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Cloud Computing: Making Them Pay

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Both Hewlett-Packard and Dell are currently in a bidding war for a company that’s miles away from turning a profit. Why? There’s a new golden goose in the tech world and it goes by the name of ‘cloud computing.’ This new(ish) phenomenon is essentially an esoteric name for companies storing their high-tech data off-site (which is cheaper in the long run) and there are only a handful of providers on the planet that offer the service (IBM, EMC, Hitachi, and 3PAR). The first three on the list are unobtainable and the last is, well, the current object of desire. Never heard of 3PAR? Neither has anyone else.

The funny thing is that 3PAR is a small, money-losing organization that’s causing business analysts to dub the current bidding war, ‘crazy.’ But, this is a rapidly growing sector of corporate spending that, according to CNN, is increasing 27% every year. This is a service that both HP and Dell badly want to offer their clients and 3PAR is the only firm that can provide it in house. The question remains, which mega-tech firm wants to pay more for it – HP has already offered a 200% premium over the value of 3PAR’s stock. Let the games begin!

Continuing the recent article on the gladiator-style bid-off, CNN also posited that this is a dual function for HP – creating confidence in its shareholders after CEO, Mark Hurd, has left the company, “an attempt to show investors that the company has a unified board, and HP is not a rudderless ship in the absence of a CEO,” and laying claim to an important aspect of their future business (albeit in need of an overhaul and some big money behind it). Whatever the case may be, 3PAR certainly stands to win on this one, and most analysts are picking HP as the new parent, causing one business professor at Tuck to say, “HP should win this one, but if they don’t they will make sure that Dell overpays.”

 
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William R. Feins , freelance journalist from London, UK; he received his B.A. degree in Economics and his Masters in Sociology. William has always been interested in the mechanics of business and the inspiration of original thinkers, and firmly believes that the former can’t succeed without the latter. In his spare time, he enjoys the ridiculous spectacle of watching table tennis on a big screen (preferably at a pub) and reading weighty tomes about World War II.

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