Data Center Re-Architecture Spawns Consolidation Rumors

October 26, 2010

With the new advents of virtualization and multicore server processors shaping the re-architecture of the data center as we know it, enabling IT to be delivered as a service, the industry’s large-system vendors are turning to consolidation in an effort to not be left on the virtual sidelines.

“[C]ompanies such as HP (HPQ), IBM (IBM), Dell (DELL) and Oracle (ORCL) have been seeing this as a huge opportunity and have essentially been tooling themselves to participate in this opportunity, which has meant filling up portfolio gaps by acquiring companies that could enable them to play in this market opportunity better,” said Rajesh Ghai, a director and senior research analyst at ThinkEquity LLC.

Ghai points to HP’s acquisition of 3PAR (PAR) as an example of a larger entity acquiring a smaller one to fill a hole in its high-end storage portfolio.

“Given that we see this cloud opportunity as a strong driver of IT spending for the next three or four years at least, we believe it is not surprising that most large system vendors are trying to fill up gaps in their portfolios with the best available small technology companies,” he said.

M&A rumors are also circling around STEC (STEC), who has supposedly been in talks with Dell and IBM.