Cloud computing raises the value of data storage companies

A lackluster data-storage company has sparked a business battle for two of the world's biggest computer companies: HP and Dell are buying a company named 3Par for each other. Industry insiders say two of computer companies have been pinched so hard because they want to transform their software services, and the second is that data storage technology is critical to cloud computing.

To increase their fares in turns

August 16, Dell first announced a 18 dollars per share price acquisition 3Par. It was not expected that HP, its rival, had "crossed a bar" and shouted a 24 dollar price per share. By 26th, Dell offered 24.3 dollars per share. The Board of Directors of the 3Par company agreed and submitted a report to the Securities and Exchange Commission of the United States. See the deal is going to be done, do not want to the evening of the afternoon, HP again to increase the price of 27 dollars per share. The forced Dell was forced to announce on 27th that it was prepared to accept the price. However, a few hours later, Hewlett-Packard raised its price again: $30 a share, all of a sudden the total value of the acquisition reached 2 billion U.S. dollars.

3Par said 27th that it was ready to terminate its initial agreement with Dell, and that the "remarriage" bid was more appealing to Hewlett-Packard, although that meant it had to pay a hefty penalty to Dell. Dell has not yet commented that it will have a few days to consider whether to raise the price. With two companies offering alternating bids, the 3Par share price has risen twice-fold from 9.65 dollars two weeks ago and has boosted shares in other data-storage companies.

Years of losses have become "Sweet cakes"

3Par is a professional data storage company located in California State, which has been losing money since its listing in 2007. What is it that makes HP and Dell so desperate to buy? Analysts say IT companies are now looking for new profit growth, especially for hardware makers, where the cost of components and retail prices have fallen, making their product margins lower. Over the past 5 years, HP has expanded its operations into areas such as technical services, computer networks and smartphones through aggressive mergers. Dell has also acquired several software companies, but half of sales still come from computers.

An analyst at a New York financial firm told Bloomberg News that the enterprise data center is one of the fastest-growing areas, with more and more companies no longer buying their own devices, but using large enterprise cloud computing services to handle internal mail, ordering data and management information. 3Par is not making money now, but a big company will be able to boost its sales significantly after its merger and reorganization. Once the acquisition succeeds, HP will have high-end storage products, providing enterprise customers with server, storage and network equipment one-stop service. Instead of selling storage for EMC (3Par competitors), Dell can make up for a gap in its business.

International Data Group analysis that the acquisition of 3Par can extend the Dell's product line for corporate customers to provide cloud computing services. By leveraging virtualization technology, Dell will be transformed into a provider of enterprise storage solutions, one analyst said. Another analyst said that 3Par is a few of the market's remaining independent data storage companies, whether Dell or HP, after the acquisition of their sales can be easily doubled, or even quadrupled. This is why two companies dare to increase the price repeatedly.

"Reds" to the end

However, Yi Anxin President Gelsing on the deal is a bit eye. He said that the 3Par, although attractive, would not bring too much profit to the new club. And HP's current morale is shaken, with former president and chief executive Mr Hurd just stepping down from a scandal in early August. Dell's days have been even sadder, with 1/4 of its board members having cast a no-confidence vote on Chief executive Michael Dell. Many analysts say HP and Dell have stockpiled large amounts of cash in the financial crisis, and now the crisis has subsided, just waiting to be deployed. Hewlett-Packard is more well-funded and is expected to be the final winner. But the price of 3Par continued to soar in the day after HP's bid, and it is clear that investors believe HP and Dell are likely to be reds.