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Dell and Compellent are exclusive

They are talking about a business marriage

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Dell and Compellent are talking about a possible business combination.

The two companies have issued a statement saying that they are engaged in advanced discussions. Dell would acquire all Compellent's outstanding common stock at $27.50/share, meaning about $876m – which will disappoint all the bid-hungry investors gamblers who have pushed Compellent stock to more than $33/share in recent days.

There is no other bidder at present and Dell has entered into an exclusivity agreement with Compellent.

The background is Dell's failure to generate significant revenue from its co-branded EMC CLARiiON block-access arrays. Ever since Dell tried to buy 3PAR earlier in the year, it has effectively served notice on EMC that the CLARiiON resale deal game is up.

The galling thing for Dell is that its acquired iSCSI block access EqualLogic array business is going gangbusters and has recently, we understand, overtaken the CLARiiON-derived revenue.

Although Compellent's Storage Center is not an enterprise-class array like the 3PAR InServ product technology acquired by 3PAR, it is being used by some enterprises and also by cloud providers such as Savvis.

It has many features of enterprise arrays, particularly its automated block-level data movement between tiers of storage including both solid state and hard disk drives. It is also very well-integrated with VMware and has FCoE support.

In its latest iteration it was given more powerful processors and the foundation laid for scaling up its features to better suit enterprise needs. The Storage Center looks to be perfectly positioned to replace the EMC CLARiiON line in Dell's range, with Dell able to broaden Compellent's channel and add a huge amount of sales bandwidth.

In keeping with EqualLogic, Dell will likely run Compellent – if a deal is completed – at arm's length, and so preserve its engineering and development team spirit while it becomes part of the Dell family. ®

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