News Analysis: As Dell and HP keep stacking the cash higher in the bidding war for 3PAR, the question arises: What makes this small enterprise storage company worth it?
As the bidding for storage company 3PAR ratchets higher,
so does one question-why are Dell
willing to spend this much money for one fairly small
My first thought was that maybe the two companies just
hate each other. I was having visions of a face-off under the hot Texas
sun as the companies finger their Colt single-action Army revolvers, each
waiting for the other to draw. Unfortunately, as much fun as that might be to
imagine, this fight is being waged with cash-piles of it.
What's actually going to happen is that HP is going to
outbid Dell and buy 3PAR. My guess is that the final offer that does the trick
will be about $2.5 billion. Yes, that's with a "B." That effectively
makes the stock price a couple hundred times earnings, and that's a pretty
expensive buy. So what is it about 3PAR that makes it worth so much that two
huge companies are trying to outspend each other to get it?
This could be one of those rhetorical questions that go
unanswered, except perhaps in some existential way, but fortunately, this is
one of those situations in which philosophy can give way to reality. To
accomplish this, I called the real expert in such things, eWEEK's own maven in
all things storage, Chris Preimesberger. Chris, it turns out, had just been
Asthana, Dell's vice president for Enterprise Solutions and Strategy
exactly the same question.
Dell, it turns out, wants to move beyond just being a
hardware company into becoming a "solutions company." This is pretty
important for Dell, if only because its solutions so far haven't really
included any real high-end options in terms of storage. Buying 3PAR would give it
that. By having a high-end storage solution, Dell could better serve really
large customers. But why 3PAR? Dell, it seems, believes that the number of
companies with the technology they need has dwindled to one. Every other
potential company has already been bought by somebody else.
HP, meanwhile, is in a different situation. HP already
has a high-end provider in the form of Hitachi, but if you know Hitachi, then
you know that this highly conservative company is slow to bring new
technologies to market, it's slow to adapt, or as Chris calls it, it's really