Dell is spending $1.4bn on storage company EqualLogic, which specialises in iSCSI storage area networks optimised for virtualisation.

The direct-selling PC giant says the deal is done, it will hit earnings by 2 to 5 cents per share each fiscal year until 2010.

The firm reckons hit is worth taking though to increase its share of the burgeoning storage market. Michael Dell said: "Our customers will be dealing with the largest increase in data we have seen in our history over the next few years." He predicted iSCSI will help Dell increase enterprise storage sales.

Dell, with its reliance on direct sales, has lost its lustre in recent years, losing its top spot for PC sales to HP in late 2006 - Dell's performance was fuelled by strong PC sales. It has been trying various strategies to improve performance - from buying its own resellers to changing its channel strategy.

The takeover of EqualLogic has been approved by the board of directors of both companies, but still needs approval from shareholders and regulators.

Assuming the deal does go through, Dell plans to continue EqualLogic branded sales as well as continuing to grow the target firm's channel programme. It will also put EqualLogic technology into Dell-branded PowerVault storage boxes.

It is far from being a new market for Dell either. It has long sold a variety of storage products - in 2004 a deal with EMC brought a storage area network aimed at small and medium businesses. Dell has also worked with CommVault and McData.

Dell's statement is here. ®