Dell Computer Corp fitted another part of its storage strategy together yesterday, with the agreement to acquire privately-held ConvergeNet Technologies Inc for around $340m. Dell will exchange about 6.9 million in shares of Dell common stock for all outstanding shares and options of ConvergeNet, in what is the first acquisition in its 15-year history. It expects to post a one time charge against the purchase for in-process R&D and development expenses, once the transaction closes, probably within 60 days.
Formed in November 1997, San Jose, California-based ConvergeNet started out with just $2.3m in seen funding from Sierra Ventures, but went on to get a record (at the time) $20m in second round funding in September 1998, and a further $5m in February of this year. The company still has only 120 staff. But it persuaded Hewlett-Packard Co’s sales chief Dick Watts, a 30-year veteran and once thought to be a candidate for the top spot at HP, to become its CEO last September. Since then it has also lured top management staff from Storage Technology Corp and Sun Microsystems Inc. Watts will become vice president and general manager of Dell’s storage systems division, reporting to senior VP Michael Lambert.
ConvergeNet has not said much about the technology it’s been working on, but has been working on storage area network technology that connects heterogeneous storage systems to servers of all types, regardless of operating system. The company was preparing to launch its first storage domain management technology at the ITExpo show in Florida on October 12, with further announcements planned for Networld+Interop two days later. Dell says the acquisition will bring SAN technology to its PowerVault storage products, and other storage systems connected to Intel or RISC servers running Unix, Solaris, NT, Windows 2000, NetWare or Linux. Its current SAN product is NT only.
Dell said it hopes to eventually win around a quarter of the open systems storage market, which IDC says will be worth around $38bn by 2002. It will stick to the mid-range storage market, rather than the large-scale enterprise systems sold by EMC Corp, Hewlett-Packard Co and Compaq Computer Corp.
