Dell Moves Ahead Fluidly in Storage

The IT industry is always adapting to new trends, from client-server and the PC revolution of the '80s and '90s to cloud computing and big data today. These trends inspire successful new vendor entrants, but they can also be problematic for established IT vendors. Over time, some leaders don't adapt and die (see Digital Equipment Corporation), while others swoon and survive in a reduced state by being acquired by larger saviors (see Sun Microsystems).

But some adapt to not only survive, but thrive. One of the latter is Dell, which seems to be successfully navigating numerous transformational challenges. An example: Dell's evolving storage efforts include a recent forum in London where the company articulated the new Fluid Data architecture, which Dell believes will help it become an increasingly important presence in the storage market.

Dell's Fluid Data architecture, which is designed to enable customers to effectively manage growing volumes of information, finds the company appearing to heed the advice of the classic Fleetwood Mac song "Don't Stop Thinking About Tomorrow." But at the same time, at least so far as storage goes, Dell appears to be following another of the band's hits: "Go Your Own Way."

Dell has long had its own PowerVault line of entry-level disk storage systems, and while those solutions meet the basic needs of business customers, the company long ago recognized that the line was not functionally rich enough to attract the enterprise customers it was pursuing. As a result, Dell turned to EMC as a primary storage partner, OEMing or reselling the company's CLARiiON, Celerra and Symmetrix platforms. While the relationship has been beneficial for both, it seemed unlikely to last forever, especially considering Dell's strategic focus on developing a broader set of end-to-end systems solutions.

Now, for years Dell's business model eschewed a large investment in R&D in contrast to competitors such as EMC, HP, and IBM. That made economic sense given the company's focus on commodity components and systems, but the approach made it more difficult to differentiate Dell solutions from competitors' offerings. That issue is even more pronounced in complex areas like storage which are particularly sensitive to rapidly evolving features and functionalities.

However, Michael Dell's return to the company in 2007 resulted in a marked change in attitude toward corporate acquisitions that, along with a plethora of innovative start-ups, has allowed Dell to successfully buy its way into storage success. The company's first major storage splash was the acquisition of EqualLogic in November 2007, which resulted in it becoming a leading player in the burgeoning iSCSI SAN, an increasingly important technology for many of Dell's target customers. Then in July 2010 came an under-the-radar (for the most part) move with Dell acquiring Ocarina Networks which provided some sexy new technologies, including compression and deduplication.

The company's biggest storage deal was the acquisition of Compellent Technologies in December 2010 for $820 million. A few months earlier, Dell was outbid by HP in a highly public pursuit of 3PAR (which HP eventually won for $2.35 billion), leading some to suggest that Compellent was a second choice. Dell would argue that point, as well it should, because Compellent brought a lot to the table, both in its portfolio of highly scalable enterprise solutions and as an early pioneer in thin provisioning and volume management, both keys to enhanced storage efficiency (and efficiency has always been a must-have value at Dell).

Overall, the EqualLogic, Ocarina and Compellent deals all demonstrate how a vendor with a clear vision of where it wants to go and a willingness to spend its cash carefully can acquire the assets required to compete effectively against players with larger R&D investments.One criticism that could be leveled at most if not all large IT vendors with strong storage portfolios is that they have multiple, overlapping product lines that can result in customer confusion, as well as inefficiencies. However, this criticism is misplaced. Large vendors typically work with a broad range of customers with often radically different requirements for storage performance, capacity, software and management functionalities. For these businesses, one-size-fits-all storage architectures are neither economically nor operationally feasible. What they need, however, is for vendors to articulate how all the disparate product lines play as a whole and fit into the vendor's vision of a storage future.

Dell's storage vision is clearly illustrated in its Fluid Data architecture, a schema that emphasizes efficiency and agility through intelligent data management. Let's make that abstract statement real with a pair of concrete examples from the company's recent announcement that illustrate the point:

Dell's new Compellent Storage Center 6.0, its next-generation architecture for the Compellent storage array systems, is built on a 64-bit operating system instead of a 32-bit operating system. What does that mean? Recall that storage controllers have CPUs built-in that manage the array. Obviously they have an operating system. In the case of Dell Compellent, that is a Linux-based operating system that can be non-disruptively updated, allowing customers to more easily gain the advantages of future improvements. The use of a 64-bit OS also gives significant performance and ability to scale capacity advantages. That coupled with storage management software as in copy and thin provisioning unmapping capabilities supports storage efficiency that Dell feels gives them a good story vis a vis competitors. Dell is also pushing server consolidation, so improvements in VMware integration with Storage Center 6.0 is another example of the new Compellent architecture's agility.

The Dell DR4000 disk backup appliance emphasizes built-in deduplication, compression, and replication using technology acquired in the Ocarina deal. According to Dell, the DR4000's ability to eliminate redundant files can reduce disk capacity requirements by up to 15 times, and deliver similar reductions in bandwidth requirements. Along with lowering backup storage costs to as low as $0.25/GB (list pricing) the DR4000 can also significantly reduce the footprint of backup in the data center, thus delivering significant power and cooling savings. The DR4000 gets Dell into a major competitive area of the storage market while leveraging its Fluid Data architecture strategy and emphasizing storage efficiency (TCO improvements over the existing architecture) and agility (both local and remote replication).

So how does Dell's Fluid Data Architecture and its related announcements position the company during what is, to put it mildly, a highly evolutionary time in the enterprise storage market? Pretty well, overall. The company has put together a solid line-up of proven and cutting-edge solutions that should appeal to existing customers and allow Dell to compete effectively in still-growing and emerging markets.

To be honest, though, Dell's offerings don't fill absolutely every customer need. In EqualLogic and Compellent, the company made big bets on cost-effective alternatives to the traditional SAN platforms, including EMC's CLARiiON and Symmetrix. However, while we expect Dell to be a strong contender, especially in green field opportunities, displacing existing enterprise SAN systems seems less likely.

That said, Dell today has done something that many have tried and few have accomplished. Its creative approach to acquisitions has, in relatively short order, allowed Dell to assemble end-to-end storage solutions that will be attractive to many if not most businesses. At the same time, Dell's exceptional eye for innovative value means that the time required for those investments to start paying off for company shareholders should be considerably shorter than it is for many traditional storage and system vendor competitors.

Overall, we find much to like about Dell's Fluid Data architecture strategy and solutions. Over time, we expect that storage customers will find much to like in Dell's offerings, as well.

David Hill of the Mesabi Group wrote this piece in conjunction with Charles King, Pund-IT, Inc.

At the time of this publication, Dell is not a client of David Hill and the Mesabi Group.