Summertime Tech Bidding Wars, Part Deux

In 2009, we saw what we thought was a bit of an anomaly within the Information Technology industry: a multi-billion dollar summertime bidding war between two tech heavy-weights over a smaller technology company. EMC battled it out with Network Appliance over the acquisition of much smaller Data Domain which had cornered the market on data deduplication. This year, in a similar time frame, we are experiencing another summertime bidding war, this time between Hewlett Packard (HP) and Dell over utility storage provider 3PAR, Inc. In my opinion, we are starting to see a pattern emerge.

Why 3PAR? As someone who has followed 3PAR for many years, it is pretty easy for me to understand why HP, Dell, or even IBM, for that matter, would be highly interested in acquiring the pioneer in storage array based thin provisioning. Also, very early on, 3PAR was quick to realize that their brand of storage was designed in a way that fit well within a utility computing environment. They had the vision to see out beyond the traditional data center and demonstrate their utility storage capabilities in the burgeoning cloud computing environment.

Let's be clear, the stakes are high for both Dell and HP. The company that ultimately wins this year's bidding war will have to integrate the 3PAR InServ line into their existing storage product line and explain to their customers why the new line-up makes sense. In my opinion, HP will have the hardest time in the early days, post-acquisition, integrating 3PAR into the current product line without explaining that ultimately there will be a phasing out of the EVA line. However, over time, HP could leverage the 3PAR InServ as a new high-end enterprise account storage eliminating both the EVA and the OEM'd--and high priced--Hitachi XP line. With very deep R&D pockets, the 3PAR line could make an excellent mid-range to high-end virtualized storage offering for HP for years to come.

Should Dell ultimately win the ongoing bidding war, the company can easily integrate 3PAR into its current storage line-up and position InServ as its enterprise storage solution. The strength of the InServ offering will undoubtedly enable greater adoption of Dell Virtual Infrastructure Solutions. 3PAR InServ is a natural fit for a Dell high-end enterprise storage offering, and with earmarking of development dollars to 3PAR R&D over the next few years, the acquisition could prove to be a major step forward for a Dell that is positioning its self as a major player in the data center of the future.

Regardless of which company wins the bidding war, the future of 3PAR's InServ  product and its InSpire architecture appear assured. The question of the day is, "Will the bidding go higher?" In my opinion, the simple answer is yes. I can for foresee Dell responding to the current $2B HP bid and a few more $100 or $200 million dollar raises to the bid by each side. Who will ultimately win? The easy answer: customers, along with 3PAR, its technology and its share holders.So, now that we are going through our second summer of tech superpower bidding wars, I believe we will see this become a yearly pattern for a several years to come. Why? Because the tech titans are sitting on piles of cash, and in many cases, the make vs. buy decision is an easy one to resolve. Today's global economic climate necessitates a diamond-like competitive edge and a product time-to-market that is a short as possible. Buying an existing technology and being able to amplify its success via a more broad global reach can help the tech titans continue to recognize revenues that ultimately fuel the continued company/technology acquisition strategy and perhaps improve the overall earnings per share for share holders.

I took some time to ponder who may be next to be purchased? Could companies such as Compellent, Panasas, or some of new start-ups such as EvoStor, or Tintri be in the cross hairs of the mergers and acquisitions groups at one of the big tech companies? In my opinion, absolutely.  These companies have truly innovative solutions for a number of problems that systems and storage administrators experience every day. Technology companies that provide demonstrable solutions for VMware, Hyper-V and Citrix Zen virtual machine environments will be highly interesting to private investors and large companies over the next five years.  

Who do you think will win this year's technology bidding war?  HP, Dell, or will a third party jump in and upset the apple cart?