Dell's Storage Sales Jump

Dell Computer Corp. (Nasdaq: DELL) continued its strong growth in networked storage last quarter, with storage sales up 47 percent year-over-year.

Dell today reported $11.5 billion in overall revenue for its fourth quarter 2003, up 18 percent on 2002's fourth quarter. Its income of $749 million or $0.29 per share (a penny over First Call's consensus) was up 24 percent and 26 percent, respectively, over last year.

For the year, storage accounted for $1.8 billion of Dells total revenue of $41.4 billion. “We maintained our considerable momentum in storage,” Dell CFO Jim Schneider said in a call with analysts.

The news reinforces a sense of growth in the storage networking market. Dell appears to have benefited from its partnerships with EMC Corp. (NYSE: EMC) and Microsoft Corp. (Nasdaq: MSFT).

Dell sells co-branded versions of EMC's midrange Clariion SAN system and also sells higher-end Symmetrix SAN (see Dell, EMC Talk Turkey) and other EMC products. On Monday, Dell and EMC announced a new line of the Clariion SAN platform. Dell also sells a NAS system based on Microsoft's Windows Storage Server (see Sands Shift Under NAS Market). On its own, Dell manufactures the low-end CX 300 system for small data centers and departmental applications, which is also co-branded with EMC (see Dell Enhances CX Line).EMC also had a strong fourth quarter, foreshadowing Dell’s success in storage (see EMC: Everything's 'Better').

Despite all this, storage remains a small part of Dell’s overall business. According to IDC’s latest quarterly report, Dell held 7.2 percent of the open SAN market and 6 percent of the NAS market in the third quarter of 2003. But with PC sales flattening, Dell might look to storage and overall enterprise sales to increase its revenues. Enterprise revenue, which includes storage and servers, rose 32 percent over the previous year, compared to 18 percent for the company’s total revenue.

— Dave Raffo, Senior Editor, Byte and Switch