Dell on Friday closed its acquisition of Force10 and now is prepped to become a networking player.
The IT vendor had primarily sold networking gear through its relationships with Cisco, Brocade and Juniper. Those relationships are expected to continue, but over time Dell is expected to sell more of its own gear.
If this playbook sounds familiar that's because Dell is doing the exact same thing with storage. Dell used to primarily resell EMC storage, but the acquisitions of EqualLogic as well as Compellent enable the company to sell its own gear. In an interview earlier this week, Travis Vigil, executive director of Dell Storage, said the company plans to double its storage revenue to be a $4 billion to $5 billion business.
In networking, Dell will use Force10's gear in data center packages with servers and storage. Dell also said it would maintain and grow the existing Force10 channel program.
Force10's trailing 12 month revenue was nearly $200 million and the company had 1,400 customers.
Wells Fargo analyst Jason Maynard said in a recent research note:
In the near term, we expect that Dell will likely maintain its relationships with Cisco, Brocade, and Juniper. Over time however, Force10 products clearly compete with those vendors’ products, and Dell will likely put its focus on selling its own products. To date, Dell generates relatively small margins on its OEM deals, and much like the EMC situation in storage, could grow its networking margins significantly.