Partners: Dell Is Making Dramatic Gains In The Data Center

Dell's aggressive enterprise offensive is paying off in big gains in the data center market as some solution providers are saying the company is displacing legacy competitors in a number of large accounts.

According to Dell, Round Rock, Texas, the company's North American Enterprise Systems Group partner business was up 28 percent year over year in its 2015 fiscal year, which ended Jan. 31.

Also, according to Dell, the company’s top 53 partners, whom it recently hosted in Austin, Texas, for its first-ever Strategic Partner Summit, grew their Dell business by a whopping 40 percent in the last fiscal year.

[Related: Michael Dell: 'New Way' SDN Opens Door For Dell To Shake Up 'Old Way' Cisco]

During the year, Dell's top North American partners completed 12,000 training courses, ran 1,100 marketing campaigns and reached 13,000 customers, the company said.

Solution providers attending the summit said they see Dell climbing the enterprise ladder to become one of their top strategic partners over the past several years. They say Dell is hungry and willing to collaborate to win deals.

Dell has jumped from a no-show in the top vendor ranks of FusionStorm four years ago to No. 3 behind Cisco Systems and EMC, said Mike Souza, senior vice president of sales and marketing at the San Francisco-based solution provider, No. 47 on the CRN 2015 Solution Provider 500 list. Dell is the fastest-growing vendor partner for FusionStorm, with portfolio sales growth of 75 percent for the last three consecutive years, said Souza.

"Our executive relationships are tight all the way from our CEO to Michael Dell all the way down," said Souza. "Everyone is involved. We don’t have that same relationship with other vendors. So much in life is about feeling and emotion. You really feel it with Dell from [Vice President of Channel Sales] Jim [DeFoe] all the way down to the field. When they say they are going to do something, they do it. We feel it, and it is real. We get a lot of lip service from the other OEMs."

Souza said he is "surprised" at how fast Dell is changing the enterprise IT landscape with its embrace of channel partners. "What the Dell channel program has done is brought validity to Dell as an enterprise player in a way they could never have imagined," he said. "With Dell Direct, customers had to question the objectivity of the Dell enterprise story. When you come to a channel partner, the objectivity opens up. Customers are hearing from channel partners that Dell is a real player. Now it is not just Dell making the statement. That has really opened customers' eyes a lot."

Bruce Geier, CEO of San Diego-based Technology Integration Group, No. 66 on the CRN 2015 Solution Provider 500, said TIG’s Dell business grew a robust 14 percent last year. "We're seeing a lot of willingness from Dell to partner on opportunities and collaborate from senior management all the way down to a one-on-one rep basis," he said. "We are seeing a tremendous amount of momentum."

Geier applauded Dell for its willingness to jump headfirst into fast-growing enterprise markets such as hyper-converged infrastructure with a Dell-Nutanix offering and a Dell-engineered solution for VMware EVO. "Dell-Nutanix is taking off like a rocket for us," he said. "It's great technology. It's saving customers a lot of money."

Dell founder and CEO Michael Dell told CRN that, in particular, he's seeing IBM partners making the move to Dell "en masse," as IBM exits the hardware business and Dell presents itself as "a fantastic choice with the breadth of products and solutions we have."

Dell's data center networking revenue grew 13.6 percent year over year in the first quarter, outpacing both HP and Cisco, according to market researcher Dell'Oro Group.

Also during the first quarter, Dell's server business grew faster than the worldwide market in x86, mainstream and density optimized lines, and its 18 percent first-quarter market share in servers was good for No. 2 worldwide, behind HP and besting IBM and Cisco, according to research firm IDC.

Dell's first-quarter server revenue grew 12.6 percent while HP's grew 10.6 percent, according to IDC.

"The whole data center stack has been fast areas of growth for us," Dell said in the exclusive interview with CRN. "You've seen in servers our growth both year over year and sequentially is very, very strong. What's also happening is as you go to software-defined, virtual and container, where does the software run? Where does the virtual machine run? Where does the container run? It runs in the compute. So, with Dell's share of compute being very, very strong, we're in an ideal position to run these future workloads."

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500 list, said Dell's penetration in the data center in the past several years has been nothing short of amazing.

"Open standards, price performance and ingenious product design and features are all driving gains in the data center market for Dell," he said. "Dell is making great products at great price points, and partners are spearheading the charge into the enterprise as trusted advisers. Four years ago, Dell was not a major factor in the channel, and they were a smaller player in the enterprise. Now, they are one of the de facto No. 1 players in both the channel and the enterprise market."

Stephen Monteros, vice president of business development and strategy at Ontario, Calif.,-based Sigmanet, No. 131 on CRN's 2015 Solution Provider 500 list, said the company's data center business with Dell has been growing at about 20 percent annually. Meanwhile, Sigmanet's Cisco data center business has been growing about 12 percent a year and its HP business has been flat, he said.

"The Dell product line allows us to touch the midmarket space we weren't touching before because of its price point," Monteros said. "Dell as a whole, they've always been the company that figures out how to [find the] sweet spot on price. In data center, there are areas I don't think it's taking away from Cisco, but I do think it's taking away from HP.

"The traditional business we're doing with Cisco, that continues," Monteros said. "A lot of the Dell business we're getting is net-new. We weren't hitting this market, now with Dell we're hitting it, particularly around public sector."

Scott Winslow, president of Waltham, Mass.-based Dell partner Winslow Technology Group, said the company grew its Dell business 50 percent last year to about $8.3 million and is on target to do about $12 million with Dell this year.

Winslow Technology Group has been a Dell partner for a decade and has been all in with Dell for about four years.

"Dell has the best servers out there. You could argue with that if you were with HP or Cisco, but [Dell's] consolidated and converged solutions are really good. They've got that licked," Winslow said. "We like the storage solutions for ease of use and ease of management. We like the Compellent solution because over 96 drives, there's no more software licensing that's charged. Some of our bigger customers get killed with that.’

Paul Neyman, president of Houston-based Waypoint Solutions, said he's noticed server and storage customers becoming less loyal and believes Dell is ready to capitalize on that.

"I don't feel like anybody has a clear advantage over Dell," Neyman said. "We've got a fairly good win rate."

Robert Braceland, president of Springfield, Mass.-based Entre Computers, said his enterprise business with Dell grew 20 percent last year, "and there's no reason to think [that won’t] continue." Entre's HP business, meanwhile, has been growing at about 8 percent annually, he said.

"Dell's really the only game in town for an end-to-end solution at this point," Braceland said. "You try to diversify, but Dell has done such a good job working with us from a channel perspective, you run with the horse that wants to run."

Steven Burke contributed to this story.

PUBLISHED JUNE 10, 2015