell.

Chuck Hollis

Hi Marc -- good to hear from you!

You're right about cycles and playing out quickly.

If I count up the potential buyers, and the potential sellers, I keep coming up with more sellers than buyers.

How do you see it?

Chuck Hollis

Hi Steve

I really don't know what the story is regarding VMware shares and Dell.

As far as trying to convince a company like Dell to rethink their acqusition, well, that's not the sort of thing that most companies would reconsider once they commit to a course of action.

Thanks for writing ...

Steve

Chuck - Thanks for taking the time to answer my question. - Steve

Marc Farley

Chuck, that's how I see it too - more sellers than buyers. To me the two big wild cards are the internal development efforts at EMC and NTAP. Not asking for a comment or response on that, I'm just thinking aloud (er, uh in type).

David Cleminson

Hi Chuck,

This is the first time I have read you blog. I find your discussion points very interesting.

There is a requierment for storage out there, this nobody can deny. We also know it is becomming instaible and will remain like that indeffinately (at least during our life times).
The challenge here is the fact that the majority of companies comming into the SAN (iscsi/FC) market have no Idea (or very little) as to how to guage or size the disk performance requierments.
Currently most of the organisations purchasing EMC (Not through Dell), IBM and HP have some in house experties or consultancy from an integration partner to do a requierments analysis to develop a solution for them. Dell’s methodology is to drop boxes in and run.
With this current trend more organisations will pruchase cheap shared storage systems, try run their production systems from these cheap and slow shared storage systems and wind up worse off than when they started.
They will have tons of storage which can not provide the performance resources requiered for their production systems to run.
Is this the next .com type bubble that will pop and leave a mess as to what went wrong…?

Reagrds

David Cleminson

T

Hey Chuck,

Good to see I'm not the only one left wondering WTF??? after reading comments regarding EqualLogic being involved in virtualization/VMWare. Dell had a pretty good relationship with VMWare since before EMC bought them. There was very little change in that relationship (for better or worse) attributed to the acquisition (VMWare and EMC). EMC is now leaving VMWare to develop on its own. Expect little change in the Dell/EMC relationship as well; it's always been tenuous, always will be, but it's good for both sides.

Kevin

Chuck, Great column. Just curious, do you think Mike Dell knew that the EQLX box could only speak in one protocol or do you think his engineers got so hyped up on ISCSI "roids" that they pushed him into an abyss riding the ISCSI train right into the "performance quagmire station"???

Chuck Hollis

Hi Kevin:

I wouldn't want to speculate on what Michael Dell knew, didn't know, or didn't fully understand.

To see some of the press, they went with "storage virtualization" to describe why Dell was so interested in EqualLogic, which -- as we both know -- is a completely separate topic, and -- of course -- the EqualLogic product doesn't even do.

Most of the industry people agree, though, this is a strange one, and we'll have to see how it plays out, won't we?

Astley Gayle Jr.

Hi Chuck,

After reading many varied comments from within the industry about Dell's purchase of EqualLogic, I'm convinced most pundits have missed the main driver behind this deal. In my humble view, this deal is less to do with servers or storage per-say and, more to do with Dell finding a vehicle that will generate double (or triple) digit growth over the next 8-10 years.

iSCSI SAN technology is rapidly approaching "mass-market" adoption. When that tipping-point is reached, I believe the global market for this type of offering will be measured in the 10s of billions (USD) annually. That's the size of the prize! The essential ingredients for success are arguably there:
> ease of deployment, use & management
> extremely affordable
> global distribution & support

Chuck Hollis

Hi Astley -- long time no see! Where have you been keeping yourself?

To your point, no one is surprised that Dell wants to sell lots of entry-level arrays -- that much is clear. And they're pretty good at it.

I think what surprised most people was Dell's departure from their traditional model of reselling or OEMing other equipment.

Not only did Dell pay a considerable sum for EqualLogic (a story in itself), but they're now committed to an entirely different business model for R+D, in-depth customer support, channel relationships and more.

If nothing else, it's a very bold move. Only time will tell if it works out as they had hoped.

Thanks for writing, stay in touch!

Kelly

Chuck,
I enjoyed this blog and agree with much of it but feel you may be mistaken in assuming there is little overlap in the EMC and Equallogic product lineup. If my sources are correct Dell is expecting this new product revenue to grow from 150 Mill last year to 600 Mill this year. The only way that will happen is if all of the Dell reps start selling it. And this will likely come at the expense of EMC. I would love to have been a fly on the wall when Joe Tucci called Michael Dell to discuss teh EQ deal :)

Chuck Hollis

Hi Kelly

Sure, there will be some impact, but to read some reports, you'd think it was the end of the world, or -- at least -- the end of the EMC/Dell relationship.

From my perspective, the primary product overlap between EMC and Dell/EQL is specifically the AX150, an entry-level iSCSI storage array we licensed to Dell and they mostly built themselves.

This business will most likely go to the EQL product in the near future. But, without disclosing too many corporate secrets, I think it's fair to say that it ain't likely to get them to $600m.

And there's a ton in the EMC portfolio (e.g. CLARiiON, Celerra, DMX, et. al.) that Dell sells today and they currently have no equivalent offering. And I don't think they're gonna be successful force-fitting these customers into an EQL.

Dell has always had their own entry-level external storage array in their lineup, and -- from that perspective -- it's just a new flavor.

But Dell paid a helluva lot of money for EQL, and -- as a result -- they're gonna try to sell it like crazy.

I think it'll take most of 2008 to see whether they'll be successful at it or not.

Thanks for writing!

In the Mix

Hi Chuck,

First time reader of your blog and enjoying the insightful commentary. My organization is currently looking at SAN products for a server virtulization project that will be running a couple of MS SQL apps and DR replication. We have been looking at a number of products, Dell/EMC,EQL and Pillar to name a few. Our requirements are such that iSCSI could be a fit but we are concerned about longer term performance objectives that may rule out a pure iSCSI solution. This lead us to EMC and Pillar. As a side note, during a conference call with Dell and EMC I specifically asked our Dell rep what the EQL acquisition meant for the Dell/EMC relationship. Well after a very uncomfortable pause he replied the EQL product line is targeted at the SMB market. I didn't respond but I couldn't help thinking to myself that this why EMC partnered with Dell in the first place, to get at the SMB market. In any case it made for a rare uncomfortable moment that I relish putting vendors in. Back to the issue at hand, we now face a decision between the Dell/EMC MS-20 product and the Pillar Axiom 500. We are impressed with the flexibility built into the EMC MS-20 product. However, we are also impressed by the application aware aspects and relative ease of installation and configuration of the Pillar system. I'm interested in knowing what you thoughts are on the direction of the higher end SAN market and how Pillar's claims that application aware SANS will lead the market.

Chuck Hollis

Hi Don -- thanks for the comments and questions.

First, it's no surprise the Dell rep was uncomfortable with the question. It's an uncomfortable topic for them these days.

With so many larger, viable storage companies in the marketplace, I'd stay clear of the smaller players such as Pillar et. al. simply because you don't know where they're going to be a year from now.

I consider their 'application-optimized storage' pitch almost complete techno-nonsense. But everyone (especially smaller vendors that aren't profitable yet) need a story to tell, and that's theirs ...

If you're interested in higher-end SAN equipment, the more successful players are EMC, IBM, HP, Sun and HDS. HDS products is available re-badged through Sun and HP.

I have my parochial opinions of who does best in this space, but there's no need to look any farther than this group, IMHO.

Cheers!

Berad

Chuck:

I can understand where you are coming from in directing the large enterprise to the historic big boys of SAN equipment.

However, I am not so sure that you should dismiss Pillar by stating their 'application-optimized storage' pitch almost complete techno-nonsense'.

I know folks running Pillar who have 80% usable disk space. I don't know anyone running EMC, HDS, IBM or SUN who would claim more than 50% on a good day. Simplified performance based lun provisioning does not bite either.

Does this mean Pillar is a threat in displacing the big boys out of the enterprise market right now? Probably not, but I do see them popping up as a disruptive force in the mid market.

Chuck Hollis

Hi Berad -- a few thoughts.

First, if Pillar has something to say, they better figure out how to get better at saying it. From where I sit, they've become largely irrelvant in the discussion.

Second, utilization is more often an artifact of how a platform is used, rather than the platform itself. There are EMC customers who are running very high utilization rates (90%+), and -- of course -- ones with lower ones.

Sure, I'll make exceptions for platforms (e.g. ONTAP) that demand large "reserves" be set-aside, but for most normal block-oriented stuff, it's more about people and process than platform.

And, I'd respectfully suggest you need to get out more often ;-)

Dan

Great post Chuck. Im in the middle of researching my final 2 SAN candidates, EMC NS20 or EQL PS5000E. This post really gives me a lot of insight into Dells EQL marketing. I found the PS5000E to be significantly more expensive than EMC AX4-5 and equivalent to the EMC NS20 pricing.

My question is, is anyone else noticing that the EQL line is priced too high. And could it be that Dell is looking to make up some of that 1.4 billion? I certainly find that Dell is trying to push the EQL much more than EMC offerings.

Thanks, Dan.

Jeff Nay

I agree with Dan, the prices of the EQL line are ridiculously high. As are the EMC and the HP MSA line.
I can purchase 5 Dell Power Edge Servers with high end multi quad core processors 16Gigs of memory and 1T 15K HD, with Perc raid controller, remote access card , for the price of 1 EQL Disk Sub-System.
I don't know but there might be a problem here.
This is a disk sub-system that we are talking about, although they are all very nice, it is still not worth more than the processing power of all of my Dell Power Edge servers put together.

Come on Dell, EMC and you to HP with your MSA line, this technology needs to be available to everyone at a fair price.
If you see "Call for price" then you know that it is overpriced.

John Easterly

Looks like this acquisition has been very lucrative for Dell Inc, Michael was dead on here.

One comment that I thought was interesting was in regards to EqualLogic not doing storage virtualization, which is completely inaccurate. Storage virtualization is the core of this product.

The comments to this entry are closed.

Chuck Hollis


  • Chuck Hollis
    Chief Strategist, VMware SAS BU
    @chuckhollis

    Chuck has recently joined VMware in a new role, and is quite enthused!

    Previously, he was with EMC for 18 years, most of them great.

    He enjoys speaking to customer and industry audiences about a variety of technology topics, and -- of course -- enjoys blogging.

    Chuck lives in Holliston, MA with his wife, three kids and four dogs when he's not travelling. In his spare time, Chuck is working on his second career as an aging rock musician.

    Warning: do not buy him a drink when there is a piano nearby.
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