Hewlett-Packard in LeftHand acquisition for $360 million

02 October 2008

The world's No.1 computer maker Hewlett-Packard Co. (HP) said yesterday that it will acquire Boulder data-storage company LeftHand Networks Inc. for $360 million in cash. HP said the deal is subject to certain closing conditions it did not detail. It said the sale is expected to be completed in HP's first fiscal quarter of 2009.

Palo Alto, California-based HP said the acquisition will help it fill a mid-market gap in its offerings of storage services. Privately held LeftHand Networks provides storage virtualization and iSCSI storage area network (SAN) products to some 3,000 business customers, primarily midsize companies and remote offices or branches of large corporations. It has 215 employees and some 3,000 customers.

With this buyout, HP continues its march of acquisition which started with the $13.9 billion for Texas-based computer giant EDS and resulted in the March acquisition of Australian software maker Tower Software for an undisclosed price. (See: HP snaps at IBM's heels with EDS merger)

This move by HP is an attempt to shore up its presence in the fast-growing IP (Internet protocol) storage segment of the data storage market. Unlike traditional storage area networks, IP storage networks allow businesses to increase the amount of data they can store without making massive investments in fiber channel switches. The IP storage market is slated to grow to $4.4 billion by 2012. In contrast, the traditional storage market is growing by only about 6 per cent each year.

HP would like to leverage this deal to counter the growing influence of its closest competitor Dell in the IP storage market. While Dell has just a 9 per cent share of the overall storage market, it controls one-third of IP storage, no doubt bolstered by its $1.4 billion acquisition of data storage network firm EqualLogic late last year. (See: Dell to buy data storage network firm EqualLogic for $1.4 billion)

The LeftHand acquisition is also an attempt by HP to pursue business with medium-sized companies. LeftHand's software will make it more cost-efficient for medium-sized companies to enhance their current storage networks.