Business

3PAR bidding war between Dell, HP heats up

Friday, August 27, 2010

There is a furious bidding war by two computer rivals to buy a small Fremont company even though everybody else is talking about the recession. The bidding war is over 3PAR, a company that makes servers and software to allow large amounts of data to be stored and retrieved.

It is all due to a big change already happening in computing. Soon people will not be storing e-mail, documents or even movies and music on a hard drive. Instead, it will be stored and managed in a massive storage facility accessed online. Dell and Hewlett-Packard see the writing on the wall and they want to make money by providing that service. They are both hoping 3PAR can make that happen.

Dell thought it had a deal at $18 per share. Then HP offered more, triggering a series of counter offers. The latest has HP paying $30 per share, or close to $1.9 billion.

"These two companies want it, they think it's valuable enough that they're willing to keep ratcheting it higher, they can afford to do so without hurting their balance sheets and so they continue to go at it," Barrons.com tech blogger Eric Savitz said.

Dell and HP are both trying to expand into the fast-growing tech field of cloud computing. They would use 3PAR's technology to create data centers where consumers and companies can consolidate their information so it is accessible anywhere, on any device.

It is growing into a lucrative business. About $16.5 billion was spent on cloud computing last year. Four years from now, spending is expected to more than triple to $55 billion.

Palo Alto-based VMWare is a major player in cloud computing, helping companies move to the cloud. Chief Marketing officer Rick Jackson says the field is exploding because of how people are using their computers and mobile devices.

"I use my phone to get my e-mail, I use my phone to keep up with friends and family on Facebook, and I have all kinds of information and applications that I access via my phone. When I go home, I put my phone away, and I pull out my iPad, and I have the same applications, the same information all available to me because it's no longer stored on the devices, it's stored up in the cloud," Jackson said.

Dell and HP have tens of billions of dollars in cash on hand to acquire 3PAR. With HP's $30 bid the highest at the moment, the next move is Dell's.

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fremont, silicon valley, hewlett packard, business
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