Dell has started manufacturing its own storage area network (SAN) systems for small and medium-sized firms, the company announced at a press conference in New York on Wednesday.
Since October 2001, Dell has been rebranding EMC products under the Dell/EMC CX200 brand, but this is the first time Dell has taken over the manufacturing process.
"The obvious benefits are the economies of scale that Dell can bring to the manufacturing, integration and distribution of those systems," said George Weiss, vice president research director of enterprise servers and storage at Gartner.
Thomas Lahive, senior analyst at research firm, Enterprise Storage Group, said: "This is a big step for Dell because it manufactures very little of its technology and this is its first big component."
According to Lahive, there are huge margins in the storage business and now that EMC is effectively licensing its intellectual property, Dell will benefit greatly from the deal: "Prior to this announcement, Dell was rebranding the EMC solution, but now they will get a much larger proportion of the revenue -- even though the products will be based on exactly the same design as before," he said.
Dell chief executive Michael Dell implied that this will mean cheaper SAN solutions. He told ZDNet UK that "a vast majority" of the extra margin gained by taking the manufacturing in-house will be passed on to the customer. "We expect to grow our market share rapidly," he added.
But Dell will still be shut out from making a solo assault on the lucrative high-end SAN market: "If you are talking about the high-end and complex SAN configurations, Dell will not be able to compete with its standards-based model, at least in the near future. Dell will still have to depend on its relationships with other vendors such as EMC," added Weiss.
The Dell/EMC CX200 systems are designed for use with small-scale database applications -- including Oracle 9i and Microsoft SQL -- and can be configured for use in both Red Hat Linux Advanced Server and Microsoft Windows environments. They are supplied with a management software called VisualScan, which will enable customers to control and monitor their SAN configurations from a single console.
According to Dell, the software will also contain support tools for online troubleshooting.
A Dell/EMC storage system configured for two Dell PowerEdge servers with three years of support will cost approximately $19,500.
Munir Kotadia reported from New York.