HP, Dell Bidding War Over 3PAR Too Expensive, EMC Exec Says

HP's bid to acquire 3PAR at a higher price than Dell's original offer for the storage vendor was to be expected, according to an EMC executive who said the bidding war over 3PAR in no way compares to the EMC-NetApp fight over Data Domain.

Jeremy Burton, executive vice president and CMO of EMC, said that HP's offer on Monday to acquire 3PAR for $1.6 billion was probably to be expected, given that there are not a lot of good storage assets to be acquired.

The offer came just one week after HP rival Dell said it planned to acquire 3PAR for $1.15 billion in a move that would give it enterprise-class storage virtualization technology.

"$1.6 billion is a lot of money to pay for a $200 million storage company that is not growing," Burton said, referring to 3PAR. "We paid $2.1 billion for Data Domain. That was a rocket ship. 3PAR has stalled."

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3PAR in July reported first quarter 2011 revenue of $54.3 million, up 22 percent over the $44.5 million it reported in the same period of 2010. However, the company reported a loss of $1.8 million, which was the same as the loss reported last year.

Burton and EMC know about bidding wars over technology-focused companies. EMC last year acquired data deduplication vendor Data Domain for $2.1 billion after a protracted bidding war with NetApp.

NetApp started the bidding two months prior to that at $1.5 billion.

Dell saw an opportunity to grab 3PAR while HP was distracted by the firing of its CEO, Mark Hurd, Burton said.

Hurd was fired this month after a scandal involving poorly filed expense reports and an investigation into sexual harassment involving an actress who contracted as a greeter at HP functions.

"It will be interesting to see who blinks first, HP or Dell," Burton said. "$1.2 billion is a lot of money. $1.6 billion is a lot more. As you get closer to $2 billion, you have to ask, what are we getting? A rocket ship like VMware or Data Domain?"

Both Dell and HP have been talking about converged infrastructure, or converged storage, but 3PAR would take either buyer in the wrong direction, Burton said.

"The world is not block data, which is what 3PAR is," he said. "The world is block and file data, SAN and NAS."

Furthermore, Burton said, acquiring a company like 3PAR is the easy part. "There's a lot of work to do to integrate the technology," he said.

The real winner in the bidding war is 3PAR, Burton said. "I imagine the 3PAR guys are throwing a party," he said.