Dell plans to develop a much more robust networking channel following the acquisition of Force 10 Networks, announced Wednesday morning, according to executives.
While Force 10 has its own channel, the company sells principally to end users now, especially its high-end products, said Dell's Brad Anderson, senior vice president of Dell's Enterprise Solutions Group.
Once Force 10 is integrated under Dell's Enterprise Solutions Group, expect to see Dell try to recruit its legacy VARs to sell Force 10 and get Force 10 VARs to sell more Dell.
"We absolutely are going to embrace the channel much like we did with our storage acquisitions, with Compellent being the most recent one, where their volume went through the channel," Anderson said in a conference call with analysts. "We see this as a way to expand and develop a much more robust networking channel within Dell."
Anderson added that Dell also will sell Force 10 solutions through its direct sales force too. When asked on the call about potential channel conflict between Dell and Force 10 partners, Anderson dismissed the notion.
"As we build our channel partner network out, [VARs] are asking us to put more products and more complete solutions into their portfolio. This is a catalyst to significantly expand our networking presence in our existing channel and to grow hte channel with all the partners Force 10 brings to us," Anderson said.
Executives did not detail which products would be available to VARs or how Force 10 would fit into Dell's enterprise certification strategy. The deal is expected to close by the end of the summer, said executives at both companies.
Force 10 reported about $200 million in sales in the previous 12 months, 80 percent of that revenue from North America, said Dave Johnson, Dell's senior vice president of corporate strategy. Force 10 also has about 750 employees, most of whom work out of the company's headquarters in San Jose, Calif., or a research facility in India, Johnson said.
For more than a year, Dell has been open with its strategy to acquire a networking player. Most recently, Brocade was the company thought to be in Dell's sights, but Force 10 complements Dell's strategy to broaden its data center solution on an open-standard platform, Anderson said.
"This positions us in a high-growth area of the business and enhances our enterprise profitability. Most recently, we've been successful in [integrating acquisitions] in the storage arena. When you think about next-gen computing and intelligent data center management, networking is the next piece of the puzzle to execute on. This acquisition greatly enhances our solution with those that customers are asking for."
Dell's interest in acquiring more comprehensive networking solutions for the data center is sparked in part by projections for that space, said Dario Zamarian, vice president and general manager of Dell's networking business who will have responsibility for Force 10 after the deal closes.
Data center networking is expected to grow by a compounded annual growth rate of 21 percent through 2015, Zamarian said, much faster than the 3 percent growth forecast for the rest of the networking industry.
