Dell Bags EqualLogic for $1.4 Billion, Says Deal Will be Channel 'Catalyst'

In buying Nashua, N.H.-based EqualLogic, Dell is acquiring a company that partners with 500 solution providers and a maintains a footprint of 2,500 customers. EqualLogic, a six-year old company, saw $68 million in revenue last year but the company has never been profitable , according to papers filed with the U.S. Securities and Exchange Commission in August, as it sought to launch an initial public offering.

"This is a catalyst for our channel partner program," said Michael Dell, Dell's chairman and CEO, told ChannelWeb in an interview. "We're going to build on what EqualLogic has started."

He emphasized that the deal still needs to clear regulatory hurdles. The companies estimate the deal will close late in this fiscal quarter for Dell, or in the following quarter.

Dell said earlier this year his company would seek a broader engagement with solution providers in North America, as the company sought to grow its indirect sales after two decades as a direct-sales focused business. Since then, Dell executives have worked largely behind the scenes, saying they are busy crafting a formal channel program to launch by year's end. Dell executives have said a pilot program would begin to engage some solution providers within weeks.

Dell said the company would keep the EqualLogic part of the business separate from Dell's direct sales side of the house, and he reiterated that Dell would launch a more formal channel program by year's end.

"We do plan to keep things seprate," Dell said. "EqualLogic is a channel brand."

Dell's acquisition of EqualLogic would supplement its PowerVault lineup as well as its business reselling EMC storage products. EqualLogic's strategy focuses on delivering SAN-based products to midmarket companies that have budget constraints, but require SAN-level storage.

"Because EqualLogic has been such a great partner with VMWare, it certainly is great news for EMC in terms of VMWare," Dell said, adding that the deal wouldn't change Dell's relationship with the Hopkinton, Mass.-based storage vendor. "Our Dell-EMC alliance is absolutely affirmed. We're going to continue to have the strong partnership we have."

In addition to vowing to engage channel partners on a deeper level, the company has been adding to its product lineup via acquisition this year as well. Earlier this year, Dell bought MSP tool provider Silverback and has hinted that additional acquisitions could be forthcoming.

EqualLogic channel partners contacted early Monday had, by and large, not learned much about Dell's announced acquisition -- some saying the deal caught them off guard. Early reaction, though, pointed to some skepticism.

Toby Harper, general manager of Focus Technology Solutions, a Seabrook, N.H.-based solution provider, said the company had a limited relationship with EqualLogic but tended to favor EMC's product line. Dell's acquisition of EqualLogic would move the company closer to EMC, he said.

"I'm not a Dell fan at all. I don't trust them," Harper said. "I have not seen anything they've done for the partner community."