In a move that could shake up the booming virtualization storage market, Dell announced Monday that it will acquire storage area network provider EqualLogic for $1.4 billion.
Dell has been an important customer of storage pacesetter EMC, which in turn owns a significant piece of virtualization leader VMware.
EqualLogic has found a lucrative niche with its rapidly growing iSCSI products. It shipped its first product in June 2003 and has enjoyed explosive growth ever since. Based in Nashua, N.H., the company has more than 3,200 global customers.
Noting that EqualLogic's "SAN solutions [are] uniquely optimized for virtualization," the company said the acquisition will boost its effort to simplify and virtualize IT for its global customers.
"Our customers will be dealing with the largest increase in data we have seen in our history over the next few years," said Michael Dell, chairman and CEO of the company. "Leading the iSCSI revolution will help Dell accelerate IT simplification and virtualization and will drive the Dell value proposition into more areas of the enterprise storage business."
iSCSI SAN technology represents the fastest growing part of the storage business. Dell said it expects to close the acquisition of EqualLogic late in the fourth quarter of its 2008 fiscal year or in the first quarter of its next fiscal year. The acquisition is expected to dilute Dell's shares by two to five cents, Dell said.
Noting that it plans to grow EqualLogic's channel-partner programs, Dell said it expects it will grow EqualLogic's current and future EqualLogic-branded products. EqualLogic's future products, too, will be incorporated into Dell's PowerVault storage line.
Dell noted that iSCSI enables users to transmit SCSI commands and storage traffic over IP networks, which should prove attractive for small and midsize businesses.