The Bidding: HP and Dell Fight for 3Par

There is a fight this week, and the fight is the bidding: the two weeks in which Dell and Hewlett-Packard chased the storage maker 3PAR, the offers that crossed in the night, the price that more than doubled, the $33 per share that HP agreed to pay on Thursday, the $2.35 billion that won the prize. The fight is the first great bidding war of the cloud era, and the war is the signal: storage and the datacenter were strategic, the cash-rich technology companies were spending again, the crisis hangover was over. The bidding war is the September 2010 story, and the story is the lesson: the storage maker that became the prize, the commodity hardware that the buyers were trying to escape, the two weeks that changed the price of the datacenter.

The bidding is the subject of this article: what HP announced on Thursday, who started the fight, why 3PAR was worth the chase, and what the two-week war means.

1. The Victory on Thursday

The victory is the news, and the news is the Thursday: the September 2 agreement from Hewlett-Packard, the $33 per share in cash, the approximately $2.35 billion for the storage maker 3PAR. The victory is the end of the fight: the offer that was up from HP's first bid of $27 a share, the counter that Dell could not match, the deal that was done, the winner that was declared. The victory is the moment: the bidding war that stopped, the analysts who reached for the calculators, the headlines that ran that hour.

The victory is also the beginning: the price that was paid, the storage company that must deliver, the integration that will be watched, the questions that have not been answered. The victory is the September 2010 context: the HP that wanted out of commodity hardware, the storage that was where the money was, the prize that was finally won. The victory on Thursday was the close, and the close was the story: the two-week war that ended with a number, the $33 that will be remembered, the fight that defined the week.

2. The Two-Week War

The war is the bidding, and the bidding is the timeline: the $18 a share that Dell offered on August 16, the $27 that HP answered on August 23, the $24.30 that Dell raised on August 26, the $30 that HP countered on August 27, the $32 that Dell put up in September, the $33 that HP made final on Thursday. The war is the arithmetic: the price that more than doubled in two weeks of bidding, the offers that climbed by the day, the premium that grew with every counter, the number that started at $18 and ended at $33.

The war is also the speed: the two weeks that took the price from $18 to $33, the bids that crossed before the ink dried, the boards that met on short notice, the bankers who worked the phones. The war is the escalation: the Dell that started the fight, the HP that would not lose it, the stakes that rose with each round, the two companies that refused to blink. The two-week war was the drama, and the drama was the point: the storage company that two giants wanted, the price that their wanting made.

3. The Storage Maker

The maker is the company, and the company is 3PAR: the maker of high-end storage arrays, the pioneer of utility storage, the inventor of thin provisioning, the early name in cloud storage. The company is the scale: the small firm with a few hundred employees, the roughly $200 million in revenue, the enterprise customers who bought the arrays, the technology that the big vendors had to chase. The company is the craft: the years of building, the storage that was sold to the data centers, the engineering that made the arrays special, the value that the bidding revealed.

The company is also the surprise: the little storage maker that two of the biggest hardware companies fought over, the name that few consumers knew, the firm that the market had valued at a fraction of the final price. The company is the proof: the storage that was where the money was in enterprise IT, the pioneer that the giants had to own, the small company that the bidding made famous. The storage maker was the target, and the target was the lesson: the technology that mattered, the company that the war was about, the prize beneath the numbers.

4. The Prize

The prize is the storage, and the storage is the money: the arrays that hold the data, the systems that the enterprises depend on, the market where the margins live, the place where the datacenter spends. The prize is the strategy: the storage that was where the money was in enterprise IT, the high end that 3PAR served, the customers who paid for reliability, the revenue that the hardware makers envied. The prize is the escape: the commodity servers that sold for pennies, the boxes that any maker could build, the margins that had disappeared, the storage that promised a way out.

The prize is also the future: the datacenter that was becoming the battleground, the cloud that was being built, the storage that would sit at the center of it, the arrays that the winner would own. The prize is the message: storage and the datacenter were strategic, the infrastructure was the war, the data was the treasure. The prize was the storage maker, and the storage maker was the point: the high-end arrays, the utility storage, the technology that two giants were willing to pay for.

5. The Buyers

The buyers are the rivals, and the rivals are the giants: the Dell that started the fight with $18 a share, the Hewlett-Packard that would not be beaten, the two companies that defined the PC era, the two that were now chasing the datacenter. The buyers are the motive: the commodity hardware that squeezed both, the servers that anyone could assemble, the margins that kept falling, the escape that storage promised. The buyers are the strategy: the HP that wanted the high end, the Dell that wanted the enterprise, the two companies that saw the same prize and bid against each other for it.

The buyers are also the change: the hardware makers who were becoming infrastructure companies, the sellers of boxes who wanted to sell systems, the giants who were spending again, the cash that was finally out of the mattresses. The buyers are the fight: the offers that crossed in two weeks, the $18 that became $33, the war that they waged over a few hundred employees and their arrays. The buyers were the story, and the story was the signal: the cash-rich technology companies were spending again, and the datacenter was where they would spend.

6. The First Bidding War of the Cloud Era

The war is the label, and the label is the era: the first great bidding war of the cloud era, the fight that the analysts would remember, the template that the coming years would follow. The war is the message: storage and the datacenter were strategic, the infrastructure mattered, the companies that held the data would hold the power. The war is the reading: the September 2010 moment, the recovery that was real, the spending that was back, the crisis hangover that was over.

The war is also the omen: the battles that would come, the acquisitions that would follow, the prices that would be paid for infrastructure, the years of consolidation ahead. The war is the significance: the small storage maker that two giants fought over, the price that doubled, the signal that the industry read. The first bidding war of the cloud era was the beginning, and the beginning was the point: the datacenter was the prize, and the giants had noticed.

7. The Questions

The questions are the price, and the price is the debate: the $33 a share for a company with roughly $200 million in revenue, the $2.35 billion for a few hundred employees, the premium that the analysts argued over, the value that the market had to recalculate. The questions are the doubts: the storage maker that must deliver, the technology that must justify the price, the integration that HP must manage, the promise that must be kept. The questions are the week: the analysts who asked why the price kept climbing, the bloggers who watched each counter, the investors who wondered if the fight was worth it.

The questions are also the answer: the storage that was where the money was, the datacenter that was strategic, the war that the giants could not walk away from, the price that the prize demanded. The questions are the aftermath: the deal that still has to close, the loser that has to move on, the rivals that will have to find their own storage, the industry that will watch what HP does with the prize. The questions were the conversation, and the conversation was the story: the two-week war that everyone priced, the $33 that everyone argued about, the storage that everyone now watched.

8. The Lesson

The lesson is the shift, and the shift is the storage: the hardware that was once the commodity, that became the strategy, that is now the battleground of the datacenter, that two giants fought over for two weeks. The lesson is the war: the first great bidding war of the cloud era, the price that more than doubled, the signal that the industry could not miss. The lesson is the phrase: storage and the datacenter were strategic, the sentence that will be repeated, the thesis of the coming decade, the claim every vendor will borrow.

The lesson is also the spending: the cash-rich technology companies that were writing checks again, the crisis hangover that was over, the deals that would follow, the era that had begun. The lesson is the September 2010 story, and the story is the lesson: the Dell that started the fight, the HP that won it, the storage maker that became the prize, the two weeks that changed the price of the datacenter. The bidding war is the beginning, and the beginning is the year: the storage that will be watched, the datacenter that will be fought over, the era that the $33 a share announced.

# The Bidding: HP and Dell Fight for 3Par