This morning's M+A news was equally as interesting as the news from a week ago: HP submitted a bid to top Dell's offer for 3PAR. And, if 3PAR trading prices are any indication, there's investor confidence that the price will go higher still.
When I wrote about Dell's bid last Monday, my central premise was "it's all about competing with HP, folks".
Turns out I was closer to the truth than I thought.
Some Good Commentary Out There Already
Stephen Foskett offered up his insight as to why HP was now playing for 3PAR in this post, and he's right -- the industry is in a battle for #2 behind EMC. Steve Duplessie offers up his quick multidimensional take, all spot on as usual, right here. And David Vellante points to all things cloud and service provider in his take.
While I wouldn't disagree with any of the thoughts presented in any of these posts, I would offer that -- first and foremost -- most of the commentators are missing a key formula when it comes to competitive M+A in consolidating segments.
(value of acquisition) = (revenue projections of acquisition) + (harm caused to your competitors)
Put differently, don't just look at who can make the most money from a proposed acquisition through scale of distribution, etc. You also need to look at what happens when you deny a competitor something they're after.
Not that I would ever have any background in any of this :-)
The World Through HP's Eyes?
As I mentioned before in my previous post, Dell and HP are squaring off against each other in desktops, servers -- and now storage. In Dell's hands, 3PAR not only represents a credible product, but the nucleus of a type of storage group they didn't get with the EQL transaction -- one that can sell to larger organizations.
Most people think that success in a given market is all about the technology, and that's true -- up to a point. But, ultimately, success in a given market usually has more to do with having the right people who understand that market segment. Technology alone is no guarantee of success.
If you're HP, you not only want to keep the technology out of Dell's hands, but you want to keep the organization and the people away from Dell as well.
Yes, the 3Par product slots in nicely to HP's current storage portfolio, and gives them access to certain storage IP that they don't have today. But, as some have pointed out, there are cheaper ways to go about plugging those gaps that don't involve a multi-billion dollar bidding war.
No, I'm convinced that any premium HP is willing to pay has a lot to do with denying Dell.
This probably isn't done yet ...