Dell Beefs Up Networking Play With Force10 Acquisition

Dell is making a highly strategic move to bolster its networking credentials with the acquisition of privately-owned Force10 Networks.

Financial terms of the deal were not disclosed.

That said, the purchase price is likely to have been significant, as Force10 has annual revenues of $200m (£124m), and it operates in 60 countries around the world. It also has a blue chip customer base, including the likes of NYSE Euronext, Yahoo!, and CERN.

Networking Play

The acquisition will of course boost Dell’s networking capabilities, especially around the data centre – an area that Force10 has specialised in with its energy efficiency ethernet switching and routing equipment.

However the deal is also noteworthy because it now means that, for the first time, Dell has a complete in-house technology stack that is geared towards the data centre. This includes servers, storage, services and networking.

Up until now Dell had been forced to offer networking equipment from the likes of Brocade and Cisco.

However, Dell has used the past couple of years to build out its IT capabilities, thanks in part to  acquisitions such as Perot Systems, Compellent and EqualLogic.

And in June Dell was advised by Canaccord analyst Paul Mansky to acquire Brocade in order to strengthen its data centre networking credentials. This was because the current thinking is that enterprises and indeed cloud service providers are increasingly seeking a ‘one stop shop’ for all their IT needs.

This means that vendors that can offer a complete stack of IT equipment, albeit servers, storage, or network, stand a better chance of netting a sale, as companies are now said to be seeking components that are fully engineered and integrated to work together seamlessly.

Strategic Move

A couple of years ago Dell announced that it intended to move away from its heavy reliance on PC sales, and shake up its product mix.

Dell’s strategy was to move more more upstream into the data centre and services arena, two sectors that offer higher margins than traditional ‘PC box shifting’.

Today’s deal means that Dell can now offer Force10’s Ethernet switching and routing products that offer a high degree of port density and resiliency.

“Force10’s Open Cloud Networking is based on open standards, automation and virtualisation and is very consistent with Dell’s design philosophy,” said Dell. “Force10’s technology allows customers to transform their network infrastructures into an open, reliable and scalable data centre and cloud computing fabric.”

Data Centre Complexity

“Today’s data centre networks are too complex and require too much manual intervention,” said Brad Anderson, senior VP, Enterprise Solutions Group, at Dell. “What worked in the past is no longer viable in the virtual era.”

“Dell’s approach of offering customers open, capable and affordable solutions aligns with Force10’s approach to offering customers new levels of flexibility, performance, scale and automation which is fundamental to changing the economics of data centre networking,” he added.

“We are excited to work with Dell,” said Henry Wasik, chief executive officer, Force10 Networks. “Combining Dell’s global scale, reach and enterprise portfolio with our innovation in high-performance networking provides our customers the best end-to-end solution for today’s and tomorrow’s data centres.”

The transaction was approved by the board of directors of each company, and is subject to the usual conditions.

The deal is expected to close later in the summer.