Stakes Continue To Rise In Bidding War For 3PAR

As the bidding for storage company 3PAR ratchets higher, so does one question — why are Dell and HP willing to spend this much money for one fairly small company?

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 of 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 asking Praveen Asthana, Dell’s vice president for Enterprise Solutions and Strategy, exactly the same question.

Why 3PAR?

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 says, it’s really old school.