Dell sees 3Par as doorway to cloud projects

Dell sees 3Par as doorway to cloud projects

The company sees 3Par's technology as valuable but expects to survive in storage if HP wins the bidding

Dell believes an acquisition of high-end storage vendor 3Par would help it gain a foothold in large enterprises moving toward cloud computing, but it doesn't think Hewlett-Packard would necessarily steal away customers if it buys 3Par instead.

"If you look at a lot of our customers, they are buying high-end systems, and in some cases they choose the high-end systems first, and then they choose the midrange and the low-end systems," said Praveen Asthana, vice president of enterprise solutions and strategy, during a question-and-answer session after a Dell press event in San Francisco on Friday morning. Asthana participated via conference call because he couldn't travel in the midst of the acquisition battle.

Dell and HP's war over 3Par continued on Friday as the bidding hit the US$2 billion mark. Asthana spoke after HP had raised its offer to US$30 per share, or $2 billion, surpassing Dell's bid of $27 per share. 3Par has not accepted HP's latest bid. Dell kicked off the bidding on Aug. 16 when it announced it had agreed to buy 3Par for slightly more than $1 billion.

3Par makes scalable, modular storage platforms with thin provisioning, which can allocate just the amount of storage that an application needs, leading to greater efficiency. Analysts believe owning it would help Dell expand its presence in large enterprises.

Asked why Dell would invest so much money in a high-end storage business despite a weak forecast for global sales growth in that category, Asthana said there is "a healthy market" in high-end storage, in addition to its potential to pull in sales of less expensive products. 3Par's technology is also well-suited to enterprises consolidating and virtualizing their data centers to ultimately deliver IT as a utility, he said. Specifically, 3Par's platform lends itself to multitenant storage for services such as cloud computing, he said.

"3Par is uniquely qualified in providing that kind of a storage technology right now," Asthana said. "There are very few other companies available to purchase."

However, Asthana does not expect all its storage customers to flock to another vendor, such as HP, if Dell doesn't get 3Par. Dell is increasing its sales of lower-end storage gear, such as its EqualLogic line, without even having high-end storage like 3Par's today, he said.

"It's not that if we don't have really high-end storage, they're going to leave us," Asthana said.

Research firm IDC estimates the market for high-end storage platforms -- defined as systems that cost $250,000 or more for the initial hardware purchase -- will decline over the next four years. It forecasts $4.8 billion in sales in the category this year, falling to just $4.2 billion in 2014, IDC analyst Rick Villars said.

However, that figure doesn't reflect the whole picture, Villars said. High-end storage is becoming more modular, so enterprises can buy systems over time, in parts that cost less than the $250,000 cutoff price, he said.

Dell needs a high-end offering because it has to be able to supply all the parts of a data center to compete with other big vendors, Villars said.

"In [enterprises] that are doing data-center transformation, it's about having the complete portfolio," with the vendor putting together the pieces, Villars said. "If you're missing one of the pieces, you're not just missing a storage opportunity, you're missing a full IT system opportunity."

However, Villars agrees that all is not lost if Dell loses out in its quest for 3Par. There are smaller, less established vendors that might bring similar capabilities to Dell. Dell could also emulate other vendors such as Cisco Systems, which are building complete data-center portfolios partly through partnerships, he said.

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Tags business issuesDellstorageHewlett-Packard3PARMergers / acquisitions



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