No More Bargains?
By bidding so aggressively for 3PAR, Dell may have shown its hand, analysts said. Any company it approaches is likely to demand a similarly high premium.

Shares of Eden Prairie, Minnesota-based Compellent have gained 50 percent since Dell announced its offer to acquire 3PAR on Aug. 16, and trade at about 3 times forward sales.

Some analysts said another target could be Isilon, which manages data networks designed for the media industry but is increasingly diversifying into other businesses such as Internet hosting.

"This is a much different approach than 3PAR, but it would bring in a unique technology that Dell could exploit through its vast distribution reach," Morningstar analyst Michael Holt said.

But Isilon is no longer cheap, either. Its shares have risen 36 percent since the 3PAR news emerged, and are more than triple their value a year ago. The company, with a market value of about $1.4 billion, trades at about 5 times forward sales.

Data storage software maker CommVault, which has a market cap of $1.1 billion, has also long been seen as a target for Dell, its biggest customer.

Gartner analyst Roger Cox said Pillar Data could improve Dell's competitive position against HP-3PAR. Pillar might also be a good fit because Dell is trying to get a foothold in the high end section of the storage market.

Wedbush Securities analyst Kaushik Roy said Dell was smart to bow out and that HP is overpaying for 3PAR.

Instead, he said, Dell could buy Brocade Communications Systems Inc (BRCD.O), which sells data storage and IP ethernet equipment and whose prime competitor is Cisco Systems Inc. Brocade shares rose 7.9 percent on Thursday.

"If Dell is following the footsteps of HP, then Dell should buy Brocade," Roy said, pointing to HP's acquisition of 3Com to expand its presence in the networking market.