Dell and HP fighting over virtual storage vendor

On August 16, Dell announced its intention to acquire 3PAR Data, better recognized as one of the early pioneers of virtualized storage. A week HP made a counter offer that ups the bidding war for one of the few remaining storage pureplay startups in the once crowded enterprise storage marketplace.

Why is Dell interested in 3PAR? Dell’s storage business has largely depended on its OEM agreement with EMC (in force until 2013). But its storage buys of the last decade (ConvergeNet Technologies, EquaLogic, Exanet, Ocarina Networks) coupled with its Perot Systems acquisition suggests that Dell has higher ambitions than being a successful reseller of storage boxes that plug and play to its servers. The EquaLogic buy gave it iSCSI SANs (despite Dell having rights to sell EMC Celerra NX4).

For its part, HP has as much interest to keep Dell from acquiring 3PAR. Adding 3PAR to its portfolio puts Dell in the thick of the data center. A serious mid to high-end storage virtualization offering means more opportunities to sell high-end services, and possibly making a serious dent on HP’s ProLiant server and EVA/low-end XP storage business. A 3PAR solution overlaps with some of the XP and EVA so there might be a consolidation. I would not be surprised if HDS will come out the loser since it gives HP one more reason to stop the OEM relationship with the Japanese manufacturer (Rumors of HP trying to buy the system storage business of Hitachi have been playing around for well close to a decade now. So far the Japanese vendor has resisted the offer).

HP with 3PAR also puts the Palo Alto stalwart into serious contention in the cloud storage business, something EMC has been building over the last few years.The latest entrant to the cloud bandwagon is HDS.

The storage industry remains vibrant if not shrinking. The last few brands worth buying, remaining untethered to any system vendor, Brocade and Qlogic. Acquiring Brocade would give HP the ump it needs to up the ante in the storage networking space, seriously putting a rock in front of the Cisco jauggernaut. HP would also do well to buy Qlogic making further inroads into the total server-storage-networking storyline.

If Dell loses 3PAR to HP, the only other target on sight would be Compellent. Not exactly near the possibilities that 3PAR offers to the company. The next battleground is in the software space with backup and recovery solutions a consistent enterprise requirement and for which the choices are aplenty despite Symantec’s dominance. The Veritas acquisition has made Symantec vulnerable to enterprise-grade, low-cost solutions from the likes of Acronis, Commvault and BakBone.

For the moment, the storage market is not the most boring place in the tech industry.

 

Of friends and enemies

Some months back I spoke to a senior executive discussing about their product strategy. At one point in the discussion, he quoted an old Arabian Proverb: “the enemy of my enemy is my friend”. It is his interpretation of how partnerships are created in the business world. What scares me is that I understood what he meant and see its practical applications.

A week ago I wrote about SAP’s acquisition of Sybase and its implication to the software arms race. I follow this rant with a twist that comes in the form of new partnerships that are shaping up, not directly as a result of SAP’s acquisition, but as a progression of what’s been happening in the IT industry over the last five years.

And it begins with an interesting article written by Gavin Clarke (the UK Register) around the budding relationship between SAP and HP, as they go after Oracle in a more concerted effort. For HP, its because Oracle dumped its technology (Exadata 1) in favor of Sun (Exadata 2), following Oracle’s acquisition last year of Scott McNealy’s company. And to think that at the 2009 Oracle OpenWorld there was scant anonymity between HP and Oracle despite the Sun relationship.

So with all the knowledge gained from the first Exadata, HP brings a lot of knowledge to bear. Still I think the new SAP appliance will have a tough time competing with the Oracle product (now on Gen 2). SAP will likely integrate its expertise around in-memory architecture (NetWeaver Business Warehouse Accelerator) to market a “powerful calculation engine” for data modeling applications.

SAP Co-CEO  Bill McDermott told Informationweek’s Doug Henschen that SAP had briefed partners including IBM, HP, EMC and Cisco on its plans. Partners are eager to embrace the innovation, he said, and said they will find opportunities to build new products and services around the engine.

Granted that HP, IBM and EMC are interested in building an appliance to compete with the Exadata (with HP having a leg-up at this point in time), at this point IBM would be in the best position given that it has a strong database business, has a captive “mainframe” market, and the resources to spend on R&D. All this without necessarily working with SAP assuming that the German software giant will want to push its Sybase database as part of the bundle. HP may be more interested in this although it would hurt its relationship with Oracle big time (we’ve seen this with HP’s relationship with Cisco).

Speaking of which, a Cisco-EMC-SAP triumvirate may present the best opportunity to run against Oracle.

For the moment, Oracle has the upper hand, having created an opportunity with the Exadata and the rest of the industry is playing catch-up. Larry Ellison is having a ball.