Dell Closes Compellent Acquisition, Promises Full Channel Support

Dell on Tuesday said it has completed its acquisition of storage vendor Compellent, and will replace Compellent's legacy annual C-Drive partner and customer meeting with a new program featuring all Dell storage and a keynote by Michael Dell himself.

Dell in December said it would acquire Compellent for a total of about $876 million, a move which would give Dell one of the industry's leading storage virtualization technologies and a big boost to its channel base. The final value of the dell was about $940 million, which includes about $140 million in Compellent cash on hand.

Dell said that Compellent shareholders earlier on Tuesday approved the acquisition.

The bid to acquire Compellent was part of a major push by Dell to make itself into a bigger player in the storage market.

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Dell's push included its unsuccessful bid in September to acquire 3PAR after a short but intense bidding war with Hewlett-Packard, as well as its successful acquisition in early 2008 of storage vendor EqualLogic, which made Dell one of the industry's top storage vendors.

For Dell, the acquisition not only gives it a bigger storage footprint, it also forms the base for a major expansion of its channel.

Compellent sold its Fluid Data line of intelligent storage products only through solution providers, and supported them with a program called Copilot, which includes such services as proactive capacity management and load management. Dell said it plans to expand Copilot to include all of Dell's storage offerings, including its EqualLogic and PowerVault lines.

Dell is also expanding Compellent's C-Drive and its EqualLogic User Conferences into a single, larger conference called Dell Storage Forum 2011, which is slated to be held in early June in Orlando, Fla.

A highlight of the conference is the planned appearance by Michael Dell, chairman and CEO of the company which bears his name.

Phil Soran, president and CEO of Compellent, said in a blog post that Dell plans to protect and grow Compellent's channel relationships, and is bringing Compellent solution providers into the Dell Certified Partner Program as storage certified partners.

"All current Compellent partners will be 'grandfathered' into the Dell Certified Partner Program as Storage Certified Partners, which offers many benefits, including access to a diverse portfolio of products, healthy margins and list-price discounts," Soran wrote.

Soran also told Compellent solution providers in an e-mail, a copy of which was viewed by CRN that all their existing deals are protected. "You still hold the Compellent upgrade business," he wrote. "The repetitive revenue opportunities in existing accounts remain yours."

John Dusek III, vice president of storage sales at Avtex, a Bloomington, Minn.-based solution provider which recently merged with long-term Compellent solution provider Convergent Storage Solutions, said the acquisition is good for Compellent.

"In my experience, Dell has a way of eroding margins for partners," Dusek said. "But Dell will bring in new volume."

Next: Channel Reaction To The Deal's Close Mostly Positive

Avtex had been working with Dell on professional services, and did a lot of business with Dell's server line while selling some Dell storage, Dusek said. "We've been able to do some professional services with Dell on their hardware, and now we're looking to do more," he said.

Dusek also said there is always some anxiety when a small company gets acquired by a larger one, but that things seem to be going well at Compellent so far.

"When a big company comes in, it can make things better or worse with the stroke of a pen," he said. "But the Compellent people tell us things are going well."

Paul Clifford, principle at the Davenport Group, a St. Paul-based solution provider and long-term Compellent partner, said he was just meeting with his regional Dell team Monday night trying to help them understand what Compellent will bring to them and what they can expect when working with his company.

"Dell's commitment to the channel is clearly there, both from the Dell and the Compellent sides," Clifford said. "And Dell clearly shows interest in keeping Copilot going and keeping it based in Minnesota."

The Davenport Group signed up with Dell to sell its EqualLogic storage line shortly before that company announced its plans to acquire Compellent, Clifford said.

"We have a pretty good relationship with Dell, and are hoping to expand it," he said. "I've been telling the Dell team, 'We're your friends. We're not going to compete with you. We'll sell EqualLogic and Compellent."

Not every Compellent partner is as excited about its long-term prospects with Dell.

One solution provider, who requested anonymity due to sensitive customer relationships, said that, while Compellent is great with support, delivery, and expertise when solution providers win new deals, but that it has not been very supportive about helping smaller partners keep their deals.

"For us, I can't imagine it will get worse," the solution provider said. "We're not a big reseller for them. I can understand that they only pay attention to the squeaky wheels. I understand the business reasons. I'm not saying, 'It's not fair.'"

The solution provider said that Dell could help level the playing field with partners. "Maybe its partner group will not be such an exclusive club," the solution provider said. "Hopefully they'll also bring in more polished messaging and better sales training for partners. But my gut feeling is, this probably will not turn out well for me."

Dell was unable to comment further on the news.