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Top Ten Private Companies: Spring 2003: Page 15 of 16

Well, good for you, 3PAR. But here's the thing: All the current market dynamics are aligned against this company. It has built a super-high-end, expensive storage array, when the rest of the industry is moving toward low-cost, midrange systems. Not only that, businesses are looking more towards software to better utilize the storage they have – rather than buying more hardware.

Also, EMC Corp. (NYSE: EMC) finally got its act together and released the next version of its high-end Symmetrix arrays in February, which steps up the competition for 3PAR (see Does EMC's DMX Measure Up?).

In fact, the odds of 3PAR being acquired by any of the top five systems vendors looks increasingly slim. Hewlett-Packard Co. (NYSE: HPQ) relies on Hitachi Data Systems (HDS) at the high end, as does Sun Microsystems Inc. (Nasdaq: SUNW); while IBM Corp. (NYSE: IBM) recently merged its server and storage groups and seems to be focusing more of its attention on software and services (see IBM Merges Storage, Server Groups).

3PAR may be hanging on to the No. 10 spot by its bloodied fingernails, but hanging on it is.

Now to the two startups that have been dumped from the list: OuterBay Technologies Inc and InterSAN Inc.