HP or Dell -- which is the better suitor for 3Par?

Both companies have very deep pockets and a lot to gain

Hewlett-Packard's $1.6 billion offer today to purchase grid storage vendor 3Par came as a surprise to many tech industry watchers, but it's a smart move, both offensively and defensively.

HP does not have its own enterprise-class storage array; instead -- like Oracle/Sun -- it resells Hitachi Data Systems' Universal Storage Platform (USP). And it sees Dell -- which offered $1.15 billion for 3Par a week ago -- as a threat in the enterprise data center marketplace. 3Par's cloud-based storage architecture would give it a significant leg up into that space.

HP's chief strategy and technology officer, Shane Robison, argued that HP would be a better fit for Fremont, Calif.-based 3Par than Dell, since both HP and 3Par are Silicon Valley companies.

HP had been eyeing 3Par for some time and had made an earlier offer for the grid storage vendor, HP executives said, though they did not provide further details.

3Par declined comment on HP's bid. So did a Dell spokesman.

"Clearly, when you go in with a bid that's a 33.3% premium [over a rival's bid] it's a competitive bid and not based on what the company is worth," said Mark Peters, an analyst at Enterprise Strategy Group in Milford, Mass. "So it's going to end up with who blinks first. Which company wants to lose this bidding war less?"

3Par's technologies will help HP expand its offerings for building public and private cloud services, according to Dave Donatelli, HP's executive vice president and general manager of enterprise servers, storage and networking.

In addition, HP has "a unique ability" to bring 3Par's products to market. "Our reach is something other [companies] simply can't match," he said during a morning conference call.

A gut punch to EMC

Donatelli once ran EMC's Storage Division. He left EMC and moved to HP in April 2009.

In more ways than one, HP's move reflects a worst-case scenario for EMC, which last year was able to obtain a court order blocking Donatelli from openly working in HP's storage division for one year under the terms of a noncompete agreement he signed with EMC. Now, however, Donatelli and HP have an opportunity to make a land-grab for technology that competes directly against EMC's high-end Symmetrix array.

"No question in my mind that Donatelli is a technology-hungry guy. Probably from the day he walked into HP, he made it known he was not crazy about reselling arrays from HDS," said Arun Taneja, lead consultant at Taneja Group in Hopkinton, Mass.

The HP-Dell bidding war is reminiscent of EMC's 2009 battle with rival NetApp for leading data de-duplication vendor Data Domain. NetApp bid first, but EMC eventually won the war in July 2009 by offering $2.1 billion in cash for a company that generated $274 million in revenue in 2008.

While Data Domain's board of directors urged the company to reject EMC's bid, ultimately they accepted the bigger offer.

3Par reported $194.3 million in revenue for the fiscal year that ended March 31. So HP's bid already represents a valuation that's more than eight times the revenue 3Par generates. Even so, analysts don't think the bidding war will end quickly; they expect a counteroffer from Dell.

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