Dell is to buy IP SAN vendor EqualLogic. The acquisition comes just a week after CEO Michael Dell hinted the company could be in the market for some bigger-than-usual acquisitions.

EqualLogic's PS Series iSCSI technology will be added to Dell's portfolio of PowerVault and Dell/EMC storage arrays. The company has not clarified its plans to rebrand EqualLogic's products, but says that it will still sell them through the extensive channel EqualLogic has established. Dell sells a lot of its storage products through EMC, making up 10 percent of EMC's business in 2006.

"This acquisition is a key part of our strategy to simplify IT and to drive virtualisation from Dell's enterprise portfolio," says Mike Arterbury, director of storage operations.

EqualLogic's products have been adopted in corporations that are also deploying virtualization. Dell expects that adding them to its portfolio will allow customers to further simplify their IT setups.

"EqualLogic did a brilliant job of marrying up storage and virtualisation," says Steve Duplessie, senior analyst for the Enterprise Strategy Group.. "The company was basically giving away VMware with their machines. It was a great sales job."

However, Duplessie's reaction to the sale price of $1.4 billion (£700m) was "You've got to be kidding me."

Fellow analyst Greg Schulz of Storage I/O also found the price eye-opening, but said: "If you go by the recent valuation of storage IPOs lately, it is more in line."

EqualLogic counts among its customers Dickinson-Wright, the Royal British Legion and Babson College.
Dell's history of acquisitions has been limited primarily to services organisations and recently consumer gaming vendors. The acquisition of EqualLogic would mark Dell's first buyout of a storage vendor since it snapped up early virtualisation company ConvergeNet in 1999 for $348 million. Subsequent work with ConvergeNet failed to generate a product.

The EqualLogic deal is expected to close early next year.

Read Techworld's storage editor Chris Mellor's blog on the acquisition's implications.