Dell Targets High Growth Storage Market

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Dell ( DELL ) on Tuesday announced that it is beefing up its storage solution portfolio in several high growth areas. In particular it added new scalable network-attached storage (NAS) and unified storage capabilities to its EqualLogic product family as well as new Fibre Channel additions to its Compellent and PowerVault families. In the past year, Dell has made a number of acquisitions in the storage sector - Compellent, Exanet and Ocarina Networks and is targeting the fast growing market for big data in the face of stiff competition from players like EMC ( EMC ), NetApp ( NTAP ), HP (NYSE:HPQ) and IBM (NYSE:IBM).

We estimate that storage makes up less than 5% of our $20.12 Trefis price estimate for Dell , which is about 30% above the market price.

Dell Aims to Gain Storage Market Share with Addition of NAS


Dell is focused on the development and acquisition of storage intellectual property that delivers productivity and efficiency gains for highly-virtualized data centers. The addition of NAS capabilities to its EqualLogic line is a big deal in terms of helping its channel partners better compete with EMC  and NetApp, the mainstays of the NAS market with a combined share of ~80%.

Dell currently is the fourth largest player in the total disk storage systems market and had a revenue share of 11.4% in 1Q11, down from 12.7% during the same period last year. On the other hand NetApp, which has strong presence in the NAS market - one of the fastest growing segments in storage industry - saw its share in total disk storage systems market jump up to 10.1% in 1Q11, up almost 2 percentage points from last year.

We currently forecast Dell's disk storage market share (of GB) to increase slightly going forward from 9.5% in 2010 to ~11% by the end of our forecast period. However, a faster growth in Dell's share as a result of addition of NAS capabilities to its storage product line would result in an upside to our near $20 Trefis price estimate for Dell .

See our full analysis of Dell



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: DELL , EMC , NTAP

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