Dell computer sales

Channel partners of storage giant EMC Corp. are increasingly getting a bigger share of its revenue as the company expands from its direct sales base and targets raid-size businesses and corporate departments.

"We're finding partners are selling into different areas of our enterprise accounts than we were traditionally," says Robert Stroud, divisional partner manager of EMC Canada. "Our partners tend to have relationships and solutions that span across departments and divisions, so we re getting expanded coverage into the enterprise."

The strategy is one reason why in July EMC signed NexInnovations Inc., a systems integrator with 35 offices across the country, to help service small and mid-sized enterprises. The Toronto-based company focuses on businesses with more than 500 employees.

"We can be an extension of their coverage model," said Todd Irie, NexInnovations' brand marketing manager. "I think that was very important to them."

Earlier this year, to help boost sales, EMC started a partner accreditation program, a mandatory training and online testing regime to let resellers deliver some EMC professional services. It is also going after mid-size business with a reseller program called Casino, which offers bundled solutions with "aggressive pricing," said Stroud, "and rewards for the partners that leverage the program and bring in incremental business for EMC."

The result is that so far this year partners account for half of EMC Canada's revenues, he said, up from 20 per cent last year.

As part of the strategy, sales to mid-size companies (defined as firms with less than $750 million in revenue) are left in the hands of resellers and partners. However, partners have to work with EMC on sales to telecommunications and enterprise customers (those with more than $750 million in annual revenues).

However, in a challenge to resellers EMC is also using Dell Computer Corp. to co-manufacture and market its products, some of which are branded with the Dell name. That's why Evans Research Corp. combines Dell and EMC sales together when measuring the Canadian market. According to industry analyst Jennifer Ewen, in the second quarter Del/EMC moved into second place in disk storage sales with 24 per cent of the market, behind IBM Corp. and marginally ahead of the newly-merged HP/Compaq. Last year Dell/EMC was third.

"All of the big storage vendors are claiming they're now going after the small and medium business market," she said.

"However, I don't know if any of them, especially EMC, can do a really good job unless price and complexity of these systems comes down dramatically."

"They'll have to drop their prices substantially if they want to make inroads there."

The competitive storage sector has hit EMC as hard as other vendors. In October EMC said revenues had dropped nine per cent compared to the previous quarter.

"The IT spending drought got even worse as the third quarter came to a close," Joe Thcci, EMC's president and CEO, said at the time. It is laying off seven per cent of its workforce.

Still, EMC continues to test lower-sized markets. In its latest move, it introduced the entry-level CX200 to its CLARiiOn line of network storage systems. The CX200 which can scale to over 2 TB in capacity, starts at under $30,000 and will be available next month. But the model will also be sold by Dell.