HP-3PAR-Dell now: can Cisco-EMC be the next?

BANGALORE, INDIA: The recent HP-3PAR-Dell acquisition drama shows where the storage industry is heading to - cloud computing.

Cloud will be the future and in the race not to be left behind, every company is trying its best to jump into the fray.

Also Read: 3PAR brings utility storage to India

This also explains why HP and Dell are fighting tooth and nail over 3PAR, a utility storage provider. Within a span of two weeks 3PAR's stock prices rose from a mere $9.65 to $30 per share.

Nishant Singh, lead analyst, Ovum, in an interview with CIOL talks about the nuances of the bid. Excerpts:

CIOL: What makes 3PAR so wanted?

Nishant Singh: 3PAR's expertise is in a relatively niche area of high-end storage. It offers a technology called ‘thin provisioning’ - a mechanism to increase the utilization efficiency of storage capacity deployment by allowing for extra capacity to be added as required.

There are other vendors with thin provisioning technologies; however while these alternatives exist, these do not have the level of maturity and market-readiness as 3PAR’s.

In the true sense therefore, alternatives to 3PAR’s solutions are indeed limited. Some options will eventually emerge, but as with all new technologies these could take a little time to mature and be market ready.

Moreover, the appeal of the software space nowadays is owing to the cost control measures that companies are looking to adopt. The recession has meant that enterprises are increasingly looking to implement affordable virtualized storage that companies like 3PAR provide rather than opting for the more expensive hardware.

Indeed, a lot of 3PAR’s appeal lies in the fact that its technology is known and accepted.

CIOL: What will the winner gain and what will the loser lose?

Nishant: Both HP and Dell believe that the acquisition of 3PAR’s scalable storage systems will allow them to significantly increase the value proposition for their cloud offerings, and 3PAR’s scarcity value means that both Dell and HP are more than keen to pay higher than what the company appears to be worth on paper.

Both Dell and HP have been keen on the cloud infrastructure market, and 3Par could offer them the ability to maximize available space on data storage hardware - a crucial cost-control step.

For the winner, the ability to integrate 3PAR's virtual storage solutions into their portfolio will increase its appeal for customers looking to decentralize their data and reduce their need for more physical servers.

A failure to acquire 3PAR will no doubt dent the failed bidder’s cloud strategy in the sense that they will have to look for alternative technologies, and at the moment there don’t seem to be many available.

CIOL: Your thoughts on high profile consolidations in storage industry?

Nishant: As the markets consolidate, there seems to be a certain uneasiness amongst the larger players. Indeed, a lot of the recent acquisitions have not failed to raise eyebrows.

The bid price war on 3PAR, and Intel’s acquisition prices for Infineon and McAfee suggests that vendors are more than keen to be ready as the era of cloud computing and convergence becomes increasingly commonplace.

As cloud computing becomes more commonplace, there will be an increased shift towards further consolidation with vendors trying to deliver a more cohesive technology stack.

Further consolidations are to be expected. More specifically, Cisco and EMC in particular have been close partners for some time now, and this partnership is likely to show an increased proximity.