At its Storage Forum 2012, Dell (NASDAQ:DELL) laid out a road map for its storage products division. Storage revenues constitute ~5% of our estimated value for Dell’s stock, and the company is focusing on this division as it makes it 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 that it acquired last year, and the improved server caching is scheduled to be incorporated into Dell’s products by Q1 2013.
Hermes To Take On EMC
Dell’s partnership with storage company EMC (NYSE:EMC) ended in 2011, which caused the sales in the storage division to fall by ~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 ~$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.Notes:
- Dell storage products roadmap includes server flash, primary dedup, www.searchstorage.techtarget.com, June 14, 2012 [↩]