Dell storage channel a work in progress

Greg Davis Dell

, channel chief

ORLANDO – Close to 250 of Dell’s top partners are joining more than 300 customers expected to attend the week-long inaugural Dell Forum. This event is a first for Dell, bringing together partners picked up through the (November 2007) and (February 2011) acquisitions, but while the channel neophyte is positive about its recent successes, and bullish about its storage future, there were plenty of mixed signals being communicated.

The company, which became an industry powerhouse through direct PC, server and storage sales, has been strengthening its channel ties recently, with channel sales up 40 per cent in 2010, and a 46 per cent increase in registered deals in Q1 2011, to 16,000, said Greg Davis, Dell’s channel chief. The results for the almost 1,200 premier partners was even better, as they grew their business 100 per cent year-over-year.

However, when he threw the floor open to questions during his Monday-morning keynote, a question about friction with Dell sales reps almost drew a standing ovation. Davis said the problem is real, but while the channel representatives have all been cross-trained, the tens of thousands of Dell salespeople will take some time to get fully acclimatized to working with a channel.

Another mixed message was communicated in Dell’s recent financial results for its first fiscal 2012 quarter, reported on May 17. Despite a storage market that saw external disk storage systems factory revenues climb 13.2 per cent, totaling just under $5.6 billion in the first quarter of 2011 (per ), the growth in the EqualLogic business, and the addition of Compellent, the company’s storage business actually fell 13 percent. , which is winding down its Dell relationship, held on to top spot and grew its revenue 24.7 per cent, followed by (up a whopping 37.8 per cent), (up 17.6 per cent), (up 16.1 per cent) and Hitachi (up 26.8 per cent).

Dell attributes the sales drop primarily to declining revenue of EMC products. In a recent blog by Rob Williams, the company said its storage revenue, which was $2.7 billion for the full year FY09, fell to $2.3 billion by the end of FY11, a 14 per cent drop in the last two years. The positive spin on this, he suggests, was Dell’s evolution from being a storage reseller to a storage OEM. During that same two-year period, the company’s total storage gross margin dollars rose nearly 50 per cent, and Dell-branded storage now accounts for almost two thirds of Dell storage revenue and more than 80 per cent of Dell storage gross margin.

Dell is in the middle of a transformation, Davis said, but is committed to the channel. Last year it delivered more than 76,000 training courses to its channel partners, and generated more than 52,000 sales leads. The top 10 partners who invested in training outshone all the rest, growing 126 per cent, he said, and certified partners grew four times faster than non-certified partners. So training will be a big part of the company’s go-forward channel strategy, with more than double the partners expected to be trained this year.

According to IDC data, Dell held 11.4 per cent of the storage market, Davis said, and the company is looking for a bigger slice. “We want our unfair share of the market.” It’s not about more partners, says Davis, but more partners who are trained, in sales and engineering.

The week-long event will include hundreds of breakout sessions, technical deep dives, and storage best practices, as well as instructor-led training, hands-on labs and opportunities as well as partner certification courses. In addition to presentations from Davis, Darren Thomas, vice president and general manager of enterprise storage, Phil Soran, vice president of Dell Compellent, channel chief Greg Davis, and Brian Bell, who heads up the Dell Compellent Channel, chairman and CEO Michael Dell is expected to host a session later in the week.

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