The bidding war between Hewlett-Packard (NYSE: HPQ) and Dell for data storage vendor 3PAR reached a dizzying height late last week when HP offered to pay $2 billion in cash for the little-known company. Since HP and Dell are vying for market share in cloud computing, it follows that they both would want storage technology like 3PAR's, but the huge bids are spurring questions about whether the fervor over the cloud is going too far.

In an article headlined "Cloud computing or cloud-cuckoo land?", The Economist questioned whether HP would be able find a decent ROI after spending $2 billion for this company. It is a sentiment echoed by a number of analysts and industry observers. 

Noting that 3PAR has revenues of less than $200 million this year and has never shown a profit, Rick Merritt at the EETimes writes that the bidding war is a reflection of the dynamics in the industry today. Calling HP and Dell "a mile wide and an inch deep, Merritt writes that neither company has been spending much on R&D lately. Both companies are hungry for innovation, so "when a well-managed, medium-sized company with a novel technology and a significant customer base comes along, it's a luscious treat," he writes.

While HP and Dell both provide storage offerings today, they rely on partnerships with other manufacturers, writes Brandon Bailey at The San Jose Mercury News. As each company tries to provide more comprehensive offerings down the road, the ability to integrate more components becomes increasingly important, and 3PAR would offer a leg up in terms of control. "People are saying it doesn't make sense to pay this much for a company that had $200 million in revenue last year. But this is about long-term strategy," said Roger Cox, a storage expert at Gartner. 

For more:
- see The Economist article
- see Rick Merritt's article at The EETimes
- see Brandon Bailey's article at The San Jose Mercury News

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