Dell, HP and 3PAR: Who's Zoomin' Who?

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The dust has settled, HP will be the new owner of 3PAR in a few months, and now there's nothing left but the Monday-morning quarterbacking.

Is Dell washed up in the cloud market? Did HP overpay? And what does it all mean for other storage providers, namely IBM and EMC?

All good questions, and ones that will only be fully answered in time. But if I were to look into my crystal ball, I would say that 1) HP probably overpaid, but could turn things to its advantage with some innovative technology pairings; 2) Dell was right to walk away when the price got too high and is by no means out of the game yet; and 3) EMC is likely to maintain its dominant position in storage for a while longer.

On the surface, $2.4 billion seems like an extremely high price to pay for 3PAR. This is a company, after all, that commands less than 1 percent of the overall data-storage market, so from a raw market share perspective it leaves HP still locked in a three-way race for second place with NetApp and IBM.

But as PCWorld.com's Michael Ansaldo pointed out recently, the key thing to keep in mind is that the storage industry is on the verge of a complete makeover with the rise of cloud computing. In this new order, big-box storage systems won't matter as much as the ability to effectively provision and then reconfigure storage resources in response to changing data requirements. That's where 3PAR excelled, and its value to future storage revenues cannot be overstated. If HP can effectively integrate 3PAR into StorageWorks-and there's no reason to think it can't-then it will have a very flexible platform capable of accommodating all sorts of data environments.

To be sure, EMC and IBM are already pretty far along this road -- EMC by virtue of its relationship with VMware and IBM through a series of acquisitions over the past few years, including XIV, Storewize and others, all of which the company picked up for a lot less than $2.4 billion. So the cash HP is laying out for 3PAR is intended to maintain parity, not necessarily excel.

So where does all this leave Dell? Certainly not without options. There are a number of acquisition prospects out there that could easily provide the kind of storage management needed to compete in the cloud. Compellent comes to mind, having just extended support of its Fluid Data system to the vSphere 4.1 platform. Another is Isilon, which makes scale-out unified storage systems capable of supporting both block and file services. Both of these companies can be had at bargain prices compared to the 3PAR tab.

That the changes happening in the storage industry are playing out on Wall Street is no surprise. This happens to be one of the few bright spots in the global economy right now with sales surging some 20 percent in the second quarter. With that much blood in the water, the tendency is to get in on the action now and sort out the winners and losers later.