Is 3Par worth $2 billion?

After seeing all the news around 3Par I started to wonder whether they are really worth $2 billion considering I had never heard of them before.

The primary benefits I can see of 3Par are:
  • simplification of storage management
  • thin provisioning

From a pure financial point of view the deal doesn't make sense - their sales were just under $200 million in the last year and I am quite confident that you could build a similar set of products for less than $2 billion.

Conspicuous by it's absence in the bidding are IBM, HDS, Oracle, and EMC. They have either decided it is too expensive or already have something similar under development.

The other thing to consider is that we have two heavyweights in HP and Dell doing the bidding. It is interesting in itself that they aren't being considered for acquisition by a smaller player. I believe that the reason for this is that a smaller company would realise you can build a competitor for much less. Many large companies have forgotten the art of innovation and it is much simpler to buy companies with the product you need.

The unknown value of 3Par might be in it's patent portfolio - since no-one else seems to be doing thin provisioning in the way that they do it might be reasonable to guess they have patented it. In my mind software/pure idea patents shouldn't exist and the idea of thin provisioning is an obvious idea. This hasn't stopped VMWare taking out patents on thin provisioning of memory though, and pursuing it.

So in my mind I wouldn't pay $2 billion for 3Par but a big company would quite willingly do so since they can't quickly innovate themselves and are scared of IP issues. What I would have done though if I led HP or Dell is to pay $100 million for a non-exclusive perpetual license of their IP, and put the rest of the money into integrating it into my products and then selling them.


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