Dell And Others Still Shopping For Storage

On Dec. 13, Dell announced it has "entered into a definitive agreement for Dell to acquire Compellent ... " Dell also said it expects the transaction to be accretive to Dell non-GAAP earnings in its fiscal year 2012. There is no doubt that I, along with others in the industry, have blogged and written quite a bit on this topic over recent days. There has been no bidding war, no firing of shots across the bow from one vendor to another, and no soaring stock price in this quickly executed company acquisition. In my opinion, Compellent as a brand gets a big boost now, and Dell has bolstered its storage line up. So what's next for the Compellent brand as it integrates within Dell, and is Dell finished with storage vendor acquisitions?

On a call for press and analysts, Dell and Compellent explained that both companies entered into a reseller agreement so that Dell can immediately start to sell StorageCenter. It's likely that existing Compellent sales partners will now have access to Dell products, providing they were not Dell resellers prior to the agreement. In my opinion, the immediate reseller agreement alone will result in the new Dell Compellent brand recognizing one its strongest calendar fourth and first quarter 2011 sales.

I don't believe Dell is finished with storage acquisitions. Quite the contrary: I believe we are at the beginning of a massive acquisition period by Dell and other large systems vendors. Many storage startups, and those that have been around for a while, are looking at the global macroeconomic situation; flat IT organization spending; their own unique solutions and how best to invoke out-of-the-box marketing techniques to accelerate sales; and what a profitable exit strategy can look like while taking good care of customers and employees. I think the next couple of years will see many of our IT household names gobbled up by bigger fish.

To be clear, it s not just the smaller disk storage vendors that I envision will be acquired in this upcoming acquisition period. Other storage vendors, providing valuable tape and content distribution technology, are part of the mix too. Furthermore, there are a number of software companies that are part of the acquisition equation, and systems vendors will be looking hard at the solutions they provide. Who are these storage and software vendors that offer so much value that they fit into the acquisition discussion? Let's name them here and you can feel free to comment on this blog with your take on who's buying whom.

Throughout 2011, I see FalconStor, DataDirect Networks, Panasas, SpectraLogic, StorSimple and Riverbed as companies that provide real value to users and could be up for grabs as the market consolidates and systems vendors opt to acquire and integrate highly successful technology. I see a couple of companies that would make good acquisitions, but additional features and functions may still be required to make them excellent acquisitions: BlueArc and Xiotech. It would make a lot of sense for Hitachi (an investor in BlueArc) to purchase the company and integrate it more fully into its high-performance NAS solutions offerings. A Hitachi purchase of BlueArc could help to accelerate development time for new features and functions. Xiotech, with its self healing Intelligent Storage Element (ISE) technology and ability to integrate into various solutions environments with its API, could demonstrate its true horsepower as part of a more broad, systems-based solution.There are a few software solutions providers that I see as potential acquisitions in 2011. They include: Correlsense (a provider of pin-point accuracy in root cause analysis of infrastructure transaction delays), Kubisys (a provider of completely cloned systems, and network and storage configurations for patch and application debug testing before introduction to production environments) and Virsto (a provider of server-based solutions that accelerate write performance in virtual machine environments.). I have spoken with all of these vendors, and some of their customers, and will be blogging on each of them soon.

Many of these companies would argue that they are not for sale, and there may be all kinds of reasons one could put forth as to why they may not make good acquisition targets. The bottom line is that the market will continue to consolidate, and many, if not all, of the aforementioned vendors may be part of a broader product portfolio by the end of 2011.

What say you? What is your opinion of the Dell acquisition of Compellent and of the other vendors mentioned in this blog?

At the time this blog was written, none of the vendors mentioned were clients of Tom Trainer or Analytico.