This morning HP announced they were trumping Dell’s bid for 3PAR, offering a whopping 33% on top of Dell’s 85%+ premium. I’ve read lots of chatter about why, but I think much of the analysis misses the mark. I thought it would be worthwhile putting the deal in historical context.
First, let’s talk a little bit about data center and storage history. Storage many years ago used to be housed with the CPUs. The large vendors shipped computers with high end processors, packed with disk drives and called them servers. As data storage grew faster than compute, the industry began to decouple storage from the compute, giving birth to companies like EMC.
EMC and Hitachi Data Systems operated in the high end enterprise segment with very large storage arrays designed for high performance, availability, and reliability. Because of how critical and difficult storage is, very few of the server makers chose to wade into the market. In fact, most compute players would regularly OEM product from the specialized storage makers. This led to a very happy symbiotic market with clean lines where everyone knew their place, and each of these vendors in fact OEM’d one another’s products. For example, Sun and HP each resold HDS’s products. Dell resold EMC’s products. Brocade was built almost entirely on a channel model.
A couple of moves really changed this panacea. First, EMC got a hold of VMware and virtualization subsequently became the hottest trend in the data center. This pulled EMC into the server side of the market and led them to rapidly expand beyond storage into systems management, software, and other layers of IT spend. Second, Cisco announced they would be entering the high end server market. This clarified their growing ambitions from dominating the router market into the compute part of the IT spend. Cisco announced a JV with VMware and EMC to complete their product vision late last year. Third, Dell bought Equallogic and HP bought LeftHand Networks, both signaling a movement towards owning IP for storage (albeit the mid market). Dell had been partnered with EMC going back to 2001 and was a meaningful channel for EMC’s mid range products. Very quickly everyone got a wake up call that their place in the stack was not secure.
So what’s happening now? Every major data center platform vendor sees two major trends going on. First is the rise of the dynamic, agile data center within enterprises. This requires being able to spin up resources – compute, network, and storage – automatically in response to business demands. Second is the eventual move of the data center to private and public cloud offerings. In this model, the vendor no longer sells equipment to the enterprise, but assembles and runs all the parts as either a dedicated or shared service.
In order to fulfill this vision, you need all parts of the stack working together seamlessly. This is where 3Par comes in. 3Par was born during the great storage gold rush of the early 2000s. Bringing their product to market took over $200MM in venture capital, including some recaps along the way. They were one of many startups that were funded to build flexible, modular, high end systems, but one of the few to survive. An enterprise’s lifeblood is storage and they would not trust startups lightly. This required high burn to build the technology, and then high burn on the sales side to succeed in market. To 3Par’s credit, they managed to get public and raise sufficient capital to sustain themselves to critical mass and profitability. And now they benefit from scarcity value.
Looking at the landscape, 3Par is the only real alternative to EMC and Hitachi in terms of high end storage. EMC has its own ambitions for data center dominance, while HDS is part of a much larger conglomerate. If you believe you need to own storage and server, both to fulfill the vision above and to avoid partnering with a competitor, than 3Par is the only place to get this type of deep high end storage technology. Given HP and Dell have a much larger sales channel than 3Par, these guys can immediately double, triple or quadruple sales from 3Par products overnight once it is part of their catalogue. Both reasons afford the premium we are seeing.
Going forward I’d expect to see more data center consolidation. There are some major battles brewing as companies compete to own the enterprise! Network Appliance has long been rumored as a fit for Cisco. Plenty of other combinations make sense as well. It’s clear to me, though, that the march is towards creating end to end solutions and masking complexity. Should be a fun next few years to watch!Read Full Post | Make a Comment ( 11 so far )
What a week! There has been an enormous amount of press coverage, both domestically and internationally, about the implications of Barack Obama as the next President of the United States. I do not think they can be overstated. This election is a testament to the ideals of this country and the power of empassioned masses. While I am a registered Independent, and prefer to keep my politics out of my regular dialogues, the avid traveler in me cannot help but feel great about the universal refrain of support and acknowledgement from every corner of the globe. I am quite hopeful in a period that only offers bleak challenges.
Amongst many of President Obama’s policies, one that particularly resonated was the call to upgrade and improve our infrastructure. Obama’s use of technology has been well documented, from his campaigns online to his engagement with Facebook audiences to his mass SMS message to campaign volunteers acknowledging their work before delivering his acceptance speech. I believe this country has not come close to generating the efficiencies possible by leveraging the latest information technology. Nowhere was this more evident than at the voting booth where I cast my vote.
On an electrifying Tuesday morning, rather than casting my absentee vote, I walked over to the Prince Georges Hotel on 28th Street in Manhattan to cast my vote in person. The line rounded the corner, but this was my day to participate in all this country offers. I waited patiently for an hour before getting inside. When I entered the hotel, I felt like I had been thrown back centuries. I was greeted by a woman who had a crumpled up piece of paper with handwritten numbers, which would identify which machine I would stand in line to vote from. These numbers were misaligned and looked like chicken scratch. She directed me to the line for “12”.
The line for “12” overlapped with the lines for “28”, “51”, “13”, and others. They wound and zigzagged around each other in a swirling mess. Once I got to the front, I was greeted by a woman who checked my ID and pointed me towards a booth. The booth itself was enormous. Twice the size of those usual “Polaroid” photo booths that you would take pictures in as a kid at an amusement park. Inside this big, old grey piece of metal were columns for the candidates. Next to the names were manual black knobs. At the bottom of this machine was a massive (3 foot long) rusted red lever. I had no idea what I was supposed to do, and still uncertain after reading the three point instruction at the top. Turns out you have to take this massive lever and push it all the way to the right. Then you had to turn each manual knob counter clockwise for the candidates you wanted. And when you were done, you pulled the lever all the way to the left again. After that, you stood there and hoped something happened. There was no feedback, no click, no guidance. I walked out scratching my head, until another woman came over, pulled some other lever in the back to reset the machine for the next person. It somehow implicitly validated I did something. Nothing about the registration of my vote was tied in the machine to who I was (ie, did I vote?). Maybe some manual reconciliation happens afterwards. And I couldn’t tell how this machine could possibly do anything but offer very high level total calculations via an internal abacus. All in all, this machine could have easily been built in the era of the Guttenberg press back in the 1400s.
My tiny experience at the voting booth could have gone radically different, and generated massive savings all around. The first issue that struck me was the opportunity for human error. From the first woman and her hand written notes, to the swirling chaotic lines, to the archaic machine, each of these had material >5% chance of errors, especially in light of the volumes of people. Compounded, it could lead to material errors in votes – the fundamental priviledge of our citizenhood! Second, there is a huge manual effort that could be entirely eliminated by using a modern booth as available in select other states. No counting votes, or manually inputting data into computers, it would happen instantaneously. This could lead to substantive savings if implemented in a standardized manner on a national basis. Third, while safeguarding the privacy and sanctity of the actual vote, is the opportunity to take the information from these machines to understand and improve our democratic process.
Technology cannot cure all ails. It is not magic. But if used effectively it can transform how we leverage and process information. This little example is one of an infinite number of inefficiencies that exist within our government. Even the smallest of focus on these can lead to substantive productivity and cost improvements that can go towards any number of the major issues facing the country. I am hopeful our new President elect will push the drive to modernizing our state.Read Full Post | Make a Comment ( 1 so far )