Dell Doesn’t Want Brocade, Buys Force10 to Scale Out Switches Market

As 2011 proves to be the year of mergers and acquisitions in the networking space, Dell has set its eyes on Force10 Networks, an Ethernet networking supplier.  At the moment, details of the acquisition remains undisclosed.

Force10 Networks is a privately owned supplier with nearly $200m in annual revenues and operating on some 60 countries.   The company has more than 1,300 customers, including many Fortune 100 businesses and six of the world’s top 10 supercomputer clusters. It has been building its business as customers upgrade from 1Gbit/s Ethernet to 10 gig, and now it is positioning itself to supply them with 40 gig product.

Dell was rumored to be interested in the purchase of Brocade, a maker of switches for data-storage networks, but decided to go for Force10 Network instead.  Both companies declined to comment on the issue as to why the acquisition did not happen.

As for the Force10 acquisition, Dell received advice from Evercore Partners Inc. while Force10 was advised by Deutsche Bank AG.  Legal Counsels for Dell and Force10 are Dewey & LeBoeuf LLP and Fenwick & West LLC respectively.

“Instead of selling ingredients like servers and storage, we’re selling the whole data center,” Chief Executive Officer Michael Dell said on June 29. “It’s the evolution of where storage goes.”

Dell’s trying on a few new trends right now, even showing interest in the possible use of Google+’s Hangout to supplement traditional customer service support.  Dell’s embracing of new innovation has inspired investors and customers alike.  Dell share are trading at $17.33, a new 52-week high.

But Dell’s not the only one looking to the Ethernet and switches business to survive the virtualization market shift. The companies entering this space are scaling out quick through acquisitions, and this week also brought news of Intel’s big move. The chip-maker has signed an agreement to acquire Fulcrum Microsystems Inc. to aid in its transformation from being a leader in server technology towards extending its chip services.