3Par Bidding Battle

Any one who is an avid follower of Computer and Gadget Blogs has (for the past several years) known that cloud computing is the "next big thing" in the tech world. Recently however, news of this trend is being covered more and more in the main stream media outlets. One such example is the recent bidding war between Dell and HP for 3Par -- software and data storage information management company.  Started by Dell's $1.6 Billion offer, the bids quickly rose to a $2 billion offer from HP.  These amounts approach 7 times the company's revenue and almost 100 times next year's projected earnings. That's a pretty hefty premium and a business minded observer may ask himself not only is it worth that price, but what reasoning is behind this acquisition?

From a management perspective, there are several challenges both Dell's and HP's executives are facing in the current corporate climate which I believe they feel an acquisition of 3Par with help them gain ground against the competition. One such challenge is managing change, specifically the move toward cloud computing. 3Par's expertise in this area would add value to either companies offerings, initially in business solutions but eventually to household consumers as well. The promise of increased versatility and convenience and decreased cost would add value to either companies offerings.

Another challenge 3Par would assist in dealing with would be in managing resources. Since its founding in 1999, 3Par has amassed a substantial human capital, physical resources and technology. Resources which have allowed 3Par to become a competitive force in the data storage and information management fields. Both Dell or HP would reap huge benefits from integrating this already established brand into its respective infrastructure.

Corporate strategy is also an aspect of management that 3Par would address. 3Par's knowledge base, intellectual capital,  and reputation  would allow either company to better leverage its already existing portfolio to better serve its customers and give it an advantage over its competitors.

Finally, the entrepreneurial aspect of management plays a roll is this bidding war as well. 3Par's acquisition would allow either company to branch out into a new business area they currently do not exist in. This would position them to be in an advantageous position as the cloud computer model takes off while remaining relevant in the information and technology sector.

Only one company, either Dell or HP, will ultimately win this battle. However, the potential added value of buying an established cloud computing firm to an already established computing giant will likely spur the loser to look for other opportunities of expertise in this field. And once that target is identified, it will likely come at a much better price.