December 09, 2008, 4:11 PM — Dell and EMC have agreed to extend their worldwide storage partnership, even though the existing deal -- which has generated billions in sales for the two companies -- doesn't end until 2011.
The announcement comes amidst speculation about the long-term prospects of the EMC-Dell partnership. In particular, Dell's US$1.4 billion acquisition of storage vendor EqualLogic, announced in November 2007, led some to wonder if the companies might go their separate ways in 2011 as Dell beefed up its own storage product line.
As part of the extended partnership, Dell will start selling EMC's Celera NX4 storage systems.
Today's announcement aims to "remove any uncertainty" about the health of the Dell-EMC relationship and highlight a relationship where both companies anticipate continued growth, said Steve Leonard, a senior vice president at EMC and president of the storage vendor's Asian operations.
Leonard spoke during a joint interview in Singapore with Steve Felice, a senior vice president at Dell and president of the company's operations in Asia-Pacific.
The latest extension of the partnership builds on a 2006 announcement that saw Dell and EMC agree to continue working together until 2011. The partnership has now been extended until 2013, a move meant to reaffirm the strategic importance of the partnership to both companies and bring them closer together.
"In the beginning, this partnership was just about selling each other's products. Now, it's 'Let's act as one unit,'" Felice said, attributing the partnership's success to good chemistry between Dell and EMC and a concerted effort to make sure both companies benefit from the relationship.
The timing of the announcement signals Dell and EMC want to end industry speculation about where their partnership is headed, said Simon Piff, program director for storage research at IDC Asia-Pacific.
"They just want to quash any concerns," Piff said.
EMC is an important partner for Dell because EMC's storage products cover the entire range of the market, something the EqualLogic product line doesn't, Piff said. The ability to offer a full range of storage products helps open more doors for the computer vendor.
"EMC gets Dell into the high-end enterprise market, particularly in the mission-critical space," Piff said.
Dell and EMC began working together in 2001. At that time, the deal was painted as a way for Dell to offer high-end and mid-range storage products to its customers, while EMC could tap the growing market for servers running the Windows operating system.
Over the years, the relationship between EMC and Dell has generated significant revenue for both companies.
During EMC's 2007 fiscal year, Dell accounted for 14.3 percent of the $5.7 billion EMC earned in revenue, or $823.7 million, according to the company's most recent annual report.
Dell does not break out the specific amount of revenue generated by the EMC partnership, but storage sales represented 4 percent, or US$2.4 billion, of the company's overall revenue during its 2008 fiscal year, which ended on Feb. 1, the company said. That figure includes revenue from sales of EMC products, as well as Dell's own storage offerings.