UPDATED on September 2nd: see below

ON ITS corporate website, Hewlett-Packard (HP) describes three important trends shaping the future of technology, including one that it dubs the “information explosion” (click the "Growth" tab on this page). On August 23rd the company dropped a bombshell of its own when it launched a $1.5 billion bid for 3PAR, a company that has built its business by helping firms store vast amounts of data efficiently. HP's move triggered a heated bidding war with Dell, a big rival that had already made an offer for 3PAR. By August 27th the price tab for the company had risen to a whopping $2 billion, with HP offering to fork out the entire amount in cash.

Why all the fuss over a firm that focuses on the seemingly humdrum business of storing data? Part of the answer is that the amount of information being generated by governments, firms and individuals is growing incredibly fast, driven by such things as online videos and file-sharing. According to one estimate, mankind generated some 150 exabytes (150 billion gigabytes) of data in 2005; this year that number could reach 1,200 exabytes. Demand for smart ways of storing and analysing this mountain of information is soaring.

At the same time, firms such as HP and Dell are jockeying for a bigger share of the market for “cloud computing”—tech-speak for on-demand computing services delivered via the internet—which is starting to attract the attention of many large corporate customers. Their enthusiasm for this business has grown as the economic downturn has squeezed margins in their consumer-focused activities. Given that high-end storage is a crucial part of any cloud offering, it is hardly surprising that 3PAR has been on their radar screens.

What is more surprising is the intensity of the battle for control of it. In part, this may reflect the fact that, like many other big tech firms, Dell and HP have no shortage of ammunition with which to wage war. Both have billions of dollars in their coffers waiting to be deployed and both see acquisitions as a quick way of boosting their presence in the cloud. Dell, for instance, bought another storage firm, EqualLogic, in 2007.

It is possible that Dell timed its initial bid for 3PAR to take advantage of the fact that HP had recently lost its chief executive, Mark Hurd, who resigned amid allegations of dodgy expense claims and sexual harassment. But if so, it seems to have underestimated the desire within HP's ranks—and, presumably, among its board members—to stop Dell from beefing up its presence in a promising market where HP already faces stiff competition from the likes of Cisco and IBM.

The big question is whether HP can justify paying such a hefty price for 3PAR. Some analysts reckon the cost of the deal had already risen beyond the point at which HP could make a decent financial return on its investment even before its latest $2 billion offer. Dell, too, will struggle to justify paying any more. Indeed, the only folk who seem certain to win from this digital dust-up are the shareholders of 3PAR itself.

UPDATE: On September 2nd Dell bowed out of the takeover battle, deciding not to match a fresh bid from HP valuing 3PAR at around $2.4 billion. Dell will get two consolation prizes: first, a sizeable termination fee, and second, the satisfaction from having forced its rival to pay such a rich price.

Read on: A special report on managing information: Data, data everywhere (Feb 2010)