Dell EMC finally made its long-awaited breakthrough in storage in the first quarter – even though on a year-over-year basis, channel storage business was actually down. It’s seen as more of a statistical fluke, rather than the harbinger of an unwanted trend, and considerable confidence around storage exists going forward.
Dell EMC’s storage business – as the channel has been told repeatedly since the Dell-EMC merger – had been underperforming. While market share was strong, growth was not, and the company has invested considerable time and monies over the last two years in particular in trying to incent and prod the channel to do better. In the first quarter of Dell’s new fiscal year, storage finally made its long-awaited breakthrough. The channel storage business did, not, however. Still, the company and its channel don’t see any reason for concern in the numbers.
Dell EMC, overall, had an exceptional quarter.
“We had a really terrific Q1, with very strong revenue growth,” said Joyce Mullen, president of global channels, OEM and IoT Solutions, Dell EMC. “Our overall business grew at an 18 per cent rate, to $21.4 billion. We grew across all business units, all regions and all customer segments. We retained our number one position in servers and grew the server business 41 per cent. It was also our 21st consecutive year of increased PC shipments – up 6.4 per cent. In addition, we had an increase of almost 15,000 approved deal registrations in Q1, and 5500 credentials earned, which is pretty solid for the beginning of the year.”
The $43 billion channel business also had an exceptional Q1 – in most areas.
“Our channel Q1 revenue grew by 14 per cent year-over-year — and that was on top of a strong year last year,” Mullen said. “Distribution was up twice that. Our channel client business was up 20 per cent. Server business in the channel was up 20 per cent.”
The overall Dell EMC channel business was cause for jubilation.
“This was our first quarter of storage gain since closing the EMC merger,” Mullen stated. “We increased share by 5.8 per cent in the quarter, which was quite momentous. It was the largest share gain in IDC history. There was also a 44.6 per cent increase in Dell EMC storage revenue.”
There is a ‘but,’ however. That’s the fact that the storage business in the channel was the most incongruent piece of data in the company’s business. While Dell EMC had that terrific quarter in storage, the channel storage business was actually down, on a year-over-year basis. While it wasn’t exactly a statistical illusion, Mullen said that it was due to unusual factors, and unlikely to be an unwelcome new trend.
“There were some big deals last time that didn’t repeat,” she said. “Storage in the channel has been heavily incented and had been growing effectively the last few quarters. Storage in the channel in the Q4 had been up more than in the company as a whole. So while this was a crappy quarter, we don’t think that it will be a trend. We feel confident that his will be a good year for channel storage.”
Scott Winslow, founder and president of Waltham MA-based Winslow Technology Group, a Dell EMC Titanium partner, found the overall storage results surprising, since his company’s performance in storage paralleled its strong overall results.
“We were up over 30 per cent in Q1,” Winslow said. “Dell, and other OEMs are breathing life into storage, with major performance improvements. We did very well this quarter with the midrange SC [Compellent] and Unity lines. People are buying more all-flash, but we are seeing our biggest growth in the hyper-converged space – VxRail primarily, but also the XC [Nutanix] series, where we saw 40 per cent improvement.”
Winslow Technology Group was originally a Compellent partner, who came to Dell with that acquisition, and has since focused heavily on the Dell EMC portfolio throughout their enterprise infrastructure business. They recently got into the Dell client line as well.
“We had a very good quarter with servers, and have seen a lot of momentum from the 14G announcement,” Winslow added.
While Dell EMC isn’t announcing any new channel programs or incents, the ones previously announced are all being operationalized now. They are in place in North America and making their way around the world with rollouts there.
“I really like what they’ve done with the incentive plans, particularly the Get Modern incent program that began last year,” Winslow said. “We were the top producer in that program, which included the largest VARs in the program, and it led to a record Q3 and Q4 for us. Get Modern rewards individual salespeople for selling designated solutions, and more for a competitive displacement. Today, we just closed 2 VxRails at a medium-sized financial institution customer. My sales rep got 3 per cent, and the company also gets paid.”
Winslow Technology Group has also made effective use of the Dell EMC MDF funding.
“We just held WTG Transform, which is our marquee event of the year, and which drew 177 users from 12 different states,” Winslow said. “The event costs $125,000 to put on and Dell EMC, VMware and Nutanix put up $90,000 – three quarters of that. Most of it came from Dell. That’s great support.”