Dell has announced it is buying storage company Compellent Technologies for about $960 million in cash. Compellent will help Dell expand beyond PCs and catch up with rivals Hewlett-Packard and IBM in technologies like cloud computing.

Compellent specializes in storage and recovery of data for small and medium-sized businesses. Dell says it plans to keep Compellent's existing operations in Eden Prairie, Minnesota, but will also invest in engineering, support, operations, and sales to grow the business. The Compellent deal is expected to close in early 2011. Dell's final offer for Compellent was $27.75 a share. When Dell and Compellent announced last week that they were holding "advanced discussions," Dell said it would bid $27.50 a share.

Data storage plays a crucial role in cloud computing, due to the need to access remote computing power and data over the Internet. Dell entered this market two years ago with its purchase of EqualLogic for $1.4 billion.

"We are excited about our merger with Dell. This is the next logical step in our goal to scale our products, channel and team worldwide," Phil Soran, President, CEO, and Chairman of Compellent, said in a statement. "With Dell's scale and technology leadership, we accelerate the adoption of our virtualized platform, Fluid Data, to redefine the value of enterprise storage for data centers and cloud computing."