Dell Becomes a Data Storage Contender

It’s been a little less than 17 months since Dell (NASDAQ: DELL) acquired EqualLogic, and during that time the company has transformed itself from a reseller for EMC (NYSE: EMC) into a storage contender in its own right.

Dell still accounts for about 10 percent of EMC’s overall revenues, but the company’s own data storage offerings made it the best performer among the top storage hardware vendors in a tough first quarter, according to analysts from IDC and Gartner.

Dell’s EqualLogic iSCSI sales grew 71 percent in the company’s fiscal quarter that ended on May 1, about 30 points better than the iSCSI market as a whole, although IDC and Gartner had the company’s overall storage hardware sales down about 9 percent for the first calendar quarter. Even so, that was still better than the 11 to 14 percent decline suffered by the rest of the industry.

Dell hopes to add to that story with two new low-end storage offerings unveiled today.

The new EqualLogic PS4000 moves the entry-level price point for Dell’s EqualLogic storage arrays from $17,000 down to $10,000, and the new PowerVault NX3000 is based on Microsoft’s (NASDAQ: MSFT) Windows Storage Server 2008, with pricing starting at $3,100.

The PS4000 doesn’t have the scalability of the bigger PS6000, but PS4000 users can add a PS6000 as they grow beyond the PS4000’s two-node limit. Dell is targeting the new array at small businesses and remote and branch offices.

“I like the message Dell is sending with this,” said Enterprise Strategy Group analyst Terri McClure. “It made it less expensive to get into an EqualLogic cluster, a good message in this economy, but users have a clear upgrade path to a 6000 if needed. I think this will help Dell drive business across the EqualLogic line.”

Taneja Group analyst Jeff Boles said that coupled with the addition of solid state drives to the PS6000, “you can see they are stretching the reach of this platform in both the higher end and the lower end.”

The lower entry price for the PS4000 and other entry-level offerings from other vendors “is making it pretty hard to justify direct-attached storage except for the smallest needs,” said Boles. “For EqualLogic, going here is simply a no-brainer. It is really just packaging for price optimization, and I think you can see that in how they’ve maintained pretty much the full feature set of the PS series in the PS4000.”

Dell is also adding a number of new features for VMware (NYSE: VMW) environments to its PS Series software, including Auto-Snapshot Manager/VMware Edition and VMware vSphere 4 Advanced Multipathing Integration.

Boles said the virtualization support — which also includes Hyper-V and XenServer environments — “is really attractive” for remote and branch office environments (ROBO), particularly array-based “per-VM” replication.

“For the server virtualization customer, that is a cool capability for ROBO support with centralized DR protection, or vice versa, and normally it takes a whole additional layer of software and management,” Boles said. “In my opinion, with the PS4000 built for ROBO deployment, this is likely to resonate a lot more coming from the array rather than another software layer from Symantec or Double-Take.”

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