Compellent VARs raise Dell merger fears

Partners question impact deal will have on channel

Partners question impact deal will have on channel

Compellent partners have voiced concerns over the storage vendor's takeover talks with hardware giant Dell.

The two vendors released a joint statement yesterday confirming they have entered into merger talks, with Dell offering to acquire Compellent for $876m (£555.43m).

In the statement, both vendors said the announcement was no guarantee that a deal will be struck. It also stated that no further comment will be made by either party until the deal is finalised or terminated.

Speculation over Dell's plans to acquire Compellent has been rife since the firm lost out to rival HP in its bidding war for storage vendor 3Par in September, although Compellent recently stressed that it wanted to stay independent.

Alastair Kitching, chief operating officer of Compellent partner Esteem Systems, said that, if the deal goes through, Dell's reputation for taking deals direct would be a cause for concern.

"Out of all the people who could have expressed an interest in Compellent, Dell are the ones that partners will be most concerned about," he said.

"We would want some commitment from Dell that they will respect our route-to-market and the relationships we have with our customers."

Despite this, Kitching said the financial backing that would come from merging with a larger vendor would be good news for Compellent.

He added: "The Compellent technology is fantastic, and the financial support of a larger organisation would help accelerate its growth and development."

Richard Blanford, managing director of Compellent partner Fordway, said Dell's scale and market reach would benefit partners.

However, he has concerns over the impact Dell's intervention could have on margins and the commoditisation of Compellent's technology.

Blanford added: "Up to now we have chosen not to deal with Dell. But, if the deal does go ahead and is handled right, it will be good news for the channel."

Meanwhile, rival storage vendor Scale Computing has expressed surprise over the small size of the proposed deal.

Jeff Ready, chief executive of Scale Computing, said: "Dell's bid is about half [of that] paid by EMC for Isilion and HP and 3Par, so it's interesting that Compellent would consider that offer."