Both HP and Dell are at a crossroads – from the companies they were to the companies they will inevitably become.
Both are solidly focused on a future that is largely dominated by the concept of Cloud Computing and both are now accepting that this future will have a significant software component.
At the core of this change is a little company named 3Par who appears to be worth only a fraction of what is being bid.
However, it isn’t what the firm is capable of alone that is driving the price.
No, it is the strategic advantage the firm’s software will give to the winner against not only each other, but larger firms such as Oracle, IBM, and the mega-partnership Acadia.
Let’s explore that for a moment.
Cloud Computing is believed to be the next big wave in corporate technology buying and it is at the core of the virtual desktop so it could also redefine products that range from PCs to iPads and Smartphones.
It promises low cost, secure, and appliance like computing in what appears to be a blend of the best of the mainframe terminal world of appliances, and the flexible power of PCs.
In short, the company or consortium that gets this right, and no one does yet, could own much of the next computer wave and even Google and Microsoft are chasing this opportunity.
3Par has been identified as the company with a keystone product that resides between two of the key components of a successful Cloud offering, the servers and the storage.
It is reported to provide a massive improvement in the effectiveness of the resulting solution – potentially cutting costs and increasing the related return by up to 50%.
If this holds up, and you would expect that both Dell and HP would have researched this heavily, the end result would be a solution which, for the same price as a competing offering, would provide substantially more value.
In addition to Oracle (Snorkle) entering this segment and IBM shifting Software to the lead position ahead of hardware; coupled with VMware and Microsoft playing pivotal roles in this emerging future – both HP and Dell have a serious need to increase their software presence.
For Dell this is to help change their image from one of an aging PC company to that of a cutting edge Cloud Computing solution provider, and for HP it is to who they can keep up with Oracle and IBM who are now making HP look like they missed the software meeting.
Both firms see 3Par as key to their future and neither is willing to let the other take that future from them.
Clearly, Michael Dell is personally invested in this and driving the bidding produces in a no prisoners approach to the acquisition. However, HP doesn’t have a CEO at the moment and is undoubtedly looking for someone who both can be more strategic than Hurd was and has a sharp focus on the future of Cloud Computing.
Dave Donatelli has emerged in this battle as HP’s front man and may either become their next CEO or Heir Apparent as a result of this move. In short, for HP, win or lose the battle has already had a significant impact on moving HP more aggressively to the future they are targeting.
3Par may look like a war but it is really only the opening salvo in what likely will be a global conflict between emerging Cloud Computing competitors the like of which we haven’t seen since the Internet Boom.
Each of these companies are fighting for the top spot in the next wave of computing which will likely change everything we know about how things will be done in the future.
Neither HP nor Dell will give up this initial fight easily but later battles could become even more bloody because when you are fighting for your future you can’t afford to give any ground in the present.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently, he provides his services to most of the major technology and media companies. The opinions expressed in this commentary are solely those of the writer.