Dell To Acquire 3PAR For $1.15 Billion

EMC's status as Dell's longtime storage partner is unclear, but adding 3PAR's high-end data storage offering may boost the PC maker's moves into IT services and cloud computing.

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Moving deeper into IT services and cloud computing, Dell Inc. said Monday that it plans to buy 3PAR Inc., a high end data storage company, for $1.15 billion.

Best known for sales of PCs to enterprises and consumers, Dell has been muscling its way into IT services since it acquired Perot Systems for $3.9 billion last year. The 3PAR deal follows Dell's 2007 $1.4 billion acquisition of EqualLogic, which gave Dell a solid storage base, but on a lower end than 3PAR's.

Dell is betting that 3PAR's thin provisioning approach, which treats storage as a utility, will result in a big payoff for the firm and its customers. The combination of thin provisioning and virtualization, Dell indicated, can overcome the limitations of traditional modular and monolithic arrays.

"3PAR addresses the problem of costly, complex, and rigid IT environments and enables organizations to treat storage as a utility," said Dell in a release, adding that customers need to pay only for "the capacity and performance they need, and only when they use it."

3PAR's technology utilizes a multi-tenant clustered storage architecture, which helps IT organizations build virtualized infrastructures. 3PAR has long maintained that its thin provisioning approach enables customers to better predict performance as they face storage capacity requirements that always seem to be increasing.

It was not immediately clear what impact, if any, the deal with 3PAR will have on Dell's longtime partnership with EMC on storage, which represents about 25% of Dell's total storage business, according to industry research estimates. Dell said it plans to integrate 3PAR into its storage portfolio including its Dell/EMC products. Dell added: "With 3PAR. Dell will offer innovative systems and customer choice at every storage tier, from direct-attach to highly-virtualized clustered SANS."

Dell said it believes a 3PAR acquisition will help Dell reduce data management costs dramatically, creating additional space in customer budgets for other strategic investments.

"We have aligned our storage offerings over the last several years to provide our customers choice and value," said Dell's Brad Anderson, senior vice president of Dell's enterprise product group, in a statement. "3PAR brings the same values of performance, agility and ease-of-use to higher end, virtualized storage deployments as EqualLogic does for the entry-level an mid-range, rounding out our industry-leading solutions portfolio."

3PAR's chief executive David Scott said the acquisition is a good fit, because his firm's storage solutions will complement Dell's distribution network.

Dell paid dearly for 3PAR, offering $18 a share for the firm, whose stock was last traded at $9.65 a share on Friday. The purchase price represents an 87% premium. The firms said they expect the acquisition will be completed by the end of the year.

In explaining 3PAR's value to boost Dell's cloud computing offerings, Dell said the storage firm's acquisition will help Dell achieve its goal of reducing customer data management costs by 50%. 3PAR has valuable virtualization solutions that should help Dell's customers trim power and energy costs as they adopt cloud computing more aggressively.

The acquisition will help Dell as it competes more aggressively with Cisco, EMC, HP and IBM, all of which have strong positions in IT services and cloud computing.

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Evan Schuman, Contributing Writer, Dark Reading
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