OEM relationship between Dell and EMC coming to an end

(Opinion) With Dell's Clariion sales decline and the building blocks that Dell's PS engineers could use, it's only a matter of time before the Dell-EMC OEM relationship ends.

Ever since Dell bought SAN supplier EqualLogic, there have been questions about Dell's commitment to continue selling the OEMed EMC Clariion CX and AX networked storage arrays. With Dell contributing proportionately less to EMC's sales, the questions are growing louder.

Currently the Fibre Channel CX-4 Clariion array line top-ends Dell's in-house PS 5000 iSCSI arrays, which are in an EMC bracket, as it were, with the low-end AX EMC products providing Dell's entry-level networked storage products. Both Dell and EMC readily admit that Dell sales of EMC products took a brief but smallish dive after the EqualLogic purchase. But the positioning of the CX-4 as Dell's high-end network storage line and the AX as its entry-level product seemed to have taken care of that.

It would be relatively easy for Dell to move the PS line to a higher level of capacity and performance and so lessen the need for the Clariion CX-4 arrays.
However, it would be relatively easy, as we show below, for Dell to move the PS line to a higher level of capacity and performance and so lessen the need for the Clariion CX-4 arrays. But first let's examine the sales evidence from EMC's third calendar quarter 2008 (CQ308) results.

Wachovia analyst Aaron Rakers perceives "significant decline in the Dell [revenue] contribution. Conversations [with management] suggest further contribution declines going forward." In more detail he stated, "EMC reported that Dell declined to 10.4 percent of total revenue, down from 12.3 percent and a 15.8 percent contribution in the prior and year-ago quarters, respectively. This implies a 26 percent year-on-year and 15 percent sequential decline."

EMC's other channel partners selling the CX-4 product did better. As Rakers noted, "EMC also noted that channel [other than Dell] were up 20% year-on-year."

Commenting on this pattern of Dell-EMC product sales, Rakers wrote, "We view this as a concern, especially given the company's comments that this relationship had gotten 'back on track' exiting CQ208. EMC reported that Dell accounted for slightly less than 30 percent of total Clariion revenue, below the (approximate) 33 percent contribution in the prior quarter and a recent peak in the 35 percent range." Rakers views this as a negative event for the Dell-EMC relationship.

We can well imagine EMC management's view of the Dell OEM sales rep who has reported such dismal results. No "salesman of the year" club award for him.

Product development goals for Dell PS engineers
Now let's imagine what the PS-Series engineers are looking at as product development goals. The building blocks they have coming their way include 6Gbps SAS, which could make the PS5000XV iSCSI SAN array a faster box. Currently it can scale to 4.8TB with its 15,000 rpm SAS drives.

Another coming building block is Fibre Channel over Ethernet (FCoE). NetApp has already announced the first native FCoE interface array by adding a QLogic target FCoE Converged Network Adapter (CNA) as its interface port protocol. EMC's CX-4 has a modular I/O design, meaning EMC could readily add one too (although so far it has not). A native FCoE PS array could connect to servers also using FCoE to access what they think are Fibre Channel storage arrays across a FC SAN fabric.

Third, there is 10Gbps Ethernet with a Data Centre Ethernet (DCE) standard coming next year that provides lossless transmission with a dependable latency. The combination of FCoE with 10Gbs DCE provides the equivalent of Fibre Channel speed and dependability without the expense of a Fibre Channel fabric.

Let's go for a fourth building block and suggest that an internal SAS backplane structure could be used in future PS arrays. At 3Gbs, it would be faster than the 2Gbps Fibre Channel Arbitrated Loops (FCAL) often used in arrays today to link FC drives or bridged SAS drives to the array controller. Using 6Gbs SAS II components would overtake the 4Gbs FCAL links used in NetApp storage arrays. HDS' new AMS range uses a SAS backplane, as do Data Domain deduplication arrays, an IBM array and, it is expected, HP's coming ExDS9100 highly scalable array.

Specs for next-generation PS storage arrays
Putting these four items into Dell's PS development pot, we could spec out a next-generation PS series. Let's call it a PS 6000, with FCoE interfaces, a SAS backplane and latent support for 6Gbps SAS drives and SAS 'fabric' inside the array. We could envisage a capacity uplift from the existing 4.8 TB to a 10+ TB level, possibly in the 20 TB area. At this point we'll keep the CX-4s to link to existing Fibre Channel SAN fabrics but expect other enterprise array customers to prefer the hopefully more cost-effective FCoE PS6000 (or whatever it might be called) product.

Our PS line engineers might also ponder the wisdom of adding a Fibre Channel target adapter to this PS6000. If this were done, then CX-4 sales could be expected to drop off very quickly, compared to a slow decline if Dell added FCoE interfaces to its PS products.

Given the pattern of Dell's Clariion sales decline and the building blocks that Dell's PS engineers could use in the near future, a sensible view of the Dell-EMC relationship's future is not if they will part but when. Don't expect either company to say anything else other than that the partnership is key and in a robust state. But if Dell adds FCoE capability to the PS product line then be alerted. . .and if it adds direct Fibre Channel capability, be pretty well convinced that the game is up.

Chris Mellor is Storage Editor for The Register.

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