OCT. 28–HOPKINTON, MA–first time, Dell Computer Corp. will manufacture an EMC Corp. data storage product under a significant expansion of the companies’ collaboration announced Monday.

The agreement to build the new CX200 storage system is seen as a further attempt to wrest market share from Hewlett-Packard by combining EMC’s data storage expertise with Dell’s sales force, and now, its famously efficient assembly lines, according to The Boston Globe.

The companies have been collaborating for exactly a year to help Dell move into storage and services as a hedge against falling personal computer prices and slumping sales, and to help EMC break into the market for smaller and more cost-conscious businesses.

EMC controls about half of the market for high-end storage servers, but only 6 percent and 3 percent in the medium and low-end performance and price segments, which are growing faster.

“There’s a whole base of the pyramid, small-to-medium-sized enterprises, where it’s Dell’s sweet spot, and it’s historically been EMC’s sour spot,” said META Group analyst Rob Schafer.

Austin, Texas-based Dell and EMC said both would manufacture the CX200 “entry level” storage system, which will be available in December starting at $28,000.
The collaboration has already produced higher-end and pricier CX400 and CX600 products, but those all have been manufactured entirely by EMC.

Russ Holt, vice president of Dell’s Enterprise Systems Group, said the collaboration had already produced 1500 sales, split about evenly between small businesses, government, health care and large companies, all of whom use complex data storage hardware and software to house and retrieve the enormous amount of data that pile up in their businesses.

Now, EMC, facing extraordinary price pressure from stingy corporate customers, hopes it can squeeze more savings by having some of the devices made in Dell plants.

“There’s nobody who does low-end manufacturing better than Dell,” Schafer said. “The cost of these systems is less and less in the components and more and more in the systems getting them out the door.”
The device, set to be rolled out in December, will still be manufactured in some EMC plants.

“We have partners who quite honestly are somewhat sensitive to purchasing a product that was manufactured by Dell or anyone else,” said Joel Schwartz, senior vice president of EMC’s CLARiiON Systems Division.

The new product is also seen as an attempt to take market share from Hewlett-Packard, whose storage offerings were boosted by its merger with Compaq and who is trying to use its strength selling servers to boost sales of closely related data storage products.

Tom Rallens, director of entry and mid-range online storage for HP Networked Storage Solutions, said HP products already offer the same features as the CX200 for a much lower price, starting at about $16,500.

But Schafer said HP should be concerned about the fruits of Dell-EMC cooperation because it is giving HP its first competition in the market for cheaper products.
Still, the real winner is small companies who are capitalizing on the storage industry’s woes to get lower prices.

“Bottom line, the customer wins,” he said.

EMC shares were down 39 cents to $5.03 in trading on the New York Stock Exchange on Monday. Dell shares were down 22 cents at $28.82.