Storage Wars: The Dell EMC Empire Strikes Back!
While still a powerful force in the industry, Dell EMC is steadily losing market share in the midrange storage segment to competitors like NetApp, Hitachi, and HPE. Even Pure, an all-flash vendor, is chipping away at Dell EMC’s midrange storage deals with both price and technology. At the same time, cloud-based storage options have significantly reduced customer demand for on-premise storage.
Dell EMC is not taking this disruption lying down. Its President and global sales leader Bill Scannell insists the vendor can regain midrange market share and achieve “hypergrowth” with its PowerStore products and Unity platforms. This may or may not be true, but the feeding frenzy among vendors bodes well for customers. ClearEdge has seen Dell EMC display highly aggressive pricing behavior whenever competition is involved in storage deals, especially in the midrange segment. In fact, in recent deals, we have observed Dell EMC offering the best pricing ever to safeguard its market share.
How Can Clients Achieve Best Pricing?
1. Clients should work to include competition on all upcoming Dell EMC deals – whether it be a refresh of legacy hardware or net new capacity adds. Although it may not be possible to compete every single storage spend, buyers must evaluate those that can be realistically moved to a competitor.
2. Use Dell EMC as a competitor to incumbent suppliers as it is likely the vendor will be eager to displace another supplier. Even if you decide not to go with Dell EMC, its proposals can be used to drive down your incumbent supplier’s proposal.
3. To fully capitalize on any competitive events, it is crucial to align internal resources to limit the amount of information that gets leaked to vendor sales teams. The more uncertain the sales teams are that a deal will get executed, the more leverage you will have to negotiate aggressive discounting.
4. Most importantly, clients should have a demand model in place to outline all upcoming Dell EMC spends to help identify storage needs that could be moved to another supplier.
A final note of caution about this vendor’s sales behavior and efforts to protect revenue: We wrote in December about Dell EMC’s ultimatum to customers who are due to renew storage maintenance deals: pay up to five times your current maintenance run rate or enter into a Transformational License Agreement (TLA). These agreements come with significant financial risk because they lock customers into Dell EMC storage, severely limit a customer’s ability to use 3rd-party hardware support (which is much cheaper than Dell EMC’s), and limit the feasibility of making the switch to another vendor. For more details about how TLAs hinder your negotiating position, read our blog on the subject, or contact your ClearEdge representative.
Scott Braverman is a ClearEdge Analyst.