Dell Buying EqualLogic for $1.4B

Updated:Dell looks to boost storage offerings and offer preinstalled virtualization.

In a move that will help it expand its storage and virtualization offerings, Dell announced Nov. 5 that it will acquire storage startup EqualLogic for $1.4 billion.

The acquisition, which is expected to close either by the end of 2007 or the first quarter of 2008, is also expected to strengthen the Round Rock, Texas, companys channel program after it begins incorporating EqualLogics technology into its PowerVault storage portfolio.

EqualLogic, which earlier this year announced that it would pursue an initial public offering in the wake of VMwares successful stock announcement, incorporates iSCSI storage protocol into its products.

Storage remains one of the most talked about areas of IT management, and Dell is jumping into the market as more and more storage capacity is being shifted to IP SANs (storage area networks). The iSCSI SAN market is expected to grow from about $600 million in 2006 to $6 billion in the next five years, according to IDC.

The deal and also the amount of Dell is willing to pay for EqualLogic seems to be a clear indicator that iSCSI is poised to claim a bigger part of the storage market from the older and more expensive Fibre Channel. In addition, Dell sees the acquisition as way to complement its growing virtualization offerings.

Praveen Asthana, the director of storage for the Dells Product Group, said the acquisition of EqualLogic will help its customers better deploy virtualization throughout the data center since the technology compliments iSCSI storage. In a way, virtualization will help businesses, whether large enterprises or smaller companies, scale their storage arrays, while iSCSI is becoming the preferred way address storage issues compared to Fibre Channel.

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"We are expecting that are customers are going to want a broad set of offerings to chose from, whether that is Fibre or ISCSI," Asthana told eWEEK. "Whether we are talking about SMBs [small and midsized businesses] or the corporate space, the customer wants a choice whether its entry-level arrays or high-end arrays and we are trying to offer them a better set of choices."

How EqualLogics technology will be incorporated into Dells products, such as its PowerVault storage offerings, is still being discussed and neither Asthana nor Tim Yeaton, the chief marketing officer for EqualLogic, wanted to comment on specific plans. Its also not known if EqualLogic will remain a separate division within Dell or if it will be absorbed into Dells storage division.

Yeaton did note that EqualLogics channel model, which emphasizes working with a number of solution providers, will work well with Dell efforts to expand its own channel as it moves away from its strict direct sales model.

"Our channel program is very inclusive and it makes it much simpler when it comes to deploying these types of storage solutions," Yeaton said.

One of EqualLogics products is PS Series SANs, a combination of storage disk arrays and storage management software that use iSCSI, or storage over IP, which is designed to be more cost-effective than traditional Fibre Channel storage systems. EqualLogic employs a virtualized architecture that lifts stored data from disks and allows the storage arrays to share resources and balance workloads.

In addition, the Nashua, N.H., company has added thin provisioning, which allows administrators to limit the allocation of physical storage to what applications immediately need.

The Nov. 5 announcement comes just after CEO Michael Dell told reporters in Japan last month that the company would begin expanding its business through a series of acquisitions. It also comes at a time when the company has been pushing a new program called "Simplify IT," which looks to expand the companys offerings and give its corporate users a complete package of hardware and services.

As part of that program, Dell has struck deals with VMware and XenSource to allow virtualization technology to be embedded in the hardware itself.

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