Dell EMC storage sags in the middle

What do you do when storage sales slow down? If you’re Dell EMC, you add velocity to the sales process.

“Storage velocity” was a frequently used term during Dell’s earnings call this morning. On the one-year anniversary of the closing of the $60-billion-plus merger, Dell EMC executives said they were happy with most parts of the business but are looking to juke storage sales over the next few quarters.

Dell EMC storage products are part of Dell’s Infrastructure Solutions Group, which also includes servers and networking. ISG reported $7.4 billion in revenue last quarter, split evenly between storage and servers/networking. But while $3.7 billion in revenue represented a 16% increase for servers/networking, the identical $3.7 billion in Dell EMC storage showed a one percent decline from the previous quarter.

“We’ve got some work to do in storage, to be blunt,” Dell CFO Tom Sweet said. “Our goal is to get the velocity back in the business.”

ISG president David Goulden identified three major growth areas in the storage industry: all-flash, hyper-converged and midrange arrays. He said Dell EMC did well in the first two, and will increase investments in its sales and channel programs to beef up midrange sales.

Goulden, CEO of EMC’s infrastructure group before the Dell merger, said Dell EMC is growing more than twice as fast as its nearest competitor in all-flash. He also said the vendor’s hyper-converged product revenue more than doubled from last year, with VxRail appliances racking up 2,000 customers and 14,000 nodes deployed since its March 2016 launch.

Goulden said new Isilon scale-out NAS and integrated backup appliances are also growing fast, and Dell EMC is doing well in high-end SANs with all-flash VMAX arrays. But he wants improvement in the midrange. Dell EMC’s main midrange SAN producs are the Unity and VNX platforms, and Compellent arrays also fall there.

“The biggest storage trend is a shift of market mix towards midrange storage systems,” he said. “The high end of the market – priced over $500,000 — is declining and has been declining in mid-teens percentage. Growth in the market is the midrange. That’s where we have more work to do.”

Goulden said Dell EMC will add hundreds of storage sales specialists and modify its sales quotas and incentives to “better capture storage opportunities.” He also promised more Dell EMC storage launches this year.

Goulden said Dell EMC storage orders were slightly up in the quarter, but revenue failed to reflect that because of product backlog and a move to flexible and utility pricing models that defer payment. He said Dell EMC storage market share will also be negatively affected by a change in the reporting calendar from EMC’s calendar. He blamed share losses last quarter on the calendar change, and said it would continue to play a role for the rest of 2017.

Dell EMC storage, backup servers, and related professional services should all benefit from a multi-year with GE. Goulden said the contract, disclosed today, makes Dell EMC GE’s primary IT infrastructure provider.

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