Dell Inc. says it will not match Palo Alto-based Hewlett-Packard’s offer to pay $33 per share for 3Par Inc., or about $2.07 billion.

Probably will write more later Been a busy morning.

From 3PAR -

HP’s revised proposal of $33 per share values 3PAR at approximately $2.4 billion

Although 3PAR previously notified Dell of its intention to terminate its merger agreement with Dell, the merger agreement was not terminated and remains in full force and effect. Following 3PAR’s notice of intent to terminate the merger agreement, and prior to receiving HP’s revised acquisition proposal, 3PAR received a revised acquisition proposal from Dell in which Dell increased its offer price from $27 per share to $32 per share. Dell’s revised acquisition proposal also included an increased termination fee of $92 million payable by 3PAR to Dell as a condition to accepting a “superior proposal,” and a multi-year reseller agreement with Dell, which would by its terms be assumed by an acquirer of, or successor in interest to, 3PAR in the event of a change in control of 3PAR (including the acquisition of 3PAR by HP or another third party), and which contained fixed pricing and other terms that the 3PAR board of directors determined to be unacceptable.

So it sounds given the length of time that elapsed for Dell to get this new deal done and how decisive HP has been, Dell likely won’t come back again, and will instead rely on the reseller agreement to get 3PAR technology on the side. Interesting strategy,

I wonder if HP will try to terminate that, even if it means going to court just to block Dell from capitalizing on their pending investment. I would put money down that they will.

If they don’t I wonder how it will make Dell’s customers feel buying HP product from Dell? I mean with all of the sparkling HP logos plastered all over it.

I also believe Dell is putting the final nails in the coffin with their partnership with EMC with this move. EMC has a lot to lose if both HP and Dell are pitching 3PAR technology to their respective customers.

Just goes to show the value that 3PAR brings to the table.

(edited to strike out references to the reseller agreement since I obviously read too quickly before posting, just shows how excited I am I guess!! (not uncommon!) )

These technology advances should make enhanced sales of 3PAR systems more justifiable, enabling HP to recoup its $2bn investment by increasing InServ sales against EMC, HDS and IBM competition. Donatelli will be able to dangle his 3PAR prize in front of HP’s board and assert his credentials to be the next HP CEO, having demonstrated, he might say, authority, decisiveness, strategic thinking, determination and effectiveness, without over-paying for the 3PAR asset.

Hewlett-Packard has raised its bid for 3PAR to $33 a share; Dell also offered a higher price and negotiated a higher breakup fee

What it seems like is at the last minute Dell finally came through with something around $30/share, sounds like they really struggled to get that one through. HP of course being decisive came back immediately with $33/share.

Here is another article that says the reason why the bidding is so intensive is 3PAR is the only game in town, there is no room for second best -

Looking at the landscape, 3Par is the only real alternative to EMC and Hitachi in terms of high end storage.  EMC has its own ambitions for data center dominance, while HDS is part of a much larger conglomerate.  If you believe you need to own storage and server, both to fulfill the vision above and to avoid partnering with a competitor, than 3Par is the only place to get this type of deep high end storage technology.  Given HP and Dell have a much larger sales channel than 3Par, these guys can immediately double, triple or quadruple sales from 3Par products overnight once it is part of their catalogue.  Both reasons afford the premium we are seeing.

In fiscal 2010 (ended January 31^st), Dell spent $617 million for R&D, or 1.2% of sales [..] an R&D budget like that isn’t going to cut it.

[..]Hewlett Packard, the larger company, already has more going on. In the trailing 12 months, it spent $2.849 billion here, or 2.3% of sales.

[..] Assuming both want to stay relevant five years hence, 3Par looks like it will be a bargain for whichever firm wins this bidding war and likely there will be some incredibly long and tense meetings in the conference rooms of the firm that loses.

And another link from Data Center Knowledge to the Boston Globe, which says something I don’t really agree with -

EMC has also partnered with Dell to allow the computer company to resell high-end network storage products made by EMC. But that arrangement would be severely tested if Dell winds up buying 3Par, giving Dell its own high-end storage provider.

For that reason Kerravala said EMC will most likely fare better if HP ends up winning the 3Par bidding war.

“At least that will preserve EMC’s partnership with Dell,’’ he said.

In the short term it will of course preserve the EMC partnership, but the rift has been created by Dell, showing EMC it’s not willing to sit by and just refer sales along to the EMC direct sales team much longer. I’m sure EMC realizes it’s days are numbered as a tight partner with Dell(hence it’s partnership with Cisco UCS which I’m sure didn’t make Dell a happy camper).

I don’t see Dell going to HDS if they lose out on 3PAR, they probably wouldn’t look that hot if they went to HDS’s arms so soon after HP and Sun/Oracle ditched them.

3PAR^® (NYSE: PAR), the leading global provider of utility storage, today announced its board of directors has determined that the unsolicited proposal by Hewlett-Packard Company to acquire all of 3PAR’s outstanding common stock at $30 per share constitutes a “superior proposal” (as that term is defined in 3PAR’s previously announced merger agreement with Dell). The 3PAR board of directors notified Dell of its intention to terminate the merger agreement with Dell, immediately following the expiration of the three business day period contemplated by, and the satisfaction of the other conditions set forth in, the merger agreement with Dell, in order to enter into the merger agreement with HP on the terms set forth in HP’s acquisition proposal.

CNBC looked at a couple of past storage deals to compare the valuations of them vs the current deal:

• HP’s latest bid is 8.5 times 3PAR’s current projected revenue, 10 times last year’s revenue
• Dell paid 10 times revenue for Equallogic back in 2007; valuation now looks smart
• EMC paid 8 times revenue for Data Domain last year  (too early to tell how it’s working out according to CNBC)

Tick, tock Dell. Throw in the towel go after Compellent or Pillar or maybe even Xiotech.

Looks like 3PAR announced a pretty big deal which has 3cV in it, expecting a lot more in the future!

With this new partnership, Nissho adds a disaster recovery (DR) solution to its enhanced service offerings, which currently include public cloud development and a private cloud environment service based on 3cV. “3cV” is a proven blueprint for the virtual datacenter featuring the combination of 3PAR Utility Storage, HP^® BladeSystem c-Class Server Blades, and VMware vSphere^™. This solution is designed to enable improved server efficiency and to enhance service levels in private cloud datacenters. All the cloud service-focused products that Nissho offers, including those based on 3cV, are available at the company’s CloudNagivate Center, Nissho’s private technology verification center where customers can verify the operation and performance of a cloud-based infrastructure built on 3PAR technology.

Dell simply doesn’t have an answer to HP’s c Class blades.

I think Force10 is way too verbose in choosing the phrase to describe their company, it’s quite a mouthful -

Force10 Networks, Inc., a global technology leader that data center, service provider and enterprise customers rely on when the network is their business[..]

I like Force10, I have been watching them for five years now, I just think any phrase you choose to describe your company should be short enough to say it in one (casual) breath.

How about “Force10 Networks Inc., a global networking technology leader”.

Force10’s marketers are very nice folks I’ve sent them two corrections over the years to their web site(one concerning the number of ports a competitor offers in their products, the other with a math error in a graphic showing much you can save on their products), they were very kind and responsive(and fixed both problems pretty quickly too). This one I won’t send to them directly since it’s more than a cosmetic change

So often these mergers come about usually about industries and companies I have no interest in and can’t really gauge whether the analysts know what they are talking about.

This one is different of course as a user of 3PAR products for the past 3 years or so I know their stuff inside and out. And I’m constantly looking out for other interesting technologies.

Here’s several videos

• Squawk Box 3PAR discussion – talking about the unique urgency in the bidding for 3PAR.
• Squawk On the Street Faber report – Just talking about the bids, not much else
• Morning Call 3PAR discussion – They talk about this being about the cloud, and how HP has some presence in the cloud, and Dell has none, and Dell is desperate to get a presence there.
• Power Lunch 3PAR discussion – Was 3PAR taken public with the express purpose of finding a buyer?
• Street Signs 3PAR Discussion – This time it’s personal.
• Closing Bell 3PAR Discussion – is 3PAR worth more than $30/share ?

PALO ALTO, Calif., Aug 27, 2010 (BUSINESS WIRE) — HP /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 37.66, -0.56, -1.47%) today announced that it has increased its proposal to acquire all of the outstanding shares of 3PAR Inc. /quotes/comstock/13*!par/quotes/nls/par (PAR 31.71, +5.68, +21.82%) to $30 per share in cash, or an enterprise value of $2.0 billion. The proposal represents an 11 percent premium above the most recent price offered by Dell Inc. of $27 per share. HP’s proposal is not subject to any financing contingency and has been approved by HP’s board of directors. Once approved by 3PAR’s board, HP expects the transaction to close by the end of the calendar year.

Cut your losses and run Dell. Go buy Compellent.

• Phase out current USP-based XP line with the enterprise 800-series of 3PAR systems, currently the T800
• Phase out the EVA Cluster with the enterprise 400-series of 3PAR systems, currently the T400
• Phase out the EVA 6400 and 8400 with the mid range 400-series of 3PAR systems, currently the F400
• Phase out the 3PAR F200, replace it with the EVA 4400-series
  

I’m sure this is all pretty obvious but it gives me something to write about

Why the changes to the EVA offerings and dropping of the F200 from 3PAR? To me, it all comes down to the 4 node architecture that 3PAR has, and the ability to offer persistent cache.

3PAR Persistent Cache is a resiliency feature designed to gracefully handle component failures by eliminating the substantial performance penalties associated with “write-through” mode. Supported on all quad-node and larger InServ arrays, Persistent Cache leverages the InServ’s unique Mesh-Active design to preserve write-caching by rapidly re-mirroring cache to the other nodes in the cluster in the event of a controller node failure.

(click on images for larger version)

Persistent cache allows service providers to operate at higher levels of utilization because they know they can maintain high performance even when a controller fails(or if two/three controllers fail in a 6/8 node T800 as long as they are the right nodes!), one of my former employers has a bunch of NetApp stuff, and I’m told they run them pretty much entirely active/passive, so as to protect performance in the event a controller fails. I’m sure that is a fairly common setup.

This is also useful during software upgrades, where the controllers have to be rebooted, or hardware upgrades (adding more FC ports or whatever).

Another reason is the ease of use around configuring multi site replication, and the ability to do synchronous long distance replication on the mid range systems.

3PAR^® is the first storage vendor to offer autonomic disaster recovery (DR) configuration that enables you to set up and test your entire DR environment—including multi-site, multi-mode replication using both mid-range and high-end arrays—in just minutes.

[..]

Synchronous Long Distance replication combines the best of both worlds by offering the data integrity of synchronous mode disaster recovery and the extended distances (including cross-continental reach) possible with asynchronous replication. Remote Copy makes all of this possible without the complexity or professional services required by the monolithic vendors that offer multi-target disaster recovery products, and at half the cost or less.

I can understand why 3PAR came up with the F200, it is a bit cheaper, the only difference is the chassis the nodes go in, the nodes are the same, everything else is the same. So to me it’s a no brainer to spend the extra what 10-15% up front and get the capability to go to four controllers even if you don’t need that up front. Takes an extra 4U of rack space. If you really want to be cheap, go with the small 2-node EVA.

I find it kind of funny that on the main page for EVA, the EVA-4000’s blurb for what it is “Ideal for” is blank.

Assuming HP gets them, which I am optimistic will occur. This is what I think HP should do.

* Phase out current USP-based XP line with the 800-series of 3PAR systems, currently the T800
* Phase out the EVA Cluster with the enterprise 400-series of 3PAR systems, currently the T400
* Phase out the EVA 6400 and 8400 with the mid range 400-series of 3PAR systems, currently the F400
* Phase out the 3PAR F200, replace it with the EVA 4400-series

I’m sure this is all pretty obvious but it gives me something to write about

Why the changes to the EVA offerings and dropping of the F200 from 3PAR? To me, it all comes down to the 4 node architecture that 3PAR has, and the ability to offer persistent cache.

3PAR Persistent Cache is a resiliency feature designed to gracefully handle component failures by eliminating the substantial performance penalties associated with “write-through” mode. Supported on all quad-node and larger InServ arrays, Persistent Cache leverages the InServ’s unique Mesh-Active design to preserve write-caching by rapidly re-mirroring cache to the other nodes in the cluster in the event of a controller node failure.

(click on image for larger version)

Persistent cache allows service providers to operate at higher levels of utilization because they know they can maintain high performance even when a controller fails(or if two controllers fail in a 6/8 node T800 as long as they are the right nodes!), one of my former employers has a bunch of NetApp stuff, and I’m told they run them pretty much entirely active/passive, so as to protect performance in the event a controller fails. I’m sure that is a fairly common setup.

Another reason is the ease of use around configuring multi site replication, and the ability to do synchronous long distance replication on the mid range systems.

I can understand why 3PAR came up with the F200, it is a bit cheaper, the only difference is the chassis the nodes go in, the nodes are the same, everything else is the same. So to me it’s a no brainer to spend the extra what 10-15% up front and get the capability to go to four controllers even if you don’t need that up front. Takes an extra 4U of rack space. If you really want to be cheap, go with the small 2-node EVA.