EMC gets even cosier with Dell

EMC has extended its five-year global contract with Dell for another two years to 2008, sparking fears for the long term viability of the storage giant's third-party reseller channel.

The multi-billion strategic alliance, originally signed in 2001, enables the companies to collaborate on new products and technologies for the storage market while adopting Dell's direct sales model.

Matthew Boon, vice-president for hardware and systems at analyst firm Gartner, said the Dell deal's extension would likely further sour EMC's relationship with its third-party resellers.

"The fact is that EMC is increasing its presence in the enterprise space, where traditional resellers can add value by shifting services as well as products. It takes away business from the channel," Boon said. "It will have an effect on [EMC] reseller partners."

He said EMC and Dell were obviously "happy" with the agreement and wanted to continue for the foreseeable future in a move which would consolidate and broaden the reach of both parties. "It's certainly [also] a way for Dell to increase its capability as an overall infrastructure provider," Boon said.

As a result of the initial agreement, the companies have so far produced Dell/EMC CX200 storage systems, a SAN integrating ATA and fibre channel technologies and SAN/NAS convergence.

David Henderson, GM for channels at EMC in Australia, said the alliance allowed the companies to share software, training resources, engage in joint manufacturing projects and marketing. "I think with the extension [of this deal] you'll see more and more of the same, certainly of dual-branding of products and delivering entry-level SAN," he said.

Henderson said the extension was worth another $US 1 billion globally to EMC, which expects total revenues this year to come in at around $US6 billion.

He said EMC's 15 resellers in Australia would not necessarily lose by the deal. The Dell agreement was focused mainly on the CLARiiON range, whereas EMC resellers represented a broader range of niches.

"We've got three other product categories. The Centera is a new archival product we released nine months ago, for different market segments, and a NAS product, and so on. So there's lots of opportunity for growth for different partners," Henderson said.

He pointed out EMC has only just signed its first third-party distributor in Australia. Last month, Express Data (ED) was appointed to distribute EMC's CLARiiON CX line to the mid-market here.

"So we'll have more resellers," Henderson said. "I'm a great believer that the more footprint there is for EMC the better. Dell is a major partner but I think I can say with confidence that all our partners are growing quarter by quarter [by revenue]."

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