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Main overlap in Dell's EMC acquisition is midrange storage

Dell's blockbuster EMC acquisition would leave overlapping storage products -- especially in the midrange array space, with EMC's VNX and Dell's SC/PS Series.

If Dell's $67 billion EMC acquisition goes through, the combined company will have a bunch of overlapping storage products -- most noticeably in its midrange storage array portfolio.

EMC's market-leading VNX array spans entry-level to high-end configurations, and Dell's midrange arrays include the SC Series from its Compellent acquisition and the PS Series through its purchase of EqualLogic.

Dell and EMC customers with imminent purchases are already contacting industry analyst firms to seek advice on what they should do, given the probability that the product lines could consolidate in the future.

"History would tell us that you cannot have three products competing for the same market for a long period of time," said Roger Cox, a research vice president at Gartner Inc., based in Stamford, Conn.

But Cox also noted that Chevrolet, Pontiac, Oldsmobile and Buick competed for a long time before General Motors pared down the brands to Chevrolet and Buick. He said he expects the new Dell/EMC to sustain the three midrange storage product lines for perhaps five or even possibly 10 years.

"Users should continue down the path of buying whatever they think they're going to buy, so long as they understand that the lifecycle of these products might be five years," Cox said. "As long as the new Dell/EMC keeps upgrading these competing platforms with the latest technology from Intel, the latest disk drives from [Western Digital] WD and Seagate, [and] the latest flash technology from whoever, then why not?"

CEO Michael Dell pledged an ongoing commitment to Dell's current enterprise storage products during last week's Dell World 2015 event, as well as through an open letter on the vendor's website.

But customers who are making imminent decisions about storage purchases have questions about the roadmap.

New Century Health, a specialty care management firm based in Brea, Calif., made a $200,000 investment in Dell's SC Series arrays earlier this month. Rick Colen, senior director of IT infrastructure and security at New Century Health, said he might have looked more closely at EMC's VNX had he known about the impending Dell-EMC deal.

"We looked at NetApp, at EMC storage and Compellent, but because we're a Dell shop and we're very loyal to Dell, we went with Compellent, knowing the service that we were going to get out of Dell," Colen said.

Colen said he had experienced problems with EMC customer service, mainly on the sales side, in his previous job. He said he has had great customer service with Dell, but wonders if Dell will put as much effort into Compellent now that it has EMC's storage portfolio.

"Are they going to try and transition everything from Compellent to EMC?" he asked.

Glenn O'Donnell, a vice president and research director at Forrester Research Inc., based in Cambridge, Mass., said EMC storage customers don't have much to worry about. He said with all the EMC acquisition rumors that had been circulating for some time, Dell's acquisition actually provides "a pretty nice, soft landing" for EMC users -- many of whom are already Dell server customers.

"There's more concern if you are a Dell storage customer ," O'Donnell said. "Usually, when these acquisitions occur, the buyer takes the more dominant position. But if you're looking at the world of storage, clearly, EMC storage is more prominent. You have to look product by product to say whether one is superior over the other, but clearly, the epicenter of the storage world is going to be in the EMC DNA."

Execs highlight differences between Dell, EMC storage

Alan Atkinson, Dell's vice president and general manager of storage, said last week that there's a lot less overlap in the storage product lines than people think because of the way in which Dell has rationalized its product line to a single stack during the last three years.

Before the acquisition, Dell identified the SC Series as its main next-generation storage architecture, while pledging to continue to support and enhance the PS Series. Atkinson noted a new thin import feature that lets customers nondisruptively move data from the EqualLogic arrays to SC/PS Series arrays. He said Dell also intends to have common management and replications between the two products.

Travis Vigil, executive director of Dell Storage, said the company provided major updates to both the SC and PS product lines this year, and will not force customers to migrate. "You can migrate at your own time, at your own pace. Storage investments are long lived," he said. "People have them in production, five, six, seven years. And we're very cognizant that they have to realize a long-term ROI on their investment."

Asked about the distinctions with EMC's VNX, Vigil said: "We tend to be more on the entry and lower end of the midrange, where other competitors tend to be on the higher end of the midrange and going into the high end."

Gartner's Cox said EMC's VNX uses more expensive enterprise multilevel cell (MLC) and doesn't treat flash in the same way as Dell's SC Series, which incorporates triple-level cell (TLC) 3D NAND. The SC allows tiering between three different types of flash -- whether single-level cell (SLC), MLC or TLC 3D NAND -- between flash and hard disk drives (HDDs), and between HDDs only.

"All of the flash in the VNX line really is to enhance performance in terms of flash cache, but also as a solid-state drive tier," Cox said. "But, on the other hand, Dell doesn't really have a product line like XtremIO. XtremIO is a billion-dollar franchise today, and it kind of stands by itself in that space."

EMC acquired XtremIO in 2012, and its XtremIO flash array was purpose-built for flash. Eric Burgener, a research director in the storage practice at IDC in Framingham, Mass., said Dell gets the No. 1 all-flash array from a revenue standpoint and a platform with lots of enterprise functionality.

"This was a great acquisition for Dell," Burgener said. "When I look at [Dell's] storage portfolio, one of the areas that I feel like they have not really been able to address considerations for is the all-flash array, where you've got application environments that absolutely require consistent sub-millisecond performance out of hundreds of thousands of IOPS."

Customers will have to wait to see exactly how EMC's all-flash XtremIO, midrange VNX and VNXe, and high-end VMAX arrays square with Dell's SC Series and lower-end PS Series in Dell's overall long-term strategy. The EMC acquisition is not expected to close until mid-2016.

"It is Dell's buy, and Michael Dell does like the Compellent product. I've got to believe the Compellent product stays," said George Crump, president of analyst firm Storage Switzerland LLC. "Everything else from the Dell side is probably on the potential chopping block."

Mark Peters, a practice director and senior analyst at Enterprise Strategy Group Inc., based in Milford, Mass., said there's nothing to stop Dell from keeping all the products if it wants to adopt EMC's "leave no gap in the portfolio approach." But, he said if he were forced to make a choice, he would probably go with the product that has more revenue and profit in the midrange. That's EMC's VNX.

Peters said, in the meantime, customers shouldn't be nervous about making investments in Dell's storage arrays. "The logic of being nervous is you believe that somehow Dell's going to run away and not support you," he said. "That would be really stupid of them in the short term if they're trying to establish credibility in the enterprise world."

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