Everyone these days has an opinion about why HP and Dell are agressively bigging for 3PAR. So far, the explanations don’t seem to satisfy the question of why 3PAR and why now. I don’t know any more than anyone else, but I have some ideas.
Dell
Dell started the bidding frenzy at $1.15 billion (http://content.dell.com/us/en/corp/d/secure/2010-08-16-ir-release.aspx) and the reasons are pretty clear. Dell has a number of enterprise storage components already including it’s OEM relationship with EMC, iSCSI storage Equallogic and the intelectual property of a scale-out NAS startup called Exanet. Dell lacks a few pieces of the whole enterprise storage puzzle which includes a high-end storage array and a scalable, multi-tenant storage solution for cloud computing. 3PAR is the only obvious vendor that can provide this whole new line of solutions for Dell getting them closer to rounding out their storage portfolio. For Dell, the 3PAR acquisition will generate new enterprise business and, based on how you value enterprise and cloud storage sales of the future, the high cost for 3PAR may very well be justified.
Even with 3PAR, Dell is still going to have to build on their VMware integration like they have done with their acqusition of Equallogic. Back then, many people speculated that Dell couldn’t integrate an innovative and R&D intensive technology like Equallogic into their commodity-driven, low margin PC business. Dell proved many people wrong and were masterful in their acquisition of Equallogic. 3PAR doesn’t automatically complete the storage puzzle for Dell but it could be a huge leap forward. The challenge for Dell will really come down to how fast and how well they will be able to integrate 3PAR and how welll they communicate the value proposition to prospective customers.
HP
HP’s counter bid for Dell was a slight surprise although there were reports that HP tried to acquire 3PAR awhile ago. HP has two enterprise storage lines already- the EVA and XP (which is OEM’d from Hitachi Ltd. in Japan). With the attemted acquisition of 3PAR, HP is essentially conceding what many in the industry already thought: The EVA line of storage has been reliable but just isn’t able to keep up with the escallating demands of enterprise and cloud computing. There is also a fair amount of overlap between the XP line and 3PAR. For HP, buying 3PAR means that there will be some level of canabalization of existing product lines. As with Dell, HP is understands that the value of this acquisition really comes down to how much NEW business can be generated. The challenge for HP is that the canabalization of existing products is not new business and can’t be counted on to justify the cost of the acquisition. To justify the acquisition, they are going to have to bank on greater sales potential with 3PAR than Dell is forecasting.
HP, however, is as well equipped to manage acquisitions as anyone. As they proved with it’s acquired EDS for $13.5 billion in 2008,(http://www.hp.com/hpinfo/newsroom/press/2008/080513a.html), HP is more than capable of making big acqusitions and making them profitable as quickly as possible. In spite of some canablaization, no one should doubt that HP could do well with 3PAR.
What’s after 3PAR?
Some stock watchers are eagerly looking for the next hot storage company as the spikes in the valuation of Compellent and Isilon have proven. While Compellent and Isilon are great technologies, they are distinctly and completely different from 3PAR. Compellent is a fibre-channel only arrary that cannot scale to the extent of 3PAR and lacks the multi-tenant features that are required for cloud computing. Isilon is a scale-out Network Attached Storage appliance for storing file data, not blocks of data like 3PAR. Again, both Compellent and Isilon are great options for the solution sets they serve, but they should not be confused as an alternative to 3PAR.
For the loser
3PAR really isn’t an all-or-nothing option for wither vendor. While some have speculated that there are other hardware vendors to be acquired, there is no match to 3PAR for sale today. The more likely scenario is that whoever does not get 3PAR will likely proceed with an OEM deal with an ably equipped, highly scalable, multi-tenant storage vendor… and there are a few. What they will really lose is control of their own destiny while R&D is managed by another company that’s presumably a competitor. It’s not a great position to be in but it’s not all that uncommon.
Who will win?
Both Dell and HP have deep enough pockets and I wouldn’t be shocked if the bidding doesn’t go another round. It really comes down to how much value and revenue either one believes they can derive by acquiring 3PAR. Ultimatley, whoever wins will have to execute a strategy in very short order to keep shareholders from questioning the deal.

Everyone these days has an opinion about why HP and Dell are aggressively bidding for 3PAR. So far, the explanations don’t seem to satisfy the question of why 3PAR and why now. I don’t know any more than anyone else, but I have some ideas.
Dell
Dell started the bidding frenzy at $1.15 billion and the reasons are pretty clear. Dell has a number of enterprise storage components already including it’s OEM relationship with EMC, iSCSI storage Equallogic and the intellectual property of a scale-out NAS start up called Exanet. Dell lacks a few pieces of the whole enterprise storage puzzle which includes a high-end storage array and a scalable, multi-tenant storage solution for cloud computing. 3PAR is the only obvious vendor that can provide this whole new line of solutions for Dell getting them closer to rounding out their storage portfolio. For Dell, the 3PAR acquisition will generate new enterprise business and, based on how you value enterprise and cloud storage sales of the future, the high cost for 3PAR may very well be justified.
Even with 3PAR, Dell is still going to have to build on their VMware integration like they have done with their acquisition of Equallogic. Back then, many people speculated that Dell couldn’t integrate an innovative and R&D intensive technology like Equallogic into their commodity-driven, low margin PC business. Dell proved many people wrong and were masterful in their acquisition of Equallogic. 3PAR doesn’t automatically complete the storage puzzle for Dell but it could be a huge leap forward. The challenge for Dell will really come down to how fast and how well they will be able to integrate 3PAR and how well they communicate the value proposition to prospective customers.
HP
HP’s counter bid for Dell was a slight surprise although there were reports that HP tried to acquire 3PAR awhile ago. HP has two enterprise storage lines already- the EVA and XP (which is OEM’d from Hitachi Ltd. in Japan). With the attempted acquisition of 3PAR, HP is essentially conceding what many in the industry already thought: The EVA line of storage has been reliable but just isn’t able to keep up with the escalating demands of enterprise and cloud computing. There is also a fair amount of overlap between the XP line and 3PAR. For HP, buying 3PAR means there will be some level of cannibalization of existing product lines. As with Dell, HP understands that the value of this acquisition really comes down to how much NEW business can be generated. The challenge for HP is that the cannibalization of existing products is not new business and can’t be counted on to justify the cost of the acquisition. To justify the acquisition, they are going to have to bank on greater sales potential with 3PAR than Dell is forecasting.
HP, however, is as well equipped to manage acquisitions as anyone. As they proved with their EDS acquisition for $13.5 billion in 2008, HP is more than capable of making big acquisitions and making them profitable as quickly as possible. In spite of some cannibalization, no one should doubt that HP could do well with 3PAR.
What’s after 3PAR?
Some stock watchers are eagerly looking for the next hot storage company as the spikes in the valuation of Compellent and Isilon have proven. While Compellent and Isilon are great technologies, they are distinctly and completely different from 3PAR. Compellent cannot scale to the extent of 3PAR and lacks the multi-tenant features that are required for cloud computing. Isilon is a scale-out Network Attached Storage appliance for storing file data, not blocks of data like 3PAR. Again, both Compellent and Isilon are great options for the solution sets they serve, but they should not be confused as an alternative to 3PAR.
For the loser
3PAR really isn’t an all-or-nothing option for either vendor. While some have speculated that there are other hardware vendors to be acquired, there is no match to 3PAR for sale today. The more likely scenario is that whoever does not get 3PAR will likely proceed with an OEM deal with an ably equipped, highly scalable, multi-tenant storage vendor… and there are a few. What they will really lose is control of their own destiny while R&D is managed by another company that’s presumably a competitor. It’s not a great position to be in but it’s not all that uncommon.
Who will win?
Both Dell and HP have deep enough pockets and I wouldn’t be shocked if the bidding doesn’t go another round. It really comes down to how much value and revenue either one believes they can derive by acquiring 3PAR. Ultimately, whoever wins will have to execute a strategy in very short order to keep shareholders from questioning the deal.