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Dell's 3PAR Termination Fee Could Fuel Storage Acquisition


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Dell may have lost to HP in the bidding for 3PAR, but its $72 million booby prize suddenly looks like a nice down payment on another up-and-coming storage company. Still primarily known for its PC offerings, Dell has been moving more aggressively into IT services, spreading out with servers and making its big move by acquiring Perot Systems for $3.9 billion last year.

Dell already has a substantial storage operation buttressed in large part by a partnership with EMC, which has supplied some 25% of Dell's storage offerings. The importance of storage was underscored Friday by a report from market researcher IDC, which said external data storage systems jumped 20% in the second quarter, indicating that the surge toward cloud computing is accelerating. According to the IDC report, Dell placed fifth in the external storage sweepstakes with 9.4% of the market. EMC held a substantial lead over its competitors with a 25.7% market share of total revenue with IBM recording a 13.6% market share. Next, in a statistical tie with 11%, were HP and NetApp.

3PAR, the object of a heated auction between HP and Dell, holds a 0.6% share of the market, according to IDC. "Although the first half of 2009 was extremely weak due to the economic crisis," said IDC analyst Liz Conner in a statement, "the gain from a relatively strong second half of 2009 shows continued customer investment and importance placed in the storage systems market."

Dell has been recovering from a series of accounting scandals and a victory in the competition for 3PAR would have been a sign it is recovering and committed to the IT services market. While the $72 million termination fee could help in another acquisition, the auction itself caused the stock prices of other small storage companies to rise.

FURTHER READING:

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HP Looks To Deny Dell Access To The Data Center

Dell Builds Out Virtualized Server Management

Dell Drops Manufacturing Focus In Surge For Services