Dell Weighs Exanet Acquisition, EMC Dedupe Deal -

Dell Weighs Exanet Acquisition, EMC Dedupe Deal

Dell (NASDAQ: DELL) has made an offer to acquire assets of clustered storage specialist Exanet, and the company may also be weighing a data deduplication deal with EMC (NYSE: EMC).

Dell has become a major player in the data storage market in the last two years, beginning with the acquisition of EqualLogic. Now the company is eyeing the market for clustered file systems and network-attached storage (NAS) through the takeover of Israel-based Exanet, which filed for bankruptcy last month.

A Dell spokesperson said the company "has submitted an offer to purchase Exanet assets, primarily patents and other IP, with court approval through a Chapter 7 liquidation in Israel. We're excited about the Exanet opportunity, both for our storage technology and because it provides a basis to possibly build Dell's development presence in Israel. Storage is an important part of Dell's overall enterprise solutions capability, and Exanet's assets represent an extension to that capability. The transaction has not yet been approved by the Israel court, so we won't speculate on its completion or timing."

The acquisition of Exanet's Linux-based NAS platform that would be the latest move by a major data storage player in the clustered NAS market. Last year saw the acquisition of Ibrix by HP (NYSE: HPQ), the merger of LSI and ONStor, the release of NetApp (NASDAQ: NTAP) Data ONTAP 8.0, and the latest in the BlueArc-HDS partnership.

Dell-EMC Deduplication Deal Coming?

Dell has a long-running OEM relationship with EMC, accounting for about 15 percent of EMC's Clariion storage array revenues, even as the two have wound down their reseller arrangement and competed in the iSCSI market since the EqualLogic acquisition.

Now the two tech giants may be poised to grow their relationship further, according to Stifel Nicolaus analyst Aaron Rakers.

Rakers wrote in a research note today that "our industry contacts/checks have suggested that the two companies could soon announce an expansion in their Dell/EMC OEM relationship to include EMC's Data Domain deduplication appliances. Some conversations have suggested that Dell could be already selling the EMC Data Domain deduplication solutions."

Rakers said the deal could be viewed as a negative for Dell partner CommVault (NASDAQ: CVLT), but he said he sees "such a move as having relatively minimal impact to CommVault's Dell revenue, which accounted for 27 percent of the company's December quarter revenue. We believe CommVault has been effectively expanding/tightening its go-to-market positioning with Dell's EqualLogic iSCSI SAN solutions, which has remained the strongest part of Dell's product portfolio."

Enterprise Strategy Group analyst Lauren Whitehouse said a Dell-EMC dedupe deal makes sense.

"I haven't heard anything specific, but it makes a lot of sense," said Whitehouse. "Dell-EMC have been partnering for some time. And the three-way synergies between EMC-Dell-Quantum diminished when EMC bought Data Domain. It makes sense for Dell to now resell EMC Data Domain."

Asked about the reports, the Dell spokesperson said, "EMC continues to be a strategic partner of Dell's, but we do not comment on rumors or speculation."

The rumors come just days after reports that NetApp has scaled back its deduplication development efforts. NetApp lost a bidding war with EMC over Data Domain last year.

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