Dell has acquired EqualLogic, which provides iSCSI storage  network solutions and virtualization software, for $1.4 billion, the companies announced on Monday.
"Our customers will be dealing with the largest increase in data we have seen in our history over the next few years. Leading the iSCSI revolution will help Dell accelerate I.T. simplification and virtualization and will drive the Dell value proposition into more areas of the enterprise storage business," CEO Michael Dell said in a statement.
EqualLogic had sales of $45 million last year and $91 million in three quarters this year. The deal comes as EqualLogic is preparing for an IPO in the red-hot virtualization market. Sector leader VMware conducted its IPO in August and now is market-capitalized at more than $42 billion.
Deal Makes 'Great Sense'
EqualLogic's focus on iSCSI is "a very hot part of the small business market right now," Charles King, principal analyst with Pund-IT, a technology research firm, said in a telephone interview.
"While there are other virtualized iSCSI vendors out there, EqualLogic has been doing it for a while, its technology is well understood, and it has a solid customer base," King said. He added that the deal makes a "great deal of sense for Dell," which along with HP is one of two "preeminent SMB vendors out there."
EqualLogic "complements Dell's server lines," he said, "and allows them to continue their strategy of delivering highly integrated business storage solutions for small and medium businesses."
The deal is notable for being all-cash. It is the largest all-cash deal ever for a venture-based startup, said Christopher Baldwin, a partner in EquityVentures, which led some $50 million in venture capital investments in the company.
The price was largely set by the recent IPOs of Riverbed Technology and Data Domain, Baldwin said. "It was a very difficult decision not to go and become a public company," Baldwin was quoted by the Associated Press as saying. (continued...)
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