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Dell Cloud Computing Spending Spree Nears $2 Billion

Dell has spent nearly $2 billion in recent years amassing a small army of cloud computing companies as the tech powerhouse looks to beef up its cloud computing strategy, a recent SEC filing has revealed.

Dell is putting its money where its mouth is when it comes to cloud computing, spending bundles of cash to acquire companies to give it an edge as Dell's cloud computing strategy takes shape.

A recent Dell filing with the U.S. Securities and Exchange Commission (SEC) sheds light onto just how many dollars Dell has dropped to amass a small army of cloud computing companies as Dell hones its cloud computing strategy. The Form 10-K that Dell filed with the SEC indicates that Dell's cloud spending is inching close to the $2 billion mark as Dell and its channel rev their cloud engines.

Dell did not respond to CRN's request for comment by press time.

Dell is no stranger to acquisitions; the Round Rock, Texas-based tech superpower made waves when Dell acquired EqualLogic for $1.4 billion in 2008, a move that officially put Dell's channel plans to bear.

But since the EqualLogic buy, Dell has been setting its sights squarely on the cloud. In early 2011, Dell closed its acquisition for Compellent, a move that gave Dell one of the industry's leading storage virtualization and cloud storage technologies along with a big channel boost. With the Compellent buy, Dell brought aboard more than 2,500 midsize enterprise, large enterprise and cloud customers, along with 450 channel partners worldwide.

Dell went after Compellent after winding up on the losing end of a cut-throat bidding war with HP to acquire storage vendor 3PAR. HP ultimately won the battle for 3PAR with a $2.35 billion bid, ending the contest Dell started with an out-of-the-blue bid of $1.15 billion for 3PAR.

Also this year Dell scooped up SecureWorks, a SaaS and cloud security-as-a-service provider that offers managed security; security and risk consulting; and threat intelligence. Dell said the SecureWorks acquisition would help the company expand its "IT-as-a-service" offerings and give the computer giant a global foothold in the managed security services space. At the time of the SecureWorks buy, neither Dell nor SecureWorks disclosed the financial agreement.

But in the 126-page SEC filing, Dell notes that it spent roughly $938 million on Compellent and $612 million on SecureWorks.

"In February, 2011, Dell completed its acquisitions of Compellent Technologies, Inc. ('Compellent'), a provider of virtual storage solutions for enterprise and cloud computing environments, and SecureWorks Inc. ('SecureWorks'), a global provider of information security service, for approximately $938 million and $612 million, respectively. Both Compellent and SecureWorks will be integrated into Dell's Commercial segments," Dell wrote in the Form 10-K filing with the SEC.

Those two components to Dell's cloud strategy total $1.55 billion. Add to that the five acquisitions Dell made last year, in fiscal 2011, most of which were cloud focused, and Dell's cloud spending spree approaches the $2 billion mark.

NEXT: Dell Cloud Acquisition Tally Rose In Fiscal 2011


In fiscal 2011, Dell captured KACE, a systems management appliance company; Dell picked up Ocarina Networks, a provider of de-duplication solutions and content aware compression across storage product lines; Dell snapped up Scalent, a provider of scalable and efficient data center infrastructure software; Dell bought Boomi, an on-demand integration technology; and Dell purchased InSite One, a cloud-based medical data archiving, storage and disaster recovery play for health care.

Among those five acquisitions, three of them -- Scalent, Boomi and InSite One -- add to Dell's growing arsenal of cloud companies as cloud computing became a central focus for Dell in 2010 and into this year.

Scalent added virtualization capabilities to Dell's data center management solution through Scalent's software capabilities, which include the ability to rapidly provision new servers, rapidly deploy virtualization technology from any number of vendors, provide automatic high availability for servers and build cloud infrastructures.

The Boomi buy gave Dell more SaaS integration and cloud muscle by giving Dell an application integration service play to enable VARs and end users to move data and applications between cloud and on-premise systems.

And InSite One pushes Dell's cloud healthcare strategy forward by adding cloud-based medical archiving that helps health care organizations ease keeping data. The InSite One acquisition gave Dell a storage-as-a-service platform to archive digital content for companies in other industries on a subscription or pay-as-you-go basis. The platform provides healthcare customers a secure, scalable, cloud-based, unified medical archive solution that supports HIPAA compliance and eliminates the silos of image information created when hospitals use multiple PACS. It also combines vendor-neutral archive software with object-based storage to simplify archiving and by moving archiving to the cloud; hospitals can further reduce the overall cost of data storage and retention.

Dell's SEC filing didn't break down the specific cost of each company, but all told Dell's five fiscal 2011 acquisitions totaled $413 million.

"Dell completed five acquisitions during Fiscal 2011, Kace Networks, Inc. ('KACE'), Ocarina Networks Inc. ('Ocarina'), Scalent Systems Inc. ('Scalent'), Boomi, Inc. ('Boomi'), and InSite One, Inc., ('InSite'), for a total purchase consideration of approximately $413 million," the filing notes.

Adding that $413 million to Dell's $1.55 billion spending on Compellent and SecureWorks brings Dell's total spend to just under $2 billion, or $1.963 billion, most of which will directly contribute to Dell's cloud focus.

Additionally, Dell had begun eyeing cloud companies prior to 2010. In December 2007 Dell acquired Everdream, a provider of SaaS and cloud solutions for remote-service management, Dell extended remote management of servers, storage, printers, and the like to desktops, notebooks and other end-user devices globally. And in February 2008, Dell nabbed MessageOne, a cloud e-mail management, compliance and archiving solution for which Dell spent $155 million and tied into its E-mail Management Services (EMS) portfolio.

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