Dell's storage business booms

SAN FRANCISCO (09/26/2003) - If history is a reliable indicator of future success, Dell Inc. appears set to take corporate datacenters by storm given its rapid ascent in the storage market.

In its fiscal year 2003, Dell's storage business netted the company US$1 billion in revenue, which represents 20 percent of its total revenue and 87 percent growth year over year. In the last quarter alone, Dell reported a 46 percent increase in its storage sales. And the company sees even more growth on the horizon.

Much of the success can be attributed to its partnerships with EMC Corp. and Microsoft Corp. In September, Dell announced it enhanced its NAS appliances to run Microsoft's latest NAS operating system: Microsoft's Storage Server 2003. And last June, Dell extended its reseller agreement with EMC.

The new deal runs through December 2008, two years beyond the original agreement signed in October 2001, and permits Dell to manufacture the CX200, the lowest end of EMC's midrange CLARiiON line, in its three manufacturing facilities.

"Our partnership with EMC was done to increase our revenues and address more market," said Russ Bailey, a senior product manager for Dell's storage group. "(Manufacturing in-house) allows us to take advantage of our supply chain processes and facilities."

However, success in the storage market for Dell did not come overnight. The company initially resold storage systems developed by Quantum and Network Appliance. Those two agreements fell apart when Dell realized it could make its own storage systems at a much lower cost.

Bailey was unwilling to reveal a revenue target for the storage group for the fiscal year 2004, but with the development of the CX200 in house and the work Dell has done to influence EMC's manufacturing processes, it is likely Dell will replicate its success this year.

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