How did the EqualLogic acquisition come about?
Darren Thomas: Early last year, Michael Dell asked [Brad Anderson, Dell senior vice president, Business Product Group], and I what we could do to change the game and move Dell forward in credibility. The first answer that popped out of my mouth was buy EqualLogic. We dug into the technology and found nothing wrong. The technology is awesome. [EqualLogic founder and vice president] Paula Long is one of the best engineers we've ever met. The marketing team, the way they've managed the reseller channel, is best-in-class. We've kept the leadership team intact.
How does the deal change Dell's storage strategy?
Thomas: A couple of things are different for us with EqualLogic. Our strategy, even before then, was to be a complete storage supplier. We have a great product line with our EMC lineup, we're happy with that relationship. The [PowerVault] MD series is one of our fastest growing. That's at sub-$15,000 price points. We have an iSCSI solution and a SAS solution there. We have a solid tape business;
Thomas: Yes, the AX 4-5 is in that price point. EqualLogic runs in the same price point, but it's much more expandable. The other important dimension is virtualization, because of the way EqualLogic scales. Because it scales out, not up, it works extraordinarily well with virtualization. If all I'd wanted to do was plug the gap at that price point, the AX4-5 would fill it. But I would argue it's not as scalable, and we're looking for enterprise virtualization. With Dell, our server team leads the industry in selling virtualized solutions. We wanted storage virtualization leadership to go with server virtualization leadership.
We hit the triple-word score with EqualLogic, if you forgive the Scrabble analogy. It's a proven iSCSI SAN solution and we got a virtualization play because iSCSI was becoming the darling of the virtualization industry. Third, Dell was perceived as a reseller of storage. We are now a developer in this industry with the [EqualLogic] team up in Nashua [N.H.].
How does having EqualLogic change the dynamic of your relationship with EMC?
Thomas: To be clear, there's little overlap in price points. EMC is the best Fibre Channel product out there, and we have a lot of customers who prefer Fibre Channel because they're in the enterprise space. EMC is our product of choice in that space. With EqualLogic, we got a best-in-class iSCSI solution. That was an enormous opportunity for us. iSCSI suits the midrange better, it's not an enterprise kind of product set today. Our goal is to have both of these. If we're going to be complete, we have to have Fibre Channel, iSCSI and SAS, and systems that cost $2,000 and systems that cost $200,000.
How much demand do you see for Fibre Channel and iSCSI together on systems?
Thomas: We do sell an iSCSI/Fibre Channel combination unit from EMC, and it's been very successful. But I don't see the need to put every interface on every box. There are customers who want a converged product that does both, but for today we're happy with the EMC box to get that converged solution for us.
How do you see FCoE affecting iSCSI? Will customers hold off on buying iSCSI with FCoE coming?
Thomas: I haven't seen that in the numbers. iSCSI is not being slowed down because of talk of FCoE. And I don't think it will be slowed down when FCoE gets here. I think FCoE will appear much more valuable to a customer who's on Fibre and wants to go to a unified network. To a customer thinking unified network, FCoE will be his protocol. FCoE is complementary to iSCSI, it's not in conflict with iSCSI.
Will iSCSI get a boost from 10 Gigabit Ethernet (GigE)?
Thomas: My rule of thumb is any time the number of change is higher than five times, it always wakes up a new crowd of customers. Ten GigE is a 10 times change. iSCSI costs have tremendous appeal to SMBs and the low end of midrange. Ten GigE will open doors to higher-end guys. We're shipping 10 GigE servers today; 10 GigE storage devices will start coming this year.
Can we expect more storage acquisitions from Dell?
Thomas: We don't consider EqualLogic a string of pearls acquisition. This is a complete set, a complete product and a complete acquisition. Having said that, there's always interesting technology we look at. We're always looking.
What about software? You partner with software vendors, but some of the large storage vendors have their own backup and management software. Can we expect Dell to acquire storage software?
Thomas: Would we be willing to buy a storage software vendor? Our partnering is fine. We would reserve acquisitions for more critical storage IP. It's not a critical thing for Dell to own. We're not going to buy companies for the fun of buying companies.
EMC executives have said Dell is selling less of its high-end Symmetrix systems to concentrate on selling midrange Clariion systems that you co-manufacture and co-brand. Is that so?
Thomas: It's a question of focus. We still sell a bunch of Symmetrix, but it's an issue of degree. We want our guys to sell products that fit more with Dell servers and other Dell products, and the Clariion line is more than capable. It can go up to 1,000 drives per system. We're more suited to sell into Clarion. The Clariion products we sell are Dell-branded, and it makes more sense for us to sell Dell-branded systems. Dell's sales force directive is to sell products in our Dell-branded lineup.
Last year, Michael Dell said storage needed to be simplified for SMBs. What are you doing to make it simpler to use?
Thomas: One of the biggest reasons we bought Equal Logic is it had the easiest system to set up that we've ever seen. When I was explaining EqualLogic's value to Michael Dell, he's a hands-on guy, so we brought him to the lab and had him set one up and do some configuration changes. He turned to me and said, 'Wow, that is easy to set up.'" When we shipped the PowerVault MD3000, I had my team work long and hard to make that easy -- we put wizards in it -- and our own team came back and said EqualLogic is easier to set up. If we make it easy to use, we'll sell more than if we make it cheaper.
What is EqualLogic CEO Don Bulens' role with Dell?
Thomas: Don reports into our Americas sales team, directly to the North American sales vice president. He's working with the channel partner team and direct sales team. He's in a consulting role to deliver consistency with our channel partners. Paula [Long] is vice president of engineering for our Nashua design center. And we're going to continue to grow that site. We're continuing to invest in what we paid for. I have more open reqs in Nashua than in Austin. We consider Nashua to be part of the community where storage was born. It was born, built and designed in that part of the country.
Now that you're selling EqualLogic direct, how do you avoid channel conflict?
Thomas: We do sell EqualLogic direct, but because we have this awesome channel we kept it alive and created a set of fair play rules. We set up a deal registration program. Whoever registers the deal – there can only be one person – we make sure they've interfaced with customers and make sure the customer has money. Assuming that person negotiates a better deal than the registered price, the deal goes to the person who has a better price point. Any one of our channel partners can compete against Dell without us dropping the price dramatically, which is the key to avoiding channel conflict.