3Par buyout puts Dell in ring against IBM, HP - even partner EMC

With the acquisition of 3Par, Dell is positioning itself against top data center storage providers, including IBM, Hewlett-Packard, Hitachi and even Dell-partner EMC.

But Brad Anderson, senior vice president of Dell 's Enterprise Product Group, said the 3Par acquisition won't affect its reseller agreement with EMC .

Dell has had a reseller agreement with EMC for the past decade, offering EMC's entry-level and midrange Clariion storage arrays as well as its Data Domain deduplication appliances. The partnership represents billions in revenue and, for many years, more than 10% of EMC's earnings.

EMC's a very important partner of ours. Our plan is not to change anything. We've always been a company about choice. We're bringing another choice," Anderson said. He added that Dell never resold EMC's high-end Symmetrix line of arrays, so there'll be no overlap or competition in that category of products with the addition of 3Par.

Over the last few years, Dell has increased its line of storage products mainly through reseller partnerships and acquisitions, with offerings such as entry-level to midrange Fibre Channel and iSCSI arrays, network-attached storage (NAS) and data deduplication devices. With Monday's news of its planned purchase of 3Par, Dell is squarely positioning itself in the enterprise-class data center space, and it will be competing with the likes of longtime partner EMC, as well as IBM , HP and Hitachi Data Systems.

3Par sells storage arrays that can be clustered together to provide petabytes of capacity that can be served up to business units like a utility. The technology is especially well-suited for supporting virtualized server and both private and public cloud computing infrastructures because it can be centrally managed and scales, like building blocks, in capacity and performance.

Steve Duplessie, founder and senior analyst with Enterprise Strategy Group, agrees that the 3Par acquisition doesn't necessarily affect the EMC partnership.

Duplessie said 3Par was one of the only independent vendors left that represented serious competition against the likes of EMC's Symmetrix, HDS's Universal Storage Platform (Virtual) and IBM's Enterprise Storage Server high-end storage arrays.

"3Par's product line competes with EMC for sure," Duplessie said. "But there's no overlap at all [with the] ... Dell/EMC relationship because of this acquisition. Will it ultimately become a problem? 3Par will compete just like EqualLogic competed with EMC, but somehow their partnership relationship continues to get bigger."

"There's not a heck of a lot of high-end options, so it will be interesting to see what they end up doing," he said.

Dell was not the only company interested in purchasing 3Par, according to Duplessie. HP also had its eye on the Fremont, Calif.-based company.

Mark Peters, also an analyst with Enterprise Strategy Group, said Dell's buyout of 3Par has less to do with storage and more to do with Dell's wanting to be an end-to-end solutions provider like HP or IBM. "This is about Dell becoming a grownup," he said.

Dell's Anderson said storage is playing a key role in the company's strategy to provide utility-style products for customers.

During a conference call with the press and analysts Monday, Anderson pointed to the emergence of software-as-a-service, infrastructure-as-a-service, social networking, and public and private cloud computing as examples of architectures that increase the need for storage platforms that scale in both capacity and performance for massive throughput.

"We're seeing an increasing demand for a new class of storage -- a class that allows storage ... as a utility. As a result of that, we think 3Par is a fantastic addition to the Dell lineup," he said.

Anderson listed Dell's acquisition of iSCSI storage company EqualLogic two years ago, its buyout of NAS provider Exanet in February and the purchase of data compression vendor Ocarina Networks last month as part of Dell's strategy to provide best-in-class storage products across all marketplaces.

"3Par, like EqualLogic, is a peer-scaling architecture ... which is absolutely critical to our customer's needs. It is the utility storage solution chosen by seven of the top 10 revenue-generating managed service providers," Anderson said. "Additionally, 3Par is perfectly aligned with Dell's strategy of open, capable and affordable solutions that really [address] a customer's storage requirements but more importantly total cost of ownership."

Anderson said that as a result of 3Par's efficient technology architecture, which includes thin provisioning and data compression algorithms, its storage arrays have the ability to lower administration and management costs by as much as 90% and to reduce capacity, power, cooling and floor space as much as 75%, he added.

3Par CEO David Scott said the company has 600 employees and more than 6,000 customers. With the acquisition, he said his company will have "massive reach" into new worldwide markets via Dell's channel sales as well as being able to cut prices through its supply chain. Once the deal is closed, 3Par will remain a separate company under Dell, with Scott staying on as CEO.

"Given the significant use of industry standard components within 3Par's offering, we believe there will be significant opportunities for improving our cost competitiveness," he said.

Scott said 3Par already had a partnership with Exanet and supported it as a NAS gateway, meaning it could serve up data in file or block form. "As such, we have a number of joint existing customers," he said. "The opportunities for a leading unified storage combined NAS and SAN offering, represent a great future potential."

Scott also pointed to Dell's purchase of Ocarina and its data deduplication and compression technology as complementary to 3Par's thin provisioning technology. "Together, Dell and 3Par will be well-positioned to become a new storage industry powerhouse. Other vendors in the storage industry will be in danger of being left flat-footed with tired product lines and few options."

Darren Thomas, Dell's general manager of enterprise storage, said his company will eventually integrate 3Par's thin-provisioning technology into other products.

"We think there's going to be a fantastic opportunity long term to drive a unified Dell storage lineup." he said. "You're going to see technology from 3Par and others, including Ocarina, that we're going to want to drive across our entire storage lineup."

Read more about storage in Computerworld's Storage Topic Center.