Behind The Bidding War: The Real Reasons Why HP And Dell are So Desperate For 3Par
As I was writing this, news of the HP / Dell bidding war for 3PAR broke on the front page of Yahoo. This made me laugh, as it typified just how crazy this story has become—few things outside of a bidding war will make a storage acquisition sexy enough to make mainstream news.
At $30, HP’s current offer is the sixth bid, a 200 percent premium over 3PAR’s previous $10 share price. Not only is this insane, but it’s also nearly unprecedented in M&A history. And since 3PAR is trading above $32 the market thinks Dell will bid even higher.
First Off, Is 3PAR Really THAT Unique?
Yes and no.
3PAR is a classic disruption play, its value proposition based on the premise that unused storage is wasteful—often times just 10% to 25% of allocated disk space is actually used.
3PAR’s “thin provisioning” technology enables disk space to be allocated only when applications need capacity, greatly reducing IT management costs. Think of it as storage on a just-enough and just-in-time basis.
In the cloud era, pre-allocation of storage is especially wasteful, because on-demand storage and computing services delivered via the internet have wide variability and less deterministic usage patterns. This makes 3PAR a great fit for data centers, and it’s partly why the technology is suddenly perceived as very valuable.
Contributor Steve Cheney is an entrepreneur and formerly an engineer & programmer specializing in web and mobile technologies.
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