Dell announced on Dec. 13 that it had reached an agreement to pay $960 million for Compellent to add virtualized data storage and thin provisioning to its line of SAN products.
Foiled in an earlier attempted to expand its virtualized
storage product line, Dell announced Dec. 13 that it had acquired Compellent to
broaden its enterprise-class storage portfolio and expand its data-center
capabilities.
Compellent specializes in virtualized storage products
with automated data-management features, including tiering and thin
provisioning. Its main product, Compellent Storage Center SAN,
is a combination of data-storage hardware and storage management software. With
the
Compellent
merger, Dell can focus on data management, thin provisioning, and storage
for cloud-computing environments, said Brad Anderson, senior vice-president of
the enterprise product group at Dell.
With the purchase price finalized at $27.75 a share, the
all-cash deal is valued at about $960 million. The buyout will actually cost
$820 million after Compellent's current cash holdings are included in the
deal.
It's no secret that Dell wants to expand its data-center
business to offer customers a combination of servers, networking and storage,
instead of relying on the commoditized PC business. In
August 2010, Dell sought
to acquire 3Par, another maker of virtualized data-storage products, but lost a
prolonged bidding war to HP.
The company has several storage offerings, which have grown
"organically" through enterprise investments and "inorganically," such as by
acquiring EqualLogic, said Anderson. Dell is "committed to the storage
industry," he said.
While long expected, the deal raised a lot of questions
about Dell's existing partnership with storage leader EMC.
Dell resells EMC's storage lineup, including
the mid-range Clariion line and high-end Symmetrix systems. First signed in
2001, the
Dell-EMC
partnership is good through 2013.
On a call with reporters, Anderson downplayed the potential
impact, pointing out that there are "over 24,000 customers" using EMC
products, and that Dell will continue to do the "right thing for customers." Anderson
said Dell and EMC had been in discussions
over the "past two days" and they remain "passionately committed to
customers."
According to Anderson, Dell will "continue to sell EMC"
for customers who are interested in that lineup. Dell's products are open,
capable and affordable, and "one element of being open is choice," Anderson
said.
When pressed further about whether the sales team will be
talking about the EMC lineup at the expense
of Compellent products, Anderson reiterated that Dell will do "the right thing
for customers" followed by the "the right thing for shareholders."
The general perception is that Dell's relationship with EMC
is not on strong footing, especially with Dell shopping for its own storage
business. When
Dell
bid on 3Par in August, the partnership was "put at risk," and
this Compellent merger "may be a defensive move" in light of a
"souring relationship" with EMC,
said Jeff Ready, CEO of Scale Computing.
"The EMC relationship
may become even more strained," wrote Jeffrey Fidacaro, an analyst with
Susquehanna International Group, in a research note. Compellent's SAN
storage solution "competes directly with EMC's
Clariion, particularly in the midrange," he wrote.
The latest merger in the data-storage industry came on
the heels of Dell's and Compellent's joint announcement last week that they
were in the midst of negotiations, at $27.50 a share.
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