One of the cover stories in this issue delves deeply into the facts and speculation surrounding Dell’s impending acquisition of EqualLogic, but this deal is interesting (and was surprising) from so many angles that it begs for further speculation.
One interesting angle is the channel ramifications of the deal. EqualLogic had built a strong channel presence of more than 400 VARs and other partners. When the acquisition was announced last month, many of the other iSCSI vendors were licking their chops at the prospect of cherry picking some of those VARs. To those vendors, Dell’s acquisition was seen as a big positive, based on the assumption that direct-sell Dell will abandon EqualLogic’s channel.
That’s a decent guess, given Dell’s history and strengths. But for Dell to become a powerhouse in storage, rather than a reseller, it might require some strategic changes. It’s possible that Dell will retain the EqualLogic channel (which represents more than 3,000 end-user customers). If that’s the case, then it’s business as usual for all the smaller iSCSI vendors that rely on the channel, except that there’s a killer shark swimming in it.
In any case, it will be some time before we can sort out the channel implications of this deal. Storage only represents about 4% of Dell’s overall revenues, and since the company has bigger issues to deal with these days, I doubt it will make any hasty moves on this front.
Which brings me to the EMC-Dell OEM relationship. Most of Dell’s storage revenues come from reselling EMC arrays, some of which have iSCSI connections. So the Dell-EqualLogic deal obviously called into question the long-term viability of the EMC-Dell relationship, with most observers predicting that the deal would eventually go south.
I agree, but it’ll be a long time before that happens. The EMC-Dell deal has been a marriage of convenience, but a very good one. Dell represents about 15% of EMC’s revenues (more than $2 billion). Most of the EMC arrays that Dell resells are Fibre Channel units or multi-protocol (Fibre Channel and iSCSI) units. In other words, the EMC-Dell thing isn’t really about iSCSI. As such, Dell can continue reselling EMC gear while staking its own claim in the iSCSI market.
To spice up all this speculation, consider the price that Dell is paying for EqualLogic--$1.4 billion. Sure, the iSCSI market is hot, but that $1.4 billion suggests that EqualLogic had more than one suitor (and more than one observer suggested that it was EMC that sweetened the pot).
But aside from all the business angles on this deal, the lynchpin lies in virtualization. When Dell announced the deal, it described EqualLogic as “a leading provider of high-performance iSCSI SAN solutions uniquely optimized for virtualization.” Like all other server vendors, Dell is betting heavily on virtualization, and EqualLogic-or maybe it’s just iSCSI in general-gives Dell a silver bullet when it comes to server-storage virtualization synergy.
Speaking of which . . . our more technically oriented readers will want to check out one of the lab reviews in this issue: “SANitize DAS to enhance virtual infrastructure,” which takes an in-depth look at LeftHand Networks’ Virtual Storage Appliance and the synergies between iSCSI and server-storage virtualization.