The 3PAR buy - a case study in cloud exploitation

Storage

by | 03 September 2010

The real point of the 'battle' to acquire storage minnow 3PAR by the HPs and Dells of the world?

The real point of the 'battle' to acquire storage minnow 3PAR by the HPs and Dells of the world? This little guy has played its way to the top table more through canny PR and marketing than engineering brilliance and if there's any justice in the world, it's that department that should be getting the upside from the deal more than the techies.

If you're not up to speed, the story so far: in the past week the two bigger firms have been in a bidding war for the cloud storage firm that's seen the bid price double, from when the 'auction' began 2 weeks ago, from $15 to the closing $33, making the sale worth a cool $2.1bn.

3PAR has to pay a 'sorry we messed you about fee' of $72m - like it cares; its stock price has tripled over the course of the bid process.

So what's happened here? 3PAR managed to turn itself from basically an obscure enterprise storage firm into, wow, a cloud storage firm!! We are all by now well used to the fact that yesterday's ASP or SaaS or managed hosting solution is today's cloud-y trendy thing - I now think we can put this transaction down as an MBA business school case study of bandwagon jumping.

Even as staid an observer as US business mag Forbes has been snickering at the foolishness of the take-over, arguing with some basis, I think, that the boards of HP, Dell and the market have been swayed less by numbers and cold logic than by less scientific factors: "It's hard to avoid the observation that the bidding between Dell and HP was tinged with testosterone. Had investors thought all the back-and-forth involved something as pedestrian as 'enterprise storage,' there probably would have been a revolt. But since the fight was over 'cloud computing,' no one complained. Like small children at bedtime, Wall Street likes to be told a comforting story".

This is what I mean when I say 3PAR's played a good game here. Indeed, CBR was to some extent 'played' as well. We spoke to 3PAR's CEO David Scott as recently as late July and there was no hint whatsoever of any kind of play being in motion. Indeed, Scott went out of his way to disparage the big boys, and I quote: "The HPs, HDSs and IBMs? They are watching us take market share off them... My mission this year as CEO is in fact to re-ignite growth and we will be making significant investment in sales and marketing to do help do that."

I and I am sure readers took that as a commitment to growing his firm and maintaining independence, now hawking it around the very big boys he'd mocked. But so what? Scott's job is to deliver shareholder value and the last few days have shown that he has been triumphal in so doing. Hats off to the bloke.

So, memo to all tech firm CEOs: if you think you can wangle a Cloud angle, get on the auction block now - riches await! The window of opportunity won't last for ever.

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