Dell Continues Software and Services Expansion with Euro Cloud Investment

With the bottom falling out of the box shifting business, Dell continues its efforts to refocus it’s business along more profitable lines. Dell first announced the appropriately named Dell Cloud at VMworld Las Vegas last August based out of its Plan0 Texas Data Center. Now it has set its sights on the rapidly growing European market with a UK data center hosting its Euro Cloud that is set to open its doors on August 31. Needless to say, Dell is not content to offer a cloud-based service without doing what it can to support its manufacturing division.

Dell’s Plano Texas, Quincy Washington, and the UK data centers are equipped with the recently refreshed PowerEdge blade server platforms and EqualLogic’s  storage arrays. If the cloud is going to cannibalize on-premise hardware sales, Dell is doing all it can to ensure that it’s both captures as much of the services and hardware markets that it can as IT vendors adjust to this new way of thinking. At the same time it is pushing hybrid cloud support using the VMware vCloud Connector extensions to allow a customer’s private cloud to be managed from the same console as the Dell public cloud, enabling jobs to spill-over from private to public cloud and back again in response to changes in load. Of the initial US only offering Dell is reporting that 45% are small and medium businesses, 29% large enterprises and Fortune 500, with 26% public sector organizations.

This is the second cloud deal with VMware’s name attached to it that has been announced this week. Deutsche Telecom’s IT services organization T-Systems has also announced that it will be offering a VMware vCloud Datacenter Services-based offering in Germany in the near future.

What makes these cloud announcements all the more topical, is that they come immediately after a European Commission director has opened the door to European data being stored on US cloud servers. Megan Richards, acting deputy director general of Information Society and Media announced at the Cloud Computing World Form in London this week that

It shouldn’t matter where data is held as long as our rules apply. The legislation in the US is not so different from the legislation we have in the EU.

A very different position to previous announcements voicing concerns that US data security regulations, in particular, laws such as the U.S. Patriot Act would create conflict. – European law mandates strict controls over the treatment of EU private citizens’ data and enforces strong sanctions against breaches. At the same time, there are clear notification requirements that must be followed if data is shared with third parties. The U.S. Patriot Act requires U.S. companies (and their foreign subsidiaries) to comply with U.S. government data requests regardless of location, provided that data is under the control of a U.S. company. Furthermore, by the same U.S. law, such data sharing is not allowed to be revealed to a third party, a direct conflict  with European disclosure requirements.

It remains to be seen how Dell will overcome the difficulties of complying with both European and US regulations.

At the same time Dell continues to pursue Quest Software. News of Dell’s interest in Quest was reported here late last month but since the initial news little more has been heard until now. Yesterday, Reuters reported that Dell is the unidentified “strategic bidder” behind the Quest news that it had received a cash offer of $25.50 per share ($2.15 billion) to buy it out, leaving Quest’s former suitor Insight Venture Partners with just two days to come up with a better offer, or settle for a breakup fee of something between $4.2 million and $6.3 million.

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