LeftHand Purchase Heightens Competition With Rival DellHewlett-Packard Co. agreed to buy LeftHand Networks Inc. for $360 million in cash, ramping up competition with rival Dell Inc. in the robust market for low-cost computer storage.
H-P is targeting small and midsize companies expanding their data centers.
LeftHand, based in Boulder, Colo., specializes in storage area networks, which allow users to attach storage devices to a server computer. H-P said the deal should allow it to offer cheaper storage systems and server networks to customers while simplifying the process of installing and managing the systems. LeftHand uses a storage technology called iSCSI, which allows small companies to store large volumes of information less expensively than traditional storage network technology.
In particular, H-P wants to increase sales of discount HP desktops and of colocation storage systems to small and medium-size businesses that are increasing the size of their data centers, which house back-office computers that run corporate functions such as email, said Dave Roberson, H-P's senior vice president of the commercial storage division.
The acquisition comes in a tech area that remains strong despite the economic slowdown and fears of shaky corporate spending. Spending on storage systems, which companies are expanding to accommodate ever-growing volumes of data, increased 17% during the first six months of the year, according to market researcher IDC.
H-P's deal follows a similar move by rival Dell. Last November, Dell paid $1.4 billion to acquire closely-held storage maker EqualLogic, which builds hardware systems that perform a similar function to the LeftHand products.
Lou Miscioscia, an analyst at Cowen and Co., said the LeftHand deal will help H-P counter Dell and refurbished Dell computer sales. While H-P built up its server-computer offerings with the 2002 acquisition of computer maker Compaq Computer Corp., it has lagged in providing storage systems, he noted.
Mr. Roberson said a large percentage of LeftHand sales are already made through H-P, so he expects the integration to run smoothly. Privately-held LeftHand was founded in 1999 and currently has 215 employees.
In May, H-P also announced it purchased technology consulting firm Electronic Data Systems Corp. for $13.25 billion, a deal aimed at building market share with large corporate clients.
By: David Benoit and Justin Scheck
Wall Street Journal; October 2, 2008
