Following HP’s $2.4 billion acquisition of 3PAR, speculation continues to run rampant over which storage vendors will be acquired next. Whether it’s a good thing or a bad thing from the perspective of end users, further contraction in the industry is inevitable as the largest IT vendors attempt to control the entire IT stack and the pure-play storage vendors plug the gaps in their product lines in order to goose revenue growth.

For the following list of the Top 10 storage acquisition candidates, I factored in the opinions of readers, which I received after posting “The Top 10 storage acquisitions of 2010.” Interestingly, the majority of the reader responses came from channel professionals — VARs and integrators — leading me to believe that channel pros are much more interested in mergers and acquisitions than are end users. I also factored in opinions from industry and financial analysts. And topped it off with my own misguided opinions.

(Note: The ticker symbol links below take you to that company’s entry page on the InfoStor Market Index, which provides up-to-the-minute info on the company’s stock as well as company- and competitor-related news.)

#1 — Isilon

Isilon scooted to the top of this list because of two recent developments: (a) The company hired Qatalyst Partners to solicit potential acquisition offers. Qatalyst was the advisor to Data Domain when EMC acquired Data Domain, and Qatalyst also shepherded the HP-3PAR acquisition. (b) The NY Post reported on Friday that EMC may be close to acquiring Isilon for about $2 billion (see “EMC in exclusive talks to buy Isilon”).

Isilon is known primarily for its strengths in scale-out NAS, but the company recently added support for the iSCSI SAN protocol in its OneFS operating system, enabling both file (NAS) and block (SAN) I/O under a single file system (although Isilon’s storage systems do not support the Fibre Channel or FCoE protocols).

In addition to EMC, financial analysts have cited Dell, HP and IBM (and, less likely, Oracle or Cisco) as potential acquirers of Isilon (NSDQ: ISLN).

#2 — CommVault

I don’t understand why CommVault’s (NSDQ: CLVT) stock jumped so high during the HP-Dell-3PAR bidding war, but it did. I guess it was because CommVault has been an acquisition speculation darling for years.

CommVault has done a great job stealing revenue from the big four vendors in the data protection space, in part because CommVault’s underlying architecture is newer and designed better for rapid enhancements, as evidenced in the recent release of its Simpana 9 software (see “CommVault unveils Simpana 9”).

Conventional wisdom on Wall Street has Dell (NSDQ: DELL) as the most likely suitor under the assumption that none of the leading backup/recovery vendors (EMC, Symantec, IBM, CA) would be interested in CommVault, but I’m not so sure about that. Any of those vendors would have to eat some crow if they acquired CommVault, but they might be better positioned for the long haul.

Another possible CommVault suitor: NetApp which, by the way, is the #4 storage software vendor — ahead of CA and HP (see “The Top 6 storage software vendors”).

In addition to the fact that many financial analysts put the company at the top of their storage acquisition target lists, CommVault earns the #2 spot on this list because I think the storage M&A focus is going to shift from hardware to software. And with CommVault, it’s hard to argue with low debt, high growth and high margins.

#3, #4 — Compellent, Xiotech

Isilon, Compellent and Xiotech have all been cited often as potential Dell acquisitions post-3PAR/HP. I doubt it, because Isilon/Compellent/Xiotech are gap pluggers rather than the game changer that 3PAR would have been for Dell. Isilon, Compellent or Xiotech don’t give Dell the high-end array technology that would enable Dell to go up against EMC/IBM/Hitachi, although they would be good complements to Dell’s EqualLogic line. On the other hand, any one of these disk array vendors would help Dell doff its “Dude, you’re getting a Dell” image.

Given their technology differentiators, and the difficulty of being a relatively small player in the contracting disk array market, it’s likely that one or both of these vendors will be acquired by someone.

Xiotech, which is not publicly traded and has a nice differentiator with its Intelligent Storage Element (ISE) technology, would be the least expensive buy in this category.

The question with Compellent is whether the company has enough differentiation from what the potential acquirers already have in their portfolios.

#5 — Permabit

Earlier this year, Permabit introduced an “OEM embeddable” version of its data deduplication software. dubbed Albierio. The company seems to be off to a good start with its OEM strategy, having already racked up reseller deals with BlueArc and Xiotech (see “Data deduplication: Permabit finds success with OEM model”).

As the last standing “independent” data deduplication player, Permabit could thrive with its OEM model, but in light of the IBM-Storwize and Dell-Ocarina acquisitions in the data reduction space I think Permabit is an attractive acquisition candidate. The company’s focus now is on deduplication for primary storage, but there’s no reason Permabit’s technology couldn’t be used across all storage tiers — and that could be very attractive for some of the larger storage vendors that have a diverse mix of data reduction solutions in their portfolios. Of course, that assumes that a “one size fits all” approach to data reduction is the way the larger vendors want to go in this space.

#6 – Brocade

IBM has been mentioned most frequently as a potential suitor for Brocade. That might have changed recently with Big Blue’s announcement that it plans to acquire Blade Network Technologies (BNT), making it less likely that IBM would go for Brocade.

BNT specializes in blade and rack Ethernet switches, so it’s not an overlap with Brocade’s business, but the IBM-BNT acquisition will still dampen speculation that IBM will scoop up Brocade. More likely, perhaps, IBM will go after Juniper Networks. (Both Brocade and Juniper are IBM partners and, making it even more interesting, Juniper is a BNT partner.)

If we take IBM out of the Brocade acquirer lineup, that would leave Dell as the most likely acquirer (although Dell is also tight with Juniper). But that goes to the heart of the question of whether Dell will, post-3PAR, try for another disk array vendor (Isilon, Compellent, Xiotech?), software vendor (CommVault?) or surprise everyone and light out into LAN/SANland via Brocade.

Making a Dell acquisition shift toward networking more likely, Dell recently hired a former Cisco exec — Dario Zamarian — to run its networking business. Assuming Dell turns to networking in its acquisition spree, it’s a 50/50 bet between Brocade and Juniper, according to some Wall Street wags.

In an article posted on MarketWatch (see “Brocade targeted by M&A rumor mill”), Wedbush analyst Kaushik Roy was quoted as saying, “It makes a lot more sense for Dell to buy Brocade than IBM. With Dell, it’s a no-brainer. If Dell has half of a brain, they should be taking Brocade out right now.”

Then again, if Dell goes after Brocade (NSDQ: BRCD), they could wind up in another crazy bidding war with, say, IBM or Oracle. And Dell’s been there, done that.

In addition to IBM and Dell, analysts have cited Oracle and Hitachi as possible acquirers.

#7 — BlueArc

Hitachi Data Systems (HDS) has been mentioned as a potential suitor for BlueArc, but it doesn’t seem to be in HDS’ genes to take the acquisitions route. But HDS and BlueArc do have a tight relationship and BlueArc has some attractive technology differentiators.

# 8 — FalconStor

Only one of our readers mentioned FalconStor as an acquisition target, and it was in the context of the company potentially being acquired by HDS or NEC, but FalconStor would be relatively inexpensive and the company has great technology (although not everybody knows it because FalconStor’s software is often sold “under the covers” by its OEMs and resellers).

In addition to getting storage management and data protection software (VTL, CDP, data deduplication, replication, etc.) across a variety of product lines, an acquirer could put the hurt on a lot of competitors because, although a relatively small company, FalconStor’s tentacles reach across a lot of vendors via its reseller deals.

The possibility of FalconStor (NSDQ: FALC) being acquired heightened recently with the resignation of ReiJane Huai, the company’s CEO. In the wake of the resignation, FalconStor tapped Jim McNiel as interim CEO and president. Some analysts think that McNiel may be more open to acquisition than was Huai.

#9 — Symantec

The latest rumors regarding Symantec centered on Microsoft as a potential acquirer (see “Is Microsoft Looking to Buy Symantec?” on InfoStor sister site eSecurity Planet).

However, that (unlikely) move would be more for Symantec’s security product line, rather than its storage software, and would be in response to Intel’s acquisition of McAfee.

Given the breadth of Symantec’s product line, and the fact that the company would be expensive and is not a pure-play storage vendor, I put Symantec low on this list. I don’t see Symantec being bought any time soon, if only because of the company’s huge market cap.

#10 — NetApp

Rumors about NetApp (NSDQ: NTAP) being acquired have existed as long as the rumors surrounding CommVault and Brocade have, maybe longer. I think the time to buy NetApp is long gone, but due to the persistence of the rumors the company still makes our Top 10 list.

I see NetApp more as an acquirer than a target. The problem with that (for NetApp) is that, if the IT market does contract down to five or six soup-to-nuts vendors, NetApp doesn’t have a chance of making that list even if it does dip into its deep piggy bank to make some acquisitions. It’s that logic that keeps NetApp on our Top 10 acquisition targets list.

One other company that occasionally comes up in acquisition conversations is Quantum. This would be for the company’s data deduplication technology and products. However, an acquirer would also get Quantum’s tape business, and I don’t think any of the likely acquiring vendors is looking to add tape to their portfolio.

And in the Least-Likely-But-Often-Mentioned category of acquisition targets: EMC. The Wall Street Journal reported last week that Oracle may be eying EMC (see “EMC Shares Rise On Oracle Buyout Rumor”). Sure, that would fill in the Tier-1 storage hole in Oracle’s portfolio and, more importantly, give them VMware, but I still think the Oracle-EMC acquisition speculation is ludicrous.