3PAR Win Is Strategic Victory for Dell

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Dell has reportedly emerged victorious in the battle with HP for virtualized storage provider 3PAR. After raising its bid to trump HP, Dell announced that 3PAR has accepted its offer. So, what does 3PAR bring to the table, and why was it such a hot commodity for the two tech giants to fight over?

Dell hopes to acquire 3PAR and add to its portfolio of services as a solution provider.
There are two key strategic values to acquiring 3PAR. Virtualized storage enables Dell to expand its services offering and provide a source of revenue beyond server and desktop hardware sales. It also gives Dell a boost in the competitive cloud market.

Greg Richardson, an analyst with Technology Business Research, had this to say about Dell's aggressive pursuit of 3PAR. "Dell is buying its way into the solutions game," adding that Dell's "acquisition of enterprise storage vendor 3PAR marks the next rung in its ladder to becoming an enterprise solutions vendor."

Dell has been on a buying spree--mimicking its rival HP. In the past couple years, Dell has acquired Perot Systems, EqualLogic, and now 3PAR. The moves let Dell expand its portfolio beyond high-volume PC and server manufacturing to provide services, and other solutions for customers.

Richardson explains "The reshaping better positions Dell against competitors IBM and HP, who can address large-scale build-outs of integrated hardware and software with their services and software portfolios. By offering hardware and software that enabled the development of virtualized environments, as well as design, implementation, and support services, Dell further positions itself as a solutions provider."

While Dell claims that 3PAR has accepted its revised offer, 3PAR also accepted Dell's initial offer--before HP came along and stirred things up. Tom Buiocchi, CEO of Data Robotics, points out "some very smart people have said in the past 'it ain't over till it's over', and we've all seen unpredictable things happen in this industry." HP could still counter.

Amish Jani, managing director of FirstMark Capital, provides some additional insight into why Dell and HP are so anxious to get 3PAR. "3Par is the only high end virtualized storage provider that is independent. Put through either one of their channels, they could double, triple or even quadruple sales. That's why these companies can afford the premium."

Jani further clarifies the desire for 3PAR in a blog post "If you believe you need to own storage and server, both to fulfill the vision above and to avoid partnering with a competitor, then 3Par is the only place to get this type of deep high end storage technology."

Data Robotics' Buiocchi believes that 3PAR is a great addition for either Dell or HP. "There is a continued, huge challenge of managing large amounts of data and huge data growth within large enterprises, and 3PAR has the goods here.

Dell must feel 3PAR is critical to its growth in order to warrant a 50 percent increase in its bid--a value of about half a billion dollars. Buiocchi may have hit the nail on the head in describing the real value of 3PAR, though. "When one of them gets 3PAR, the other doesn't - and that could provide a competitive advantage in a big market."

Based on current reports, though, it appears that Dell has emerged victorious in this battle.

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