Like EMC, HP pushes around smaller rival in bidding war

In May 2009 NetApp triumphantly announced a $1.5 billion deal to purchase Data Domain, but was quickly outbid by EMC

The HP/Dell bidding war over storage vendor 3Par is shaping up to be a repeat of last year's high-profile battle between EMC and NetApp.

In May 2009 NetApp triumphantly announced a $1.5 billion deal to purchase Data Domain, but was quickly outbid by EMC. Although NetApp raised its bid to $1.9 billion, EMC eventually won the seven-week bidding war with a $2.1 billion offer that provided a key victory over its smaller rival.

Tech M&A deals of 2010

Fast forward to August 2010, and HP has offered $1.6 billion to purchase 3Par, topping Dell's bid of $1.15 billion. If the HP/Dell contest follows the same pattern, Dell will soon raise the bid closer to $2 billion. (See also: Five technology bidding wars preceding EMC vs. NetApp.)

"The strategic value of 3Par to Dell is such that it wouldn't surprise me to see Dell come back with a counteroffer," says Pund-IT analyst Charles King. "3Par is going to go to whichever company has the stomach to stick with the bidding."

Like EMC, HP is trying to push around a smaller competitor. HP reported more than $30 billion of revenue in the most recent quarter, compared to $15.5 billion for Dell. But while the HP/Dell situation is similar to the EMC/NetApp bidding war of 2009, there are some key differences.

At the time of the Data Domain bidding war, EMC reportedly had $7 billion in cash reserves, compared to $2.7 billion for NetApp. According to YCharts, HP has $14.17 billion cash on hand, compared to Dell's $10.88 billion.

While HP clearly has more money to spare in the contest for 3Par, Dell has a much larger cushion than NetApp did when it was pursuing Data Domain.

HP is also in a precarious position with shareholders, partly due to CEO Mark Hurd being forced out of the company in the wake of sexual harassment accusations.

"If HP pushes this too far, they're going to have to come up with some very solid justification," King says. "3Par is a highly innovative company, but this is still a fairly young market. The payoff is further down the road than a deal for a well-known entity like, say, NetApp would be."

But even if one assumes that Dell is in a better position vs. HP than NetApp was vs. EMC, there is still at least one other consideration: 3Par isn't the only option for either HP or Dell.

EMC and NetApp seemed to believe that Data Domain was far and away the best option in the data de-duplication market. 3Par is attractive to HP and Dell because of its thin provisioning and virtualized storage technology. But there are other vendors offering cloud-centric, highly virtualized storage systems (Isilon and Compellent are two examples).

Thus, if either HP or Dell believes the price for 3Par is too high, they may be less gung ho than EMC and NetApp were over Data Domain because they have other options.

"There are other companies in this space," King says. "3Par wasn't alone."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesDellstorageemcData Centerhardware systemscorporate issuesnetappacquisitionsmergers3PARPund-ITMergers / acquisitionsConfiguration / maintenanceStorage Management

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jon Brodkin

Network World
Show Comments


James Cook University - Master of Data Science Online Course

Learn more >


Victorinox Werks Professional Executive 17 Laptop Case

Learn more >



Back To Business Guide

Click for more ›

Brand Post

Bitdefender 2018

Roam freely in the digital world. Critically acclaimed performance and security at your fingertips.

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?