Michael Dell: Storage, Server, Network Silos Are Going Away

As far as Dell Technologies founder and CEO Michael Dell is concerned, the light is burning out for competitors that are focused on technology silos.

"It's not so much about the silos anymore. In other words, 'Yes, you need networking. Ye,s you need storage and servers, but ultimately you need all of those together with software,'" said Dell, in an interview with CRN. "This is why the [Dell Technologies] combination makes so much sense and you're seeing that in our results. The competitors that are focused on one particular silo, I think that game is going to get harder and harder."

Dell said the genesis of forming Dell Technologies years ago -- which now includes Dell, Dell EMC, VMware, SecureWorks, Pivotal, RSA and Virtustream – was based on the idea that technology silos were diminishing through the rise of software-defined and innovative architectures like hyper-converged infrastructure.

[Related: Michael Dell: 'Much, Much More To Come' On Dell EMC VMware Integration]

Looking inside his own market-leading portfolio of storage and servers, Dell said the lines are being blurred.

"If you look at the storage business and the server business and you try to say that these things are distinctly different, that becomes harder and harder over time," said Dell. "In other words, you have software-defined storage, you have hyper-converged, you got scale out – the reality is we're number one in both and we're growing in both. Increasingly, it looks like one business which is really good. That was our objective."

For the first quarter of 2018, Dell became the worldwide leader in both server and storage market share, according to research firm IDC. Dell captured gold with 19.1 percent global server share, generating $3.59 billion in revenue, up 50 percent year over year. For storage, Dell EMC took first place with 22 percent share and sales of $2.8 billion, an increase of 43 percent year over year.

Dell EMC channel chief Joyce Mullen told CRN that customers are a key reason why the lines between storage and servers are becoming harder to distinguish.

"The lines between a server and storage are blurring. So it's getting harder and harder to distinguish between those. When we're looking at solving customer problems and supporting their workloads, lots of times they don't care whether it's a storage product or a server – they just need it to perform," said Mullen.

Robert Kane, senior vice president of product marketing at Insight, a top Dell partner ranked No. 12 on CRN's 2018 Solution Provider 500 list, agreed with Dell and said the company's infrastructure vision has been paying off for channel partners.

Dell storage sales at Insight, for example, were up "high double-digits" during the company's recent first quarter thanks to combined solutions like VxRail. "They've got a great story and growing very well for us especially when you add the whole portfolio of storage and servers together with VMware," Kane said.

During its first quarter, Dell Technologies reported triple-digit growth for its VxRail and VxRack hyper-converged systems, which leverage VMware software. The company reported total sales of $21.36 billion, up 19 percent year over year.

VMware, which is majority-owned by Dell, recently reported 14 percent year-over-year sales growth to $2 billion for its first fiscal quarter, beating Wall Street's expectations. Other businesses within Dell Technologies – including RSA, Pivotal, SecureWorks, Virtustream – generated a total of $579 million during its first fiscal quarter, up 9 percent year over year.

Michael Dell told CRN the company relied on its theme, "better together," a strategy to drive more cross-selling across technology silos.

"We had more cross-selling -- the 'better together' theme – so the average number of [line of businesses] being sold by partners was up roughly 10 percent and we grew double-digits in the first quarter," said Dell. "We're continuing to simplify the offerings and all that is resonating extremely well with partners and customers. That's why we're growing and winning."