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Dell spends $1.15 billion on 3PAR

Dell took another huge step into the storage world today when it said it will buy thin provisioning pioneer 3PAR for $1.15 billion.

The blockbuster deal isn’t Dell’s most expensive storage buy – it paid $1.4 billion for iSCSI vendor EqualLogic in 2008 – but 3PAR becomes another key piece in an expanding storage strategy. The storage industry has been waiting for Dell to make a large acquisition for more than a year, but it concentrated on adding pieces such as Exanet’s clustered NAS technology and Ocarina Networks’ primary data optimization.

3PAR’s InServ storage systems gives Dell a utility-based modular storage system that appeals to larger customers than EqualLogic’s iSCSI SANs. It also brings it into greater competition with its storage partner EMC, which 3PAR considers its largest competitor. Dell resells EMC’s midrange Clariion and Celerra storage systems as well as Data Domain deduplication backup appliances.

According to Dell’s press release: “Dell plans to make 3PAR an integral part of its industry-leading storage portfolio, including PowerVault, EqualLogic and Dell/EMC. With 3PAR, Dell will offer innovative systems and customer choice at every storage tier, from direct-attach to highly-virtualized, clustered SAN.”

Dell also added an object-based storage platform this year, which competes with EMC’s Atmos system. EMC and Dell keep saying their relationship is strong, yet Dell keeps acquiring EMC competitors or developing its own products that compete with EMC.

Dell also paid a large price for 3PAR. The $18 per share cash transaction is an 86% premium on 3PAR’s share price last Friday. “Nonetheless, we think it is a positive for Dell,” Wedbush financial analyst Kaushik Roy wrote of the deal in an email. “Dell needs to move up into the data center and this is what would help Dell get into the data center, Dell is desperate for better margins … and storage is adjacent to what Dell sells – in other words, it is an easy product to sell for Dell.”

We’ll have more on this breaking story later on

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