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EMC-Dell strategic partnership has 'cooled off,' says EMC's Tucci

EMC CEO Joe Tucci says EMC-Dell strategic partnership damaged by Dell's courtship of 3PAR Inc.; seeks a new 'meaningful' and 'lasting' commitment from Dell.

EMC Corp. CEO Joe Tucci today said he doesn't expect Hewlett-Packard (HP) Co.'s $2.35 billion acquisition of 3PAR to change the competitive balance much, but admitted that Dell's courtship of 3PAR had a negative effect on the EMC-Dell strategic partnership.

HP outbid Dell to acquire storage systems vendor 3PAR Inc. last month. Dell sells EMC Clariion SAN, Celerra NAS and Data Domain backup systems, but would have become more of a competitor to EMC than a partner if it won the battle for 3PAR. On EMC's quarterly earnings conference call today, Tucci said he's not sure if the EMC-Dell partnership can be repaired.

"We took a setback as Dell went after 3PAR and cooled things off [with EMC]," Tucci said. "We are in discussions to see if we can do something more meaningful and lasting. The key is, it's got to be meaningful and it's got to be lasting to say it's back on track. So I can't tell you that yet, but I can tell you we are in serious discussions, and there is intent on both sides to do that."

EMC historically gave details of sales of its products through Dell on its quarterly earnings calls, but stop doing that this year. When asked about sales of the midrange Clariion system, Tucci said sales were strong last quarter despite more competition from Dell's EqualLogic iSCSI platform. "Obviously, Clariion was affected by Dell moving on to EqualLogic," he said.

In response to Tucci's comments, a Dell spokesman said EMC remains a key storage partner.

"EMC is a strategic partner and plays an important role in our storage portfolio," the Dell spokesman said. "In addition to Clariion midrange arrays we have also expanded the relationship this year to include the Data Domain deduplication appliances as well as it NS unified storage systems."

As for HP-3PAR, Tucci said he doesn't think it "changes the landscape at all. 3PAR is 10 years old and we've been competing with it for quite a while. Will HP make 3Par more successful? I'm sure they will. But I think what you are going to see there is largely substitution for their high-end EVA product and for systems that they previously sold through Hitachi. "

EMC said sales of its Symmetrix enterprise storage system increased 23% over last year and its midrange product lines (primarily Clariion, Celerra and Data Domain) jumped 22%.

With published reports claiming EMC is negotiating to buy clustered NAS vendor Isilon Systems Inc., Tucci said EMC would launch new products in that market next year.

"We have a successful high-end NAS product in Celerra, and there are a lot of developments there," he said. "We're investing in new products. Clustered NAS is about handling a global namespace. We have solid plans in that area, I'm comfortable with our roadmap. I have to keep some things secret, but suffice to say, we'll have a robust product line for 2011."

As he did on EMC's previous earnings call in July, Tucci teased a low-end midrange system EMC is planning for early 2011.

"It's in beta now," he said. "That's the fastest growing market in storage, and we're excited about the prospects of entering that market in a big, big way."

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