Dell says it is in advanced talks regarding a possible merger with Compellent Technologies. The deal would call for Dell to pay US$27.50 per share, or roughly US$876 million, for the storage vendor. The companies, however, gave no assurances that a deal will be consummated, and say they do not plan to make additional comments "until an agreement is reached or discussions are terminated." The storage market has been heating up of late. Earlier this year, Dell lost a bidding war for storage vendor 3Par to Hewlett-Packard, and last month EMC said it would pay US$2.25 billion for Isilon Systems. Companies around the world are ramping up spending on storage to handle exploding data volumes. Global disk storage systems revenue during the third quarter was US$7 billion, growing by 18.5 percent compared to the third quarter last year, analyst firm IDC said last week. Dell's intentions for Compellent came as no surprise says Forrester Research analyst Andrew Reichman. The loss of 3Par was "a huge motivating factor" for Dell to make a follow-up deal, he said. "However, 3Par was a pretty proven, top-tier enterprise storage play," whereas Compellent has had a presence in the SMB market, Reichman says. Compellent also has some overlap with Dell's own EqualLogic products, Reichman says. It’s unclear if a bidding war similar to the one over 3Par will emerge, but a theoretical suitor could be Cisco, Reichman says.