Dell Cloud Storage Chief Explains Scramble for 3PAR

3PAR is "uniquely qualified" in providing the kind of storage technology right now that Dell requires, Dell executive Praveen Asthana tells eWEEK.

Dell's top cloud and storage executive, Praveen Asthana, confirmed to eWEEK Aug. 27 why Dell is pursuing 3PAR so desperately: Not only does its IP fit an important high-end storage need, but he admitted that there aren't any other available companies at the moment that fill that requirement.
Asthana, deeply involved in the acquisition negotiations at the company's Round Rock, Texas, headquarters, understandably could not comment about the tug-of-war between his company and Hewlett-Packard, which also values 3PAR enough to offer a cool $2 billion for the Fremont, Calif.-based storage maker.
"If you look at the emerging market currency of cloud storage and cloud services, 3PAR is uniquely qualified in providing that kind of storage technology right now," Asthana, whose title is Dell vice president of enterprise solutions and strategy, told a small group of journalists in answering eWEEK's question.
3PAR is not the only company that offers scale-out storage. Isilon, Compellent, Xiotech, Pivot3 and Infortrend are five of at least a dozen established companies that offer high-end utility-type storage for enterprises large and small.
"That may be true, but there are very few other companies available for purchase," Asthana said.
The bottom line: There is less on the table to look at, right? "That's correct," Asthana said.
By the end of business on Aug. 27, the score in the bidding war was HP $2 billion, Dell $1.8 billion. Board members of all companies involved undoubtedly will be postponing weekend activities to try to bring the impasse to a conclusion.

Explaining the most common metholodogy companies use to buy data center systems, Asthana said, "If you look at a lot of our customers, they are buying high-end systems, and in some cases they choose the high-end systems first, and then they choose the midrange and the low-end systems."
Why 3PAR is a prime target
3PAR is considered a prime asset primarily for three reasons:
No. 1: Its clustered, utility-type architecture is tailor-made for cloud systems that deliver software as a service, and cloud storage systems are in high demand at this time.
No. 2: 3PAR began shipping its own brand of autonomic storage tiering, called Adaptive Optimization. The process actually prevents common storage bottlenecks from happening in the first place through a combination of business and operational intelligence, gained by a constant collection of data. 3PAR's version anticipates data blockages and solves them before they happen.
3PAR Adaptive Optimization follows this concept to enable high-end-type storage systems to achieve an efficient distribution of data over the application life cycle, without needing intervention by an administrator, the company says.
No. 3: The company is available for sale.
This deal boils down to these factors: Dell requires a company like 3PAR to give it a tried-and-true, high-end storage system that can handle massive amounts of data.
HP also could use this IP, but its needs are different. The company's storage portfolio is already much larger, and its long-time partnership with Hitachi gives it an established massive-scale -- though considerably old-school -- offering at the high end.
HP, with a massive market cap of $88 billion and $11.2 billion of that in its checking account, also has more cash than Dell ($7.7 billion), and, well, cash speaks loudly everywhere -- especially in negotiations like this.
"For HP, it's about improving, fixing and owning IP in an area where they have been highly successful, but you can argue whether they really have strength," Mark Peters, storage analyst with Enterprise Strategy Group, told eWEEK. "Their success comes because they are HP, because the deals are there for the taking because they're [customers] captive.
"HP doesn't have its own IP. There's got to be an element of, well -- they don't want their competitors to have it."
HP may want to replace Hitachi at some point
The other factor involves HP's longtime partnership with Japan's Hitachi, which has supplied massive-scale enterprise storage for more than a decade to the U.S. systems maker. Hitachi's IP is older and more established, while 3PAR is second-generation. Would an HP victory here cause a problem with its Hitachi relationship?
"They haven't bought [3PAR] yet, so we don't want to assume anything yet," Peters said.
Dell, however, has a lot more at stake in winning this battle.
"Strategically for Dell, it's [owning 3PAR] is more important, yes," Peters said. "This is about more than storage for Dell. It begins to move them into more of an enterprise play, which is what they want to do.
"So for them, it's using storage as a lever."
And 3PAR is the lever of choice. No doubt CEO David Scott, Marketing Director Craig Nunes and all the other 600 or so 3PAR employees like being that lever while they watch the stock continue to spiral up.
It closed at a bit over $32 on Aug. 27 -- up rather markedly from $9.65 two weeks ago.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...