EMC and Dell ending resale partnership


EMC and Dell ending resale partnership

Alex Scroxton

EMC and Dell are winding up their eight-year reseller partnership on the back of the latter's recent acquisition of EqualLogic.

Dell has been reselling EMC's volume storage CLARiiON line since 2001 in a relationship originally predicted to last around five years.

As MicroScope reported at the time, the deal caused an outcry among EMC partners as Dell had not yet u-turned on its direct focus.

Speaking yesterday on a conference call to mark the end of EMC's third quarter, CEO Joe Tuccui told analysts: "We're extremely committed to the OEM side of the relationship. What's kind of winding down if you will is the reseller side of the relationship."

He continued: "As that winds down we're trying to pick up that slack with our own direct sales and mostly through channel partners."

Tucci insisted that he was not closing the door on Dell, adding that the two vendors were still committed to their OEM partnership and hinted at plans to keep working with Round Rock on duplication and NAS technology.

Disturbingly, he also talked of a need to "beef up our direct selling organisation to take up some of the slack that we're going to lose from the reseller side".

EMC took 25% of its client revenues from Dell CLARiiON in Q3 and 10% of that figure came from resale, down by a quarter sequentially.

Canalys analyst Alastair Edwards said that closing down the reseller relationship could benefit EMC's OEM business.

"It means that as Dell builds out its channel, EMC gets access to those partners. It can better extend its reach through an OEM relationship rather than overtly competing with its own channel," he said.

EMC closed out its third quarter Thursday with profit down 24% and sales down 5% year-on-year.

It banked $298.2m (£181.3m) on total sales of $3.5bn, boosted both by the acquisition of Data Domain and EMC's majority stake in VMware, which added $489m to the top line.

Bosses welcomed the figures, which were up sequentially, as a sign that the storage market is now beginning to bottom out.

"Customers are signalling more comfort spending their IT budgets, which gives EMC confidence in our ability to perform well and achieve our full-year targets," said Tucci.

He continued: "We predicted back in our January call that the year on year revenue declines would bottom out in Q2 and that IT spending in the second half of 2009 would be stronger than the first half, and as you can see from our quarter results and our Q4 forecast, this is the way the year seems to be playing out."

EMC expects IT spending to return to growth, albeit somewhat below the historical growth levels that it saw in 2004 through 2007, during 2010.

The vendor is targeting fourth quarter and full year sales of $4bn and $13bn respectively.

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