By Stephen Shankland
Staff Writer, CNET News.com
May 9, 2001, 12:30 p.m. PT
It's almost a contradiction.
Dell Computer, a company known for tackling markets once they're well established, is two years into its effort to conquer the storage market. It's territory that's fraught with expensive planning--not to mention chockablock with equipment that doesn't work together. For Dell, this is a world away from the market for interchangeable commodities that PCs and low-end servers have become.
But Russ Holt, general manager of Dell's Storage Systems Group, stands by the company's decision to move into limited areas of the storage market, gradually offering higher-end products to bigger customers.
"We want to begin forcing the commoditization," he said in an interview.
Holt has credentials for the task: He laid the groundwork for Dell's current ascendant position in the low-end server market. And before joining Dell in 1998, he spent 14 years at the old-line computing company NCR, most recently in charge of servers.
But storage is a tough nut to crack, as IBM, Hewlett-Packard and Sun Microsystems have found as they try to win back former customers who now source hardware and services from storage specialists, such as EMC and Network Appliance. Dell won't be granted an exemption just because it's dominant in the PC market.
Dell's storage effort "hasn't been a total success when looking at the...mix of storage to total sales," said Technology Business Research analyst Brooks Gray. "It's been down there in the 1 to 1.5 percent range for the last four quarters."
While Dell's storage revenue is increasing quickly, "that's from a very small base," Gray said. Gray estimates that Dell garnered about $102 million in the fourth quarter of 2000 for standalone storage products--products such as direct-attached hard disk arrays, storage area networks (SANs), network-attached storage (NAS) that are independent from a server.
Storage companies promised that high-speed SANs would ease storage headaches, but that promise proved overambitious as companies struggled to get their switches, network cards, and storage systems to work together. NAS, a much simpler form of storage product attached to a network, has been easier but still comes with its share of headaches involving managing the profusion of NAS systems.
But there's no question Dell is ambitious. Though its high-end storage systems currently can be used with Windows servers but not Unix servers, the company has expanded so the products work with Windows servers from IBM, Compaq Computer and Hewlett-Packard as well as those from Dell. Holt described his aspirations in an interview with CNET News.com.
Q: What's Dell's storage strategy and how well is the division faring?
What fraction of that is directly attached to servers, what fraction is attached by a network, and do you see that fraction changing?
At Sun, IBM and Compaq the storage business reports directly to the chief executive. How independent is your storage business from your server business?
How often are Dell NAS and SAN products used with non-Dell servers?
Who do you consider to be your biggest competitor now?
Do you foresee a day when there will be a single, unified island of storage?
What do you think about the debate of Fibre Channel (the communication standard used to build today's storage area networks) and Internet Protocol (IP, an adaptation of which is starting to make its way into the storage market)?
What about InfiniBand (a high-speed connection technology backed by many server and storage companies)? Many believe it also has the potential to replace Fibre Channel.
IP will make its entree as a systems interconnect, making very thin servers interconnected. Over time you'll see it as a replacement for Fibre Channel. It'll probably start making an impact three to five years out.
What's the status of your acquisition of ConvergeNet? That acquisition didn't result in products as soon as Dell had hoped.
So that was a change in strategy?
Storage has been a hot market, but now it too has been hit by the spending pullback--both storage specialists and server companies expanding into storage.