Dell ends 10-year reseller relationship with EMC

The contract was due to expire in 2013

Dell announced it has ended a decade-long reseller relationship with EMC this month through which it sold more than a billion dollars worth of midrange and entry-level storage products.

The reseller agreement, which began in 2001, has twice been renewed and was supposed to expire in 2013.

Travis Vigil, Dell's executive director of product marketing for enterprise storage, told Computerworld earlier this year he would not speculate on whether the company would renew its reseller contract with EMC, saying only that it would continue to care for its joint Dell-EMC customers. That is exactly what the company said it will now do.

In an email response, Dell stated that it has "met the terms of the relationship agreement, and will service and maintain systems past 2013, through EMC's end of life dates."

The partnership has been extremely profitable for both companies. Annually, EMC garnered 8% to 9% of its revenue from its relationship with Dell. For Dell, the partnership accounted for 50% of its storage revenue in years past -- about 90% of it coming from the resale of EMC's midrange Clariion line and 10% from the high-end systems.

For the past five or so years, there has been speculation that Dell and EMC would cut ties as Dell continued to bring more upscale storage to market and EMC continued to move downstream with products, creating hotter competition between the two technology giants.

"From a deal perspective, it lasted longer than most marriages.," said Steve Duplessie, founder and lead analyst at market research firm ESG. "They grew apart, it happens. It was great while it lasted; they both made a lot of money on it. EMC reached accounts they never would have been able to without Dell, and Dell learned how to become a storage company. Win/win if you ask me."

Over the past three-and-a-half years, Dell invested more than $2 billion to expand its own family of storage products, much of which continue to be built for virtualized, cloud-based data centers. Those investments include acquisitions of such companies as EqualLogic, Exanet, and Ocarina. Then, last year, Dell purchased SAN-vendor Compellent Technologies, which put it in direct competition with EMC's Clariion line.

Dell also announced it will invest another $1 billion this fiscal year in a broad range of storage technologies to extend its global reach into data center, mobile and cloud environments.

Dell said it will no longer sell Dell-branded EMC storage products, including Clariion storage area network (SAN) arrays, Celerra network-attached storage (NAS) servers, Data Domain deduplication appliances and VNX NAS/SAN combination arrays.

The company will continue to provide existing Dell/EMC customers with Dell services and support to manage their storage environments. Going forward, Dell will support its customers new storage needs with its own growing storage portfolio.

Dell's line of storage products includes Compellent, EqualLogic, and PowerVault arrays, as well as data migration software such as Dell Fluid Data, which allows data to be automatically moved between tiers of storage.

"We are 100% committed to providing quality service and support to our existing Dell/EMC customers, but the future is Dell storage intellectual property and the robust, end-to-end Fluid Data architecture we are delivering, Darren Thomas, vice president and general manager of Dell Storage, said in a statement to Computerworld. "Dell is making serious investments in both acquisition and internal development to assemble a competitive storage portfolio that provides customers with superior technology, such as automated tiering, virtualization and content aware deduplication and compression."

EMC did not immediately respond to a request for comment.

Duplessie said the dissolution of the partnership will have no real effect to either company's bottom line (as evidenced in both of their earnings for the last quarter).

EMC reported record earnings for its second quarter of this year, with $4.85 billion in revenue representing a 20% year over year increase. Dell revenue was up 15% year over year for Dell-owned storage products.

"If anything, Dell is making much more money on the bottom line now. So as far as divorces go, this was a pretty easy one, Duplessie said.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian or subscribe to Lucas's RSS feed . His e-mail address is lmearian@computerworld.com.

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