Dell to Pay $1.4 Billion for EqualLogic

Dell Inc. has agreed to pay $1.4 billion in cash for EqualLogic Inc., a closely held provider of data storage software. Nashua, N.H.-based EqualLogic provides iSCSI storage area network solutions optimized for virtualization. ISCSI SAN technology is the fastest-growing part of the storage business. The company, founded in 2001, shipped its first product in 2003 and currently has more than 3,200 customers in 30 countries.The deal is one of the biggest moves by Michael Dell, who returned as CEO of Dell earlier this, to revamp the personal computer giant amid stiff competition in its core market. Dell said the acquisition would cut earnings by two cents to five cents a share in fiscal 2009 and 2010.

Virtualization allows software applications and operating systems to be separated from their hardware systems and shared over servers and storage infrastructure. The technology helps corporations manage large pools of data more easily over fewer pieces of hardware by separating software and operating systems from their hardware devices.

Among the segment's leaders is VMware Inc., whose shares have quadrupled sine going public nearly three months ago. Microsoft Corp. is planning to launch its own virtualization platform called Viridian, in late 2008. In September, Microsoft and Sun Microsystems Inc. said they plan to work together on virtualization by making sure Sun's Solaris operating system works well on Microsoft's virtualization software, and that Windows works well on Sun's virtualization programs.