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Store it Up! Dell, EMC Ink Major Storage Deal

For those that thought multi-billion-dollar technological contracts have gone by the wayside in the fetid economy, Dell Computer Corp. and EMC Corp. turned that notion on its ear Monday with the announcement of a five-year, multi-billion dollar co-branding agreement.

A Dell spokesman would not release terms of the deal, in which Austin, Texas' Dell and Hopkinton, Mass.-based EMC will co-brand EMC's CLARiiON line of enterprise storage systems, making the No. 1 computer manufacturer the leading reseller of the CLARiiON product line. CLARiiON will in turn become Dell's standard offering for storage area networks (SAN) and high-end network-attached storage (NAS) installations.

The agreement makes it possible for Dell to address a broader range of customer needs with storage products that provide additional features that cater to the enterprise. While a significant score for Dell, it is still miles behind Compaq Computer Corp., a major player in the storage arena. Compaq, in fact, plowed ahead Monday with its latest storage virtualizaton offering, StorageWorks Enterprise Virtual Array [called "Enterprise"] and the StorageWorks NAS Executor. Hitachi Data Systems (HDS), too, posited its own virtualization offerings.

The deal could be more important for EMC, which has struggled mightily in recent months, as evidenced by layoffs and lurking competitors such as IBM and HDS waiting in the wings for what some analysts have speculated may be a takeover. But some firms, such as Goldman Sachs' research arm, remain faithful. After the firm posted a net loss of nearly $1 billion and cut another 1,600 jobs, GS said EMC could rebound with its midrange server offerings.

EMC said Monday's agreement builds on its strategy to work with partners to bolster its presence in the Windows NT and Windows 2000 storage markets.

"Dell and EMC are both sharply focused companies in the world of information technology," said Sean Derrington, senior program director at META Group. "This is a highly complementary relationship that will greatly benefit both firms and their customers."

"We expect Dell's direct sales model will increase EMC's reach and capability to better service enterprise-class CLARiiON customers, including a much broader set of small and medium-sized businesses," said Joseph Tucci, EMC president and CEO. "The midrange information storage market alone last year was about a $15 billion opportunity, and we were barely scratching the surface with an industry-leading product. The new relationship with Dell will give us an edge to more rapidly gain market share."

Tucci's $15 billion opportunity claim is probably not an exaggeration. Many current research notes peg various aspects of storage, from software to networking, in the billion-dollar range. To be sure, IDC research projects worldwide storage software market sales to soar from $5.47 billion in 2000 to $10.7 billion in 2005.

Monday's deal is by no means exclusive; Dell will continue to offer its PowerVault direct- and network-attached storage systems and EMC will continue to offer its industry-leading Symmetrix and CLARiiON family of enterprise storage systems and software, directly and through partners, to customers worldwide.

Dell will begin offering the EMC products, which include the FC4500, FC5300, FC4700 and IP4700, to customers in November.