Storage revenue constitute about 5% of our estimated value for Dell's stock, and the company is focusing on this division as it makes the shift to cloud services.
It unveiled its strategy in the storage market and highlighted Project Hermes -- a flash cache product designed to improve performance and speed of accessing data. Dell refers to this technology as "Fluid Cache," which is designed to change memory from fixed storage resource within a server to shared resource among multiple server arrays.
This technology comes from RNA Networks, a cloud memory startup Dell acquired last year, and the improved server caching is scheduled to be incorporated into Dell's products by the first quarter of 2013.See our full analysis on Dell.
Enter HermesDell's partnership with storage company EMC (EMC) ended in 2011, which caused the sales in the storage division to fall by about 15% that year. Project Hermes is Dell's response to EMC's popular VFCache, a server flash cache designed to access information on servers quickly. Dell is trying to set itself apart from its competitors by placing write cache along with read cache. This could improve performance as most of the competitor cloud storage solutions only have read caches. If this technology proves successful and our storage revenue forecast doubles from our current estimate of approximately $3 billion by the end of our forecast period, we can expect a 5% upside to our current price estimate. We have a $19.22 Trefis price estimate for Dell, which is significantly higher than the current market price. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
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