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Mail Stop 4561         February 12, 2010  Subramanian Krishnan Senior VP, CFO and Treasurer Digi International Inc. 11001 Bren Road East Minnetonka, Minnesota 55343
Re: Digi International Inc.
 Form 10-K for the Fiscal Year Ended September 30, 2009
Filed December 3, 2009 File No. 001-34033

Dear Mr. Krishnan:
We have reviewed the above-referenced filing and have the following comments.
If indicated, we think you should revise your document in response to these comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.  In
some of our comments, we may ask you to provide us with supplemental information so
we may better understand your disclosure.  After reviewing this information, we may
raise additional comments.
 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.
 Form 10-K for the Fiscal Year Ended September 30, 2009

General
1. You state on pages 15, 34, 64, and elsewher e that you operate in Latin America,
the Middle East, and Africa, references generally understood to encompass Cuba,
Iran, Syria, and Sudan.  You also include S udan in the list of countries included in
the dropdown menu in the “Warranty Regist ration” section of your website.
Cuba, Iran, Syria, and Sudan are countr ies that are identified by the State
Department as state sponsors of terror ism, and are subject to U.S. economic
sanctions and export controls.  We not e that your Form 10-K does not include

Subramanian Krishnan
Digi International Inc.
February 12, 2010 Page 2
disclosure regarding contacts with Cuba, Iran, Syria, and Sudan.  Please describe
to us the nature and extent of your past , current, and antici pated contacts with
Cuba, Iran, Syria, and Sudan, if any, whet her through subsidiaries, distributors,
resellers, or other direct or indirect arrangements.  Your response should describe
any products, equipment, components, tec hnology, software, or services that you
have provided into Cuba, Iran, Syria, and Sudan, directly or indirectly, and any agreements, commercial arrangements, or  other contacts you have had with the
governments of those countries or entit ies controlled by those governments.

Item 1A. Risk Factors

“We depend on manufacturing relationships and on limited-source suppliers…,” page 18
2. You disclose that you procure certain ke y components involved in producing your
products from a sole supplier or a limite d number of suppliers, and that “[a]ny
extended interruption in the supply of any of the key components currently
obtained from limited sources could disrupt [y]our operations and have a material
adverse effect on [y]our customer relations hips and profitabilit y.”  It is unclear
from this risk factor and the related di scussion in the Business section on page 12
the extent of your reliance on limited-sour ce suppliers and the nature of the key
components they provide for you.  Please tell us in your response letter what percentage of your revenues is derived fr om the sale of produ cts that involve key
components that are available from only one  or a limited number of suppliers.  To
the extent material to your business as a whole, disclose the nature of such key
components, and ensure that you have pr ovided a materially-complete description
of your arrangements with such  suppliers in Business.  Pl ease also file as exhibits
any supplier contracts upon which your busin ess is substantially dependent.  See
Item 601(b)(10)(ii)(B) of Regulation S-K.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Results of operations, page 32
3. Please describe for us in greater detail  the reasons for, and amounts associated
with, the changes (i.e. price and/or volu me) in the product and customer mix that
impacted Net Sales and Gross Profit,  as disclosed on pages 32 and 34,
respectively.  In view of your identification of the effe cts of these known changes,
it would appear your MD&A should provide analysis of the f actors and reasons
underlying the changes and discuss whether they will give rise to other material
changes in the company’s future operati ons and liquidity.  Please tell us why you
have not provided such MD&A disclosure.

Subramanian Krishnan
Digi International Inc.
February 12, 2010 Page 3  Critical Accounting Policies and Estimates

 Goodwill, page 43

4. Please tell us how much your market cap italization plus an estimated control
premium of 35% exceeded the carrying va lue of the reporting unit.  If your
reporting unit was at risk of  failing “step one” of para graph  350-20-35-4 of the
FASB Accounting Standards Codification be cause the fair value of your reporting
unit was not substantially in  excess of its carrying valu e, please provide us the
following information and provide this  information in future filings:

• The percentage by which fair value ex ceeded carrying value as of the most
recent step-one test;
• Analysis of the degree of uncertainty associated with the your assumptions,
and
• A description of potential events and/or  changes in circumstances that could
reasonably be expected to negativ ely affect the key assumptions.
 Alternatively, if in your vi ew your reporting unit is not at risk, we encourage you
to disclose that fact in future filings.
5. In addition, for the periods reported provide to us greater detail of the similarities
you share with the companies used to de termine your control premium over the
past five years.  Tell us what control premium percen tage was used in conjunction
with your reporting unit fair value de termination as of June 30, 2008 and 2009.
We note your disclosure that the estima ted control premium was determined by a
review of premiums paid for similar comp anies over the past five years; however
there is no quantification of the percentages.  Since this is a significant assumption, we would expect enhanced disclosure of the basis and assumptions used to select a particular control premium in future filings.

Income taxes, page 38

6. The discussion of fiscal 2009 income tax benefits resulting from the reversal of
income tax reserves and other discrete ta x benefits does not appear to fully or
separately describe and quantify thes e or other material effects upon your
effective 2009 tax rate.  We note, for exam ple, the material amount of tax credits
disclosed in Note 11 to the financial statements and the 2007 and 2008 tax return
adjustments impacting 2009.  The tax credit s alone reduced the effective rate in
fiscal 2009 by 28.9%.  Please explain to us  in greater detail the nature, amounts
and timing of the credits, the reversal of  income tax reserves and other discrete
tax benefits, as well as the basis for each  of their recognition in fiscal 2009.

Subramanian Krishnan
Digi International Inc.
February 12, 2010 Page 4  Consolidated Financial Statements

 Notes to Consolidated Financial Statements

 Note 5. Selected Balance Sheet Data, page 65

7. Please provide analysis of the components of “other” in Accrued Expenses, or confirm that no item is in excess of 5% of total current liabilities for each balance sheet date.  See Rule 5-02.20 of Regulation S-X.
 Note 7. Fair Value Measurements, page 67

8. We note that your certificates of deposit are classified within level 1 in the fair
value hierarchy table.  Please tell us how you concluded that this classification
within the hierarchy, for certificates of deposit and other investment securities, is
appropriate considering that level 1 inputs are quoted prices in active markets for
identical assets.  Please refer to para graph 820-10-35-40 of the FASB Accounting
Standards Codification.
 Item 11. Executive Compensation (incorporat ed from Definitive Proxy Statement on
Schedule 14A filed on December 8, 2009)
 Compensation Determination Process, page 10

9. Your disclosure indicates that you engage  in benchmarking of base salaries, cash
incentive opportunities and equity aw ards for your named executive officers
against the compensation practices of your  “peer group” companies and the larger
group of public technology companies incl uded in the Radford survey.  As it
appears that benchmarking is material to your compensation policies and decisions, please clarify how you target each material element of compensation
and overall compensation, in each case if a pplicable, against the peer group and
survey data.  You should also disclose  where actual awards or incentive
opportunities for your named executive offi cers fall relative to the applicable
target or range.  In this regard, we no te your statement that your executives’ base
salaries are “generally below the median relative to comparable companies,” but
that their cash incentive opportunities would result in total cash compensation
“generally” above the median.  Please provi de a more specific de scription of these
benchmarks.  Please also clarify how the ma rket data is considered in determining
stock option awards.  We note in this regard your general statement that the
compensation committee “awards stock opti ons based on the same principles of
market comparisons of total compen sation including long-term incentives
combined with the remaining factors listed above.”

Subramanian Krishnan
Digi International Inc.
February 12, 2010 Page 5  Item 13. Certain Relationships and Related Transactions and Director Independence
(incorporated from Definitive Proxy Statement on Schedule 14A filed on December 8,
2009)
 Related Person Transaction Approval Policy, page 26

10. Please confirm that the company had no related person transactions since the
beginning of its fiscal 2009 required to be  disclosed pursuant to Item 404(a) of
Regulation S-K.  Consider adding a statement to such effect, if applicable, in
future filings.
 Item 15. Exhibits, Financial Statement Schedules

 Schedule II – Valuation and Qualifying Accounts, page 89

11. We note that you maintain a valuation account for inventory reserves.  Tell us
how you considered the guidance in SA B Topic 5BB, which indicates that
inventory write-downs due to obsolescence establish a new cost basis and should
not be presented as a reserve.  Pl ease clarify how your accounting method
establishes a new cost basis for your inve ntory and why you believe including this
reserve as a valuation and qua lifying account is appropriate.

* * * * * * *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please  submit all correspondence and supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T.  If you amend your
filing(s), you may wish to provide us with marked copies of any amendment to expedite our review.  Please furnish a cover letter that keys your response to our comments and provides any requested information.  Detailed co ver letters greatly faci litate our review.
Please understand that we may have addi tional comments after reviewing any
amendment and your response to our comments.
 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
  In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:

Subramanian Krishnan
Digi International Inc. February 12, 2010 Page 6
• the company is responsible for the adequacy  and accuracy of the disclosure in the
filing;

• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
 You may contact David Edga r, Staff Accountant, at (202) 551-3459 if you have
any questions regarding comments on the fina ncial statements and related matters.
Please address questions rega rding all other comments to Katherine Wray, Attorney-
Advisor, at (202) 551-3483 or Mark Shuman, Branch Chief-Legal, at (202) 551-3462.  If
you need further assistance, you ma y contact me at (202) 551-3226.
        S i n c e r e l y ,
      C r a i g  W i l s o n
Sr. Asst. Chief Accountant