Dell Dumps Overland

October 13th, 2006: In somewhat of a surprising turn, Overland Storage has reported that Dell is terminating an agreement made in November 2005 for the supply of two different automated tape libraries.

The company was expecting to begin shipping the drives to Dell in the near future, but has instead rushed to cease spending on the agreement and attempt to recoup any preparation losses it can.

The company says it is still assessing the impact of the announcement, and believes that impact of the termination will be relatively small. Overland claims that most of the hardware bound to the deal can be redeployed to support its own branded business.

The deal reportedly went south due to Overland’s failure to deliver its new drives on schedule, having originally been set to debut early this year.

“We have always stated that OEM contracts are very sensitive and subject to delay, modification or termination,” says Christopher Calisi, president and chief executive officer of Overland Storage. “Although the Dell program experienced some delays during the evaluation unit phase, the Overland and Dell teams remained fully engaged and up to this moment had been actively working together to achieve manufacturing readiness of the products. Consequently, we are extremely disappointed by this decision. Although we believe Dell was satisfied with our product design, it concluded that we could not meet its intended delivery schedule.

“We will use this opportunity to focus more of our efforts and resources on our branded products. Although the Dell business represented an important revenue opportunity, the margins were low relative to our branded business, and the resource commitment was high,” added Calisi. “We will now concentrate on improving our product quality and customer service levels and on launching a complete new line of ULTAMUS and REO disk-based appliances.”

Dell makes the second partner Overland has lost in the last year, with HP being the first in August 2005.

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