Dell Boosts Its Storage with a Deal for Ocarina

Over the past couple years, Dell (DELL) has been investing aggressively in the rapidly growing storage market. A key part of this strategy was the $1.4 billion acquisition of EqualLogic, a top provider of high-performance storage area network solutions. All in all, it looks like it was a smart move.

Now, Dell has struck another important deal in the storage space: Ocarina Networks. The company develops storage optimization technology, which includes things like compression and de-duplication.

The deal is expected to close at the end of this month, though the price tag was not disclosed.

A Look at Ocarina

Back in 2007, Murli Thirumale and Goutham Rao started Ocarina. Before this, both had top positions at Citrix (CTXS).

At Ocarina, Thirumale and Rao had the ambitious vision to become the industry leader in primary data reduction by the year 2012. To do this, they had to put together a strong technology road map.

There was also need to get a slug of venture capital. So, Ocarina raised $32 million from firms like Kleiner Perkins Caufield & Byers, Highland Capital Partners and JAFCO Ventures.

And it paid off. Now, Ocarina has a sophisticated platform that helps customers manage the explosion of unstructured data, like email, documents, media files and so on. The company says that the data world has gone from gigabytes to terabytes -- with the next step being petabytes. But with technology from Ocarina, the transition is fairly seamless and the costs are substantially lower than traditional approaches.

New Competition

While the deal for Ocarina will provide Dell with a nice value-add offering, there are still some challenges. The companies have not been in a comprehensive strategic relationship so there could be issues with integration (although it looks like Dell will let Ocarina operate independently).

Next, there is likely to be disruption in the competitive landscape. For example, Ocarina is a competitor to NetApp (NTAP), EMC (EMC) and CommVault (CVLT).

Even so, as seen with the EqualLogic deal, Dell has experience handling such issues. And in order to benefit from the substantial growth in the storage market, it helps to have control over the key technologies.
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