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EMC CEO hints at trouble in paradise with Dell

Although EMC executives said sales of midrange Clariion systems were strong last quarter — up 12 percent from last year — the Clariion discussion wasn’t all hearts, roses and strong margins on its earnings call. Dell accounted for less than 30 percent of Clariion sales, down from  33 percent in the prior quarter.

Wall Street analysts estimated Dell Clariion revenues for the quarter were down 26% year over year and 12% sequentially. Aaron Rakers of Wachovia pointed out that Dell now accounts for 10.4% of EMC overall revenue, down from 12.3% in the second quarter and 15.8% a year ago.

For the first time since Dell acquired iSCSI SAN vendor EqualLogic last January, EMC CEO Joe Tucci acknowledged his long-time partner’s acquistion of its own SAN platform affected Clariion sales. “We’ve probably gotten a little off track,” he said. “As Dell bought EqualLogic, we diverged more than we should’ve.” Tucci added “there’s a lot more we could and should be doing together…we’re quickly and actively working to put plans in place to make this relationship even better.”

In the meantime, Tucci noted that EMC had built up new sales channels for Clariion, which negated the impact of the decline in Dell Clariion revenues.

Rakers called the Dell revelation “disappointing as [EMC] did note that it was ‘back on track’ with Dell during its prior quarter earnings call.”

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