Computer maker Hewlett Packard HP has launched a $1.6bn �1bn bid for data storage firm 3PAR, trumping a $1.2bn offer made by rival Dell last week.
Along with IBM, the two firms are looking into more profitable business areas outside of making computers.
The bids come as part of a glut of merger and acquisitions activity in the technology sector, including last weeks $7.8bn bid for McAfee by Intel.
The HP bid helped to push Wall Street higher in early morning trading.
The main Dow Jones index was up 69 points, or 0.7%, at 10,282.19.
Good fitHP said that, if its offer was accepted, the deal should be closed by the end of the year.
Analysts said the battle between two of the worlds three largest computer makers to gain control of 3PAR showed their determination to move into so-called cloud computing - technology that allows access to data servers over the internet.
One of the growth areas in technology is in the enterprise storage space, Joel Levington at Brookfield Investment Management told Bloomberg.
3PARs products fit in well there. Its an easy way to gain product breadth.
He also expressed doubts about whether Dell would be able to match HPs offer.
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