Dude, Where's My PC?

3:45 PM -- Looking quickly at Dells latest earnings, it might seem the company's a lot better at selling storage than selling desktop PCs. Sales of storage gear were up 35 percent year-on-year this quarter, while PC sales were down 29 percent. Does this mean Dell will eventually be known more as a storage company than a PC company?

Not likely. Those growth figures are a bit misleading. Dell’s storage revenue of $500 million last quarter represents less than 4 percent of its overall revenue. PCs still generated more than $5 billion in revenue. And while Dell remains the leader in PC sales, it still has a ways to go to catch rivals Hewlett-Packard and IBM in storage.

Still, Dell is consistently picking up market share in storage, something its server/PC rivals, HP, IBM, and Sun, can’t claim. (See IDC: High-End SAN Revs Up and Gartner: Dell, NetApp Lead Storage Surge.) Its secret is partnering, rather than trying to do storage on its own. Indeed, most of Dell’s storage revenue comes from EMC products that it resells.

That partnership works not so much because of technology, but because it brings together a server company and a storage company with common competitors. That gives Dell the opportunity to sell storage to its server customers without having to build it or buy a storage company. So Dell finds storage success largely because it’s not a storage company, just a storage reseller.

Dell’s rivals are catching on. IBM’s most successful storage platform is the midrange SAN it gets through an OEM deal with Engenio, and it’s now selling Network Appliance storage. (See IBM, NetApp Ink OEM Pact and IBM/NetApp Deal Blossoms.) HP is partnering right and left to fill gaps in its storage product line, although its acquisition of AppIQ shows it’s not averse to buying technology. (See HP Chomps AppIQ & Peregrine and HP Hoists New Storage Products.)Even Sun has finally realized it was better off selling somebody else’s storage, although it would have been cheaper and easier just to partner with StorageTek instead of dropping $4 billion to buy it. Lessons learned. (See Sun to Acquire StorageTek for $4.1B.)

— Dave Raffo, Senior Editor, Byte and Switch